Tax on online games and bets: Everything you need to know about this initiative

Tax on online games and bets: Everything you need to know about this initiative

This week the head of the Ministry of Foreign Trade and Tourism (), Roberto Sánchez, reported that the Council of Ministers approved the bill that proposes to regulate online sports betting and games. The initiative has already been sent to Congress, where it must be debated and analyzed for its subsequent publication.

What is this project about?

This initiative proposes the creation of a direct tax applied to the Net Income (Net Win) to the bookmakers that operate through the internet. With this initiative, online sports betting and games will be added to casino games and slot machines made in face-to-face establishments, which are currently taxed with the ISC.

The project also seeks to protect vulnerable sectors of the population through access controls for minors and the implementation of responsible gaming policies aimed at preventing the development of addictive behaviors.

In addition, it seeks to prevent the exploitation of remote sports betting and games from being used for the commission of crimes related to money laundering and financing of terrorism or for the commission of fraud, computer crimes and any other illicit purpose.

What requirements must online betting houses meet?

The companies that are dedicated to the betting sector must be registered in the Single Registry of Taxpayers (RUC). Likewise, they must have a legal representative in Peru and the web domain of their platform must have the ending “.pe”.

In this framework, if the companies that wish to carry out this activity do not have the respective sectoral authorization, they will be prohibited from entering into advertising or sponsorship contracts.

It is worth mentioning that the Mincetur would be the entity responsible for granting authorizations for the use of technological platforms in games and sports betting, as well as in physical premises.

What is the penalty for companies that do not meet the requirements?

In case of not complying with what is established in the bill, the sanctions can be a fine of between 1 UIT to 500 UIT, suspension of activities, cancellation of authorization and/or administrative registration, and disqualification.

How would this measure affect the online betting market?

José Ruidías Rojas, professor of Marketing at Pacífico Business School, points out that a new regulatory framework will definitely generate a contraction in this market, but beyond that, it does not represent a great risk for online betting.

“Any new tax will generate less demand, there will be an impact, because it will be more complicated to be a supplier in this industry. But in the medium term, it is normal for this to stabilize and those who are best aligned with the legal framework and also with consumers remain. This measure is going to work rather as a purifier of the best proposals on the market”, holds.

However, the specialist emphasizes that Congress must analyze in depth how beneficial this approach can be and that it does not end up destroying the online betting industry.

“The activities that generate profit must pay taxes, that is not bad, but it is important that the norm is studied well to see how beneficial it can really be, in addition, that a counterproductive effect does not occur and end up affecting this industry ”he adds.

However, one factor to take into account is that a large part of the economic movement in the online betting market is not done with Peruvian companies, but through virtual platforms with global companies.

In this sense, José Ruidías Rojas states that a risk of the bill is that it generates unfair competition, since “it makes your national companies compete unfairly with foreign sponsors who do not pay taxes.”

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