Portuguese government scraps GGR tax plans

Plans to swap Portugal’s turnover tax on online gambling to one on GGR tax have been removed from Portugal’s 2019 budget.

The proposal would have seen the replacement of the current taxation rates of 15-30% for online casino revenue and 8-16% of sports betting turnover, with a new unified rate of 25% on GGR.

However, Portuguese Finance Minister Mário Centeno presented the final budget document without the change to parliament last week.

A debate on the budget will take place from 30 October, with a final vote scheduled in parliament for 30 November.

Khalid Ali, president of ESSA, which had called for a change in taxation, called the news “very disappointing” adding: “In our response to Portuguese gambling framework we advocated a taxation rate between 15-25% on GGR, which we believe would have significantly enhanced consumer channelling and related integrity benefits.”

João Alfredo Afonso, partner in Portuguese law firm Morais Leitao Galvao Teles, Soares Da Silva & Asscociados, said the amendment had been included in the initial version of the budget to “test how the market would react to such change”, but had likely seen pushback from incumbents.

“There has been a lot of pressure for these changes (especially on the tax treatment of fixed odds sports betting) but clearly it was not well received by some operators already established,” Afonso said.

Portuguese regulator Serviço Regulação e Inspeção de Jogos do Turismo de Portugal (SRIJ) conducted a full review of the Portuguese online gambling market earlier this year.

Discussing the review, Afonso said: “This report was delivered recently and, although its content is not publicly known, it is not difficult to anticipate that it addressed the taxation issue, which is indicated as the main detrimental aspect of the existing regime, which, according to some reports, is the main reason for nearly 60% of the revenues originated from players based in Portugal being targeted to operators that are not licensed in Portugal.”

Addressing the future of the Portuguese market, Pierre Tournier, the Remote Gambling Associations’ director of government relations, believes that the current status quo will: “continue to raise at least two concerns: a) the existing regime is unable to achieve the public policy objectives stated by the Government, in particular the reduction of the unregulated market, which will remain significant without a dramatic tax change and b) our state-aid claims remain unanswered as certain products and operators will continue to be unlawfully discriminated against on a fiscal basis.”