Estonia’s Ministry of Finance has submitted a draft law that would increase online gambling, table game and lottery tax rates.
On April 26, the ministry submitted the Tax Laws Amendment Act for approval, after finance minister Mart Võrklaev approved the changes.
It proposes that the gambling tax rate for online gambling will increase to 6 percent in 2024 and then again in 2026 to 7 percent.
Additionally, the ministry said it wants the gaming table tax rate to increase by 10 percent and the lottery tax rate to increase from 18 percent to 22 percent.
The proposed tax increase is estimated to generate €8m in 2024, €8m in 2025, €12m in 2026 and €13m in 2027.
Due to the “urgency of the bill”, the law is planned to enter into force on January 1, 2024, according to the explanatory notes accompanying the proposed changes.
“In recent years, tax receipts from remote gambling (including online toto) have increased exponentially. According to the opinion of the Estonian Gaming Operators Association (EGOA), the main reason for this is the low tax rate of 5 percent, which is a decisive factor in the registration of the licence of international gaming organisers in Estonia,” the government analysis states.
Reported online casino revenue has grown by about 260 percent from €78m in 2020 to €281m in 2022, according to the latest figures of the Estonian Tax and Customs Board.
As of April 2023, there are 29 online gambling operators licensed in Estonia, 14 of them are Estonian operators and 15 are foreign operators.
“Foreign operators with an international reach registered in Estonia generally do not offer services on the Estonian market, which at some point will be exhausted. A significant part of gambling tax revenue comes from the bets of players from other countries (e.g. Finland and Germany),” according to the analysis.
The draft bill also includes a raft of tax exemptions on pensions and a universal tax-free income of €700 per month.
The increase in taxes on gambling is accompanied by a proposed increase in the excise duty for alcohol and tobacco products to help fund these changes.