Michal says government will debate online casino tax cut

Estonian Prime Minister Kristen Michal said the government will debate the online casino tax cut during talks on the state budget and budget strategy, ERR reported. He said further reductions would not make sense if the measure does not generate additional revenue for the state.

A law approved by parliament last December is lowering the gambling tax on online casinos from 6% to 4% over two years. The aim was to attract more online casinos to register in Estonia and increase tax revenue. So far, however, the state budget has suffered a shortfall of several million euros instead of receiving additional income.

Michal said the government must discuss whether continuing with the tax reduction is reasonable. He added that culture must not lose funding because of the measure, and that money already missing from the cultural sector would have to be replaced.

“This debate will certainly take place,” Michal said on the programme “The Prime Minister in the Studio.” “The first concrete principle I stated is that culture must not lose out. We have added the missing money there because of this legislative mistake, and other missing funds must also be found so that culture does not lose.”

Michal said it was still difficult to assess whether the tax cut, which has been in effect for only a short time, had attracted additional online casinos to register in Estonia. It was also not yet entirely clear why gambling tax revenue had declined. The government cabinet is expected to gain a clearer overview in the coming weeks, he said.

“If tax revenue does not grow, there is no point in continuing with further tax cuts,” Michal said. He added that gambling in Estonia had also decreased, affecting gambling tax revenue overall, and that the government needed to determine how much of the decline was connected to the remote gambling tax cut.

ERR reported in June that the tax change had not brought new online casinos to the Estonian market. The opposition Social Democrats have also called on the government to scrap the tax concession before the budget talks.

Social Democrat deputy leader and member of parliament’s Finance Committee Riina Sikkut said that, after six months, it was already clear that Estonian culture would lose 5 million to 6 million euros this year because the lower tax rate reduced tax revenue and Kultuurkapital funding.

The Finance Ministry has estimated that lower gambling tax revenue would cost the state budget 6 million euros in 2026, 8 million euros in 2027, 10 million euros in 2028 and 13 million euros in 2029.

The amendment also contained an error that would have allowed online casinos to operate tax-free in 2026. Parliament therefore had to pass a corrected version again in February.