President Pedro Castillo Endorses Online Gaming Regulation Bill
A month after the Congress of Peru voted with 91 ayes, 0 nays, and 7 abstains on a new bill to legalize and regulate online sports betting and gambling in the South American country, president Pedro Castillo signed the bill numbered 31,557 and made it a law at a special ceremony conducted at the Government Palace.
The new legislation will come into force 60 days after promulgation in the official gazette, El Peruano, and will introduce a tax of 12 percent on the net income of online sports betting and gambling operators payable on a monthly basis. There will also be a 1 percent Selective Consumption Tax (ISC) for levying players.
Speaking at the signing ceremony, president Castillo highlighted that “for the first time, a special tax is being created” for online sportsbook and gambling operations which will provide the opportunity for Peru to “to have more resources to meet its economic and social obligations” and to “generate an annual collection of approximately $40m for the State.”
The tax proceeds will be shared on an equal basis by the Ministry of Foreign Trade and Tourism, the Ministry of Health, and the Peruvian Sports Institute, after 20 percent are taken by the national treasury.
The Peruvian president praised the collaborative efforts by the Executive and Legislative branches of the country to promote “growth and development to benefit all citizens” and highlighted that the adoption of the new online gaming legislation “represents an important step towards formalizing activities that until today had operated without any type of regulation or supervision.”
“The Executive and Congress have agreed on the need to establish a regulatory framework so that these operations are controlled in an integral way, paying taxes and complying with the appropriate conditions.”
Some Tax-Related Concerns by Stakeholders
In July, shortly after the Congress of the Republic adopted the remote gaming regulation bill, the Peruvian Sports Betting Association (Apadela) voiced its concerns that online casino and betting sites offering fast withdrawals for players that operate on the Peruvian market from offshore locations will in practice receive a tax exemption as nothing in the the new law obligates them to establish a branch in the country.
“The law brings unfair competition to the table because it imposes a tax that doesn’t consider companies operating from abroad without a branch in Peru,” the statement by Apadela said. “In addition, there’s no actual obligation on the recently approved regulation to establish a branch to operate in the country.”
“Congress exempts the payment of this tax to around 100 offshore companies that are not physically in Peru, but that operate in the country through their digital platforms,” representatives of the sports betting association elaborated.
Nevertheless, Apadela expressed its support for the new online gaming legislation after the endorsement by president Castillo.
Authorities Hurry to Rake in Revenues during the FIFA World Cup in Qatar
As the next FIFA World Cup event is rapidly approaching, with football fans eagerly waiting for the matches in Qatar this November, Peruvian tax experts stress that the country should put a high priority on a timely opening of the online sports wagering market to rake in good revenues from the large number of expected bets.
“As it is an annual tax, its effects are immediate. Apparently, we’re still waiting for the regulation [to come into force], but the ministry in charge has 120 days to present it. I understand that they’re rushing because there will be a large number of bets at the end of the year,” Francisco Pantanoso Velloso da Silveira, director of the Master’s Degree in Taxation at the Universidad Peruana de Ciencias Aplicadas (UPC), commented.
According to Eduardo Sevilla, Director of Casino Games and Slot Machines at the Ministry of Foreign Trade and Tourism (Mincetur), the ministry which will be in charge of online gaming and sports betting, when the new law comes into force 60 days after its promulgation, the operators “will receive the authorization and [will be able to] register.”
The law stipulates that online gaming companies have to get a registration in the Single Taxpayer Registry (RUC), establish a legal representative in Peru, and use the “.pe” web domain for their website. Failure to conform to these requirements will mean that the operator cannot sign sponsorship and advertising contracts.