Online sportsbooks to pay taxes in Peru

Online sports betting is in the sights of the Government because it already has the bill that will be presented to the new parliament to regulate both sports betting and online games, which currently lack of a specific regulation which leads to not paying taxes.

“Bets as such are not taxed with a specific tribute unlike other activities such as casino games and slots. In Peru, many of the bookmakers (which operate via online) constitute a company that charges a kind of commission - which surely pays a tax for the commission it charges - but which does not pay IR, ISC, IR, IGV, or other tribute, ”explained the taxpayer Jorge Picón.

The Ministry of Foreign Trade and Tourism (Mincetur) seeks to change this scenario so it already has the regulatory framework that will impose a 12% tax on net winnings (net win) as well as the requirement to provide guarantees of up to 500 UIT (S / 2′100,000) to ensure payment to punters, taxes and possible fines.

What does the new regulatory framework pose? Manuel San Román, general director of Casino Games and Slot Machine of Mincetur, explained that it is intended to formalize an activity that must necessarily be controlled; that responsible gambling policies similar to those that already exist for the casino and slot games have to be applied; and that it is fulfilled to pay the prizes, the fines and taxes.

Thus, among the novelties of the Executive's proposal, it stands out that companies (bookmakers and online games) that do not have the respective sector authorization (which will be issued by the Mincetur) will be prohibited from signing advertising or sponsorship contracts.

It is also established that sportsbooks which operate in the country will have to be formally constituted in Peru -with a legal adress-including those offered by the online service.

For a better control, San Roman pointed that a deal has been reached with the Ministry of Transport and Communications in order to block all the IP codes, the URL and even the apps of the companies that are not constituted and do not have permission to operate.

"The most important part is that those Internet providers which bring service to those unauthorized platforms, will be banned from operating in Peru," he warned.

The Government proposal will also enable the use of credit or debit cards just to authorized platforms. It will also be banned that they may have access to sportsbook houses and online games to people with gambling problems and underaged.

The officer said that it would be "ideal" that the new parliament would promulgate the proposal next yeat, considering that they have been working for more than two years in it, and they have even reached an agreement to charge a 12% tax on net winnings, with the Ministry of Economy and Sunat.
“Many congressmen that participated in the previous Congress knew that the regulation issue was walking, even there had been initiatives in the Parliament to regulate Internet games and sportsbooks. It should be understood that the worst condition is that this sector continues without regulation," he added.

Online games and sportsbooks are growing significantly in 2019, with around 150,000 daily bets, performed by men, between 20 and 45 years old, according to Mincetur estimations.

Besides, only five companies dedicated to sportsbooks have been formalized, a scenario that is expected to change with the regulation. “We aim to set the existence of a tax to net income to tax the activity, passing by the approval of technical norms that will allow to protect transparency in gaming and sports integrity, avoid money laundering, asset laundering or other crimes," San Román said.