Legislative typo leads to elimination of online casino tax in Estonia
New legislation unintentionally abolished online casino tax instead of reducing it.
Estonia.- Plans to turn a Baltic nation into the Malta of the north through a reduction of gambling tax in Estonia appear to have been accidentally taken to an extreme. Local media are reporting that online casino taxation for the current year has been eliminated due to a typo in new legislation passed in December.
The intention was to gradually lower gambling tax from 6 to 4 per cent by 2028, cutting the rate by half a percentage point each year. However, ERR News, the English-language service of Estonian Public Broadcasting, reports that a typo in the Gambling Tax Act means that instead of reducing remote gambling tax to 5.5 per cent in the first phase, most online gambling will be completely untaxed this year.
That’s because a clause specifies that the 5.5 per cent tax rate applies to “skill games” as defined in Section 1, Subsection 1, Clause 5 of the law. The term doesn’t include “games of chance”. The provisions for subsequent years were correctly drafted to include games of chance.
Reportedly, the mistake was only discovered by a lawyer representing a gambling company.
Riina Sikkut (SDE), a member of the Riigikogu’s Finance Committee, has said the error will deprive culture and sports of the revenue expected. “The prime minister promised an end to the tax festival, but apparently the Estonian people were waiting for a tax circus to begin. Today, it became clear that the gambling tax exemption, which was created in a hurry and allegedly as a result of political blackmail, was flawed,” Sikkut said, as reported by ERR.
“Now the very thing that was feared is happening: culture and sports will be deprived of the expected revenue – a ‘typo’ that has become law exempts a large part of the gambling industry from paying tax,” she added.
The gambling tax reform was championed by Reform MP Madis Timpson, chair of the Legal Affairs Committee. He suggested that it would make Estonia “a remote gambling paradise“. “Those people who are playing somewhere, I don’t know, in France, in Spain; their profits would come to us,” he had argued.
Others in the coalition government had questioned the proposals, arguing that international operators prioritise economic stability over marginal tax savings. However, Sikkut says Prime Minister Kristen Michal of Reform had enthusiastically defended the tax exemption even though some party colleagues deemed it to be the “worst law of the year”.
After the bill was passed in December, former finance minister and MP Mart Võrklaev of Reform, who eventually voted in favour, told ERR that he saw it as a “very bad piece of legislation”.
He said: “It’s no secret the coalition has been held hostage over it: the threat has been that if this bill doesn’t pass, then the state budget won’t get the votes and the coalition will fall.”
He added: “This bill would have passed with or without my vote. However, I saw a need to make savings in the state budget. I proposed cutting €9m from the maritime transport subsidy for one year – that’s over €40m across four years. That was my compromise: if we’re going to move forward with this bill anyway, then let’s at least save money in the budget.”
