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Portugal – RGA calls for changes to Portugal’s online tax

By - 3 May 2017

The body responsible for the online gaming industry the Serviço Regulação e Inspeção de Jogos do Turismo de Portugal (SRIJ) has only issued six licences since Portugal passed its online gaming act two years ago. The Government approved rules for online gambling and betting on April 29, 2015.

During this period, the SRIJ received 19 applications from operators who wish to operate in the Portuguese online betting market and awarded six licenses. According to the Remote Gambling Association (RGA) the high taxes make the market “unattractive” to investors.

Clive Hawkswood, the RGA’s Chief Executive said: “It is clear from all the evidence that the Portuguese market is not operating in the way that the Government intended. Only six licences have been granted so far, of which just two are for sports betting which compares unfavourably with well-regulated jurisdictions in Europe and cannot be sufficient to channel consumers into the regulated market. The main reason for this is the 8/16 per cent turnover tax on online sports betting which makes the market unattractive to the bulk of European operators. There are also a range of regulatory issues, such as the limitations on poker liquidity, which would benefit from reconsideration. If suitable amendments can be made, especially on the tax front, then more operators will take out licences and this in turn will enable the regulator to police the market more effectively. Against this background, we strongly urge the Portuguese government to follow the example of other EU countries where viable tax regimes and good regulation have created markets that are successful for their governments; provide suitable protections for their consumers; and enable the industry to be competitive and profitable.”

Back in 2012 it was revealed that a government committee was looking into legalizing online gambling in order to raise cash for state pension funds and to aid debt-ridden soccer clubs. This was after a Portuguese court ruled that the sponsorship of sports by online gambling companies was illegal. Under previous rules only the state-run charity Santa Casa de Misericordia de Lisboa could offer sports betting and lotteries.

The new act fast became a matter of increasing urgency as Portugal’s economy continued to falter and the government hoped to raise to raise an extra €25m in tax revenue. However the new law imposed a tax of between 15 and 30 per cent for casino operators and 8 and 16 per cent for sports betting operators. Although the new move marked a significant change in policy regarding gaming in Portugal it immediately came under heavy criticism due to the high tax rate. The RGA argued back in 2014 that the Portuguese plans for reform, in particular, the prohibitive taxes that would apply to online sports betting would make the establishment of a competitive licensed market almost impossible and described the new tax rates as both “punitive” and “unworkable.”

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