Czech Republic Expected to Hike Gambling Tax to Meet Budget Deficit
Czech Republic plans to increase gambling tax revenue, aiming to raise the contribution to €1bn to reduce budget deficit.
The Ministry of Finance in the Czech Republic has announced plans to increase tax revenues from the gambling sector, in a bid to address the country's budget deficit. Finance Minister Zbyněk Stanjura is looking to define measures that will deliver savings of Kč 70bn (EUR 2.6bn) in the budget. At present, the Czech gambling sector generates Kč 9bn (EUR 333m) per year in taxes, and the government is aiming to increase this contribution to Kč 1bn (EUR 37m).
The Czech gambling industry has already seen the introduction of a tiered tax on gross gaming revenue, ranging from 23% to 35%, which has caused the exit of international operators such as William Hill and GVC Holdings (now Entain) from the market. The change in tax policy left the Czech gambling sector dominated by local operators such as Fortuna Entertainment and TipSport in sports betting, and Sazka (Allwyn) for the lottery.
The increase in gambling tax is just one of the measures the Czech government is considering to address the budget deficit. The country's government is reportedly looking at cutting costs across a range of areas, including social welfare and defense spending. The government's deficit for 2022 was projected at Kč 295bn (EUR 10.9bn).
The Ministry of Finance has not yet revealed how much the new gambling tax rate will be, but it is expected that the move will likely cause concern among local operators who have already seen a downturn in revenues due to the impact of the COVID-19 pandemic. However, the Czech government sees gambling as an easy target for increased tax revenue due to the sector's profitability.