Sweden wants online gambling operators to pay more taxes
Sweden’s Finance Ministry has presented a new budget for the next financial year, dealing a blow to the country’s online gambling operators. Without prior discussion, they included tax rate increases that would have a significant impact on revenue.
In the 413-page budget proposal, the gross gaming revenue (GGR) tax will rise from 18% to 22%, taking effect next July. There have been no changes to gambling tax on gross receipts since the Swedish gambling market was re-regulated in January 2019.
Finance Minister Elisabeth Svantesson said the 22% tax was now “consistent with the goal of achieving a channelization rate of at least 90%”. Tax revenue could increase by just over 500 million kronor ($44.8 million) a year.
GAMBLING SUPPORTS THE ECONOMY
Svantsson and others at the Treasury see the increase as a logical step since Sweden resumed gambling licensing. They believe that the gaming market is more stable than four years ago and the degree of channelization has increased significantly.
Therefore, according to her, the government does not need to be so cautious when taxing the industry. Instead, a tax that is “balanced” must be introduced and can improve the financial position of operators without severely affecting them.
Svantesson added in the proposal that the tax rate was initially intended to be higher than 20%. However, the government ultimately decided not to introduce this rate to allow gaming operators a smooth transition.
The proposal could still be rejected. The Finance Ministry will submit a formal proposal reflecting the proposed increase to the Swedish government next year. The German parliament may take action on this.
In comparison, online casino operators in Germany pay a tax rate of around 19% on their GGR, although there is currently a legal debate on this subject. In Italy, online casinos pay 25%.
“Strange” behavior of the department
The Swedish Online Gaming Industry Association (BOS, by its Swedish abbreviation) is not interested in the proposal. The group, which includes Flutter, Entain and other gaming giants, has agreed to provide the government with more resources to combat organized crime and prevent illegal gambling operators from reaching Swedish consumers.
BOS believes that this increase may have the opposite effect to the Treasury Department’s intentions and may ultimately push some operators out of licensed areas and into unlicensed areas to avoid paying taxes.
This is similar to what happened in the Philippines when the government increased taxes on the Philippine Offshore Gaming Operators (POGO) sector. The consequences are devastating.
BOS Secretary General Gustaf Hoffstedt said in a statement that according to the organization's data, online casinos have a channelization rate of 72% and the overall gambling market has a channelization rate of 77%. Raising the tax rate would have a negative impact on gambling revenue and he said it was "strange" that the Treasury didn't think so.
Hofstetter believed that the German Reichstag would fully support the proposal, which would lead to "a huge impact on canal construction." Therefore, he believes the gaming industry needs to prepare for another round of new regulations.
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Source: www.casino.org
