The Estonian government has approved the amendment of the gambling tax act which will reverse next year’s planned increase to the remote gambling duty rate.

The new bill will gradually decrease the rate, currently 6%, by 0.5% annually until it reaches 4% in 2029.

Estonia’s government lowering taxes comes after it was raised from 5% to 6% as part of the 2024 tax reform.

It was then meant to increase again to 7% at the start of 2026.

However, the coalition government of the Reform Party and Eesti 200 submitted a draft bill earlier this month to reduce duty in increments.

It passed its first reading on 21 October and has now been approved, with the funds raised to be used for sports and culture.

The lowering of taxes is also forms part of the government’s efforts to persuade gambling companies situated in European counties such as Malta to relocate to Estonia.

However, those opposed to the bill highlighted that Malta has the right to refuse foreign court judgments regarding gambling firms registered on the island.

Margus Tsahkna, minister of foreign affairs, said of the tax change: “The current plan is that while about €22m is collected at the moment, if everything works and the forecasts hold, this could grow to €30m by 2028.

“This money will go entirely to culture and sports. Hopefully, this will ease the pressure of the annual negotiations over how much direct support can be allocated from the state budget to culture and sports, as this would create a mechanism and actual revenue on a larger scale.”

However, prior to the bill being passed, Evelyn Liivamägi, Ministry of Finance deputy secretary general, that a reduction in tax could reduce income, as opposed to the increase in government revenue that has been suggested.

Mart Võrklaev, ex-finance minister and Reform Party member, said in an interview with Eesti Ekspress earlier this week that the proposal should be scrapped.

He said: “The Ministry of Finance’s forecast shows that this tax cut will cost us €6m in 2026, €8m in 2027 and €10m in 2028.

“The new scheme is based on the assumption that lowering the tax will bring a large number of gambling operators to Estonia.

“But after we decided to raise the tax in 2023, nine new operators still entered the market. That brought in €4m per year. The forecast expecting a massive influx of gambling operators is built on shaky ground.”

In response, Tsahkna said: “If it succeeds, Estonian culture and sports will receive more sustainable and improved long-term funding.

“If the forecasts don’t pan out, we’ve already planned for that. We’re not acting recklessly or randomly.”

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