Portuguese betting tax will cost State 20m, says PwC
Big four accountancy firm says proposed turnover-based levy will lead to a "small" and "inefficient" regulated market
PricewaterhouseCoopers (PwC) has urged the Portuguese government to rethink its proposed online sports betting tax regime or risk losing out on 20m in tax receipts.
In a study, developed for the Remote Gambling Association (RGA) and presented to Portugal’s Commission for Economy and Public Works, PwC warned the introduction of the planned turnover-based levy would result in the creation of an “inefficient and unprotected” market.
Instead, the big four accountancy firm estimated that a switch to an alternative gross gaming revenues-based tax model could generate an additional 20m in tax receipts by 2018.
“Current taxation plans will lead to the loss of competiveness for regulated operators and encourage consumers to use the non-regulated market,” a statement released by the RGA said this morning.
The study highlighted the French market, which operates a similar regime to the one proposed by Portugal, and noted that 18 of 35 licensed operators had left the country after the first year due to a lack of profitability.
PwC also said the ‘absorption rate’ – the percentage of market in hands of licensed operators – was significantly smaller in jurisdictions where turnover-based tax regimes were in operation.
According to the study, the absorption rates in GGR-taxed countries such as Denmark and Spain were 82% and 52% respectively, while France’s rate was 25%, with PwC projecting Portugal’s to be lower still at 20%.
“The PwC study concludes that the proposed system will result in a small, inefficient and unprotected market; the countries with the alternative GGR tax system were able to create larger, efficient and secure systems for consumers,” the RGA statement read.
Speaking to eGaming Review, a senior executive at a leading European sportsbook operator said it was “very disappointing” that Portugal hadn’t “learned the lessons from other successful and unsuccessful jurisdictions”
“A tax rate based on turnover has shown itself to be ineffective, often forcing operators to pass the cost on to the customer or withdraw from the market altogether, thereby making the unlicensed market more attractive,” he added.
While sports betting is set to be taxed on turnover – at a of rate between 8% and 16% dependent on the bet – online gaming will be broadly set at 15% of GGR. Land-based sports betting is currently taxed at 4.5%.
A regulated Portuguese market is now expected to be introduced before the summer after the European Commission earlier this month said Portugal was free to pass its bill into law, despite ongoing concerns over its compatibility with European law.