LATIN AMERICA
have obtained a gambling license from the Peruvian gaming authority to provide online gambling. Under Peruvian legislation, a business may obtain a gambling license as either a domiciled operator or as a non-domiciled operator. Currently, there are more than 40 operators that are operating from abroad. Now, in addition to the 11.76 percent special tax out of their gross profits, they will also have to file a monthly declaration of their Peruvian-source income. The current Income Tax Law levies tax at a rate of 30 percent of gross income obtained from Peruvian sources for those who are not domiciled in Peru. It will also be very easy for the tax authority to demand this tax which it currently does not collect. Additionally, among other major flaws, Law 31557 establishes two obligations that foreign companies will not be able to meet and, unless the regulations find a creative solution to this problem, it will be impossible to operate as a non-domiciled company. The Law requires operators (whether domiciled or non-domiciled) to have a bank account with a Peruvian entity for their players to make their deposits. It also requires all operators to provide a guarantee to the State to back their obligations to the State and the players. Such a guarantee has to be issued by a Peruvian entity and in both cases, financial entities will not open bank accounts or grant guarantees to companies domiciled abroad. As it stands, the Law has the unintended consequence of requiring non-domiciled operators to become domiciled. All this is a consequence of not consulting more broadly on the bill that resulted in Law 31557. The phantom excise tax on online gambling in Peru Law 31557 also attempted to create an additional tax on top of the gaming tax. The “Excise Tax on Online Gambling” is anti-technical, unconstitutional, and absurd as evidenced in other Latin American countries. In the end, however, it is not enforceable because it has no tax rate. In fact, the current Law 31557’s Supplementary Provision amending several articles of the “General Sales Tax and Excise Tax Law” to regulate the “Excise Tax on Online Gambling” will remain anecdotal. It fails to include the tax rate; hence, not all of the elements of a tax are present, and the tax may only exist if a new Law sets out the tax rate. For this reason, we can state categorically that there
is no Excise Tax on Online Gambling in Peru. Nevertheless, it highlights the weakness in the legislators’ approach. If a political decision was taken not to create an “Excise Tax on Online Gambling” it would have been reasonable to remove any article associated with amending the “General Sales Tax and Excise Tax Law.” Law 31806 could have eliminated the useless provisions related to this tax, but this was not done. We are left with a phantom tax with no validity. Ecuador’s 15% tax on operators: the same, but different Following the dissolution of Congress, ordered by President Lasso through Executive Order 741 dated May 17, 2023, the President himself took on the roles of the Executive and Legislative branches as a temporary measure until November 25, 2023, when the new President and legislators take office. Executive Order 742 was the first to be issued by President Lasso, on May 17, 2023, after taking temporary control of the Legislative branch. The biggest surprise, at least for the gaming industry, was that this Executive Order created the “Single Income Tax on Sports betting operators”, the practical effect of which confirms the legality of providing sports betting services to the Ecuadorian market, whether online or retail, from abroad or from Ecuador. As will be recalled, on May 07, 2011, then President Rafael Correa held a referendum which comprised 10 questions one of which was: do you agree with a ban on gambling businesses such as casinos and slot parlors in the country? This negative result led to the closing of casinos and slot parlors, causing considerable harm to investors and, mainly, employees. The ban was formalized through Executive Decree 873 of 2011. Then, in 2014, the Comprehensive Organic Criminal Code (COIP, acronym in Spanish) was approved. Its Article 236 created the crime of operating casinos, slot parlors, betting houses or businesses engaged in games of chance. Afterwards, however, in response to a query by the Guayaquil Welfare Board (Junta de Beneficencia de Guayaquil), in 2019, the Solicitor General stated that the crime established in Article 236 of the COIP, and the prohibition are to be understood in
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IMGL MAGAZINE | OCTOBER 2023
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