Sweden’s Proposed 22% GGR Tax Shakes Online Gambling Industry

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An unexpected move by Sweden’s Finance Ministry has startled the country’s online gambling community with the prospective introduction of an elevated tax rate. In the yearly budget proposal, a surprising increase in tax rate, set to make a significant dent in revenues, was presented without preceding discussion.

The proposed alteration is a leap from the existing 18% to a hefty 22% in the gross gaming revenue (GGR) tax, to be set into motion come July of the following year. This ascent represents the first ever since the reformation of the Swedish gambling sphere took effect in January of 2019, a time since when the gambling tax upon gross revenue has maintained stability.

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As per Minister of Finance Elisabeth Svantesson’s disclosure, a tax reaching 22% aligns ideally with the endeavor of achieving a channelization rate falling not short of 90%. Resultingly, the projected annual increment in tax revenue could touch a figure a bit above a total of 500 million Swedish Krona, an equivalence of 44.8 million dollars in US currency.

The enhanced earnings are deemed by Svantesson and her colleagues within the Finance Ministry as a pragmatic escalation from when the provision for licensed gambling was reintroduced in Sweden. They hold the view that the gambling sector now demonstrates more robustness in comparison to its state four years ago, with the rate of channelization having seen substantial growth. Their stance leads them to believe that the government doesn’t require to maintain its previous level of heedfulness while imposing taxes upon the industry, with the pressing need being the implementation of a tax “well-balanced” enough to top up the government’s funds without delivering a harsh blow to operators.

The modification draft also reveals the initial intention of setting a tax rate surpassing 20%, with the eventual dismissal of this figure aimed at facilitating a smooth switchover for gaming operators. However, the possibility of the proposal being discarded still holds.

But how does this new orchestration compare to the global milieu? In Germany, online casino operators are subjected to a GGR tax rate hovering around 19%, amidst ongoing legal disputes on the matter. In contrast, their Italian counterparts face a taxing rate of 25%.

The proposition, nonetheless, remains subjected to criticism from the Swedish Online Gaming Industry Association (BOS), which has expressed a lack of satisfaction with the suggested increase. Considering its members include behemoth operators like Flutter and Entain, and given their collective decision to pump in additional funds to the government’s budget for combating organized crime and rendering Swedish clients unreachable for illicit gaming operators, the Association voices concern that the new tax strategy might push gaming operators towards unregulated territory for tax evasion. This echoes a similar occurrence in the Philippines post the upheaval in taxes levied on their Offshore Gaming Operator Segment.

BOS Secretary General Gustaf Hoffstedt expresses the organization’s apprehension that the elevated tax rate would negatively impact gaming revenue and deemed it indeed “bizarre” that the Finance Ministry thinks differently. Hoffstedt also expects that the Riksdag will end up giving their full support to the proposal, setting off a ripple effect detrimental to channeling. As a result, he anticipates a need for the gaming sector to brace for another phase of regulatory changes.