Argentina’s national government has opted to impose a higher rate of tax for online gaming for the forthcoming year, despite the fact that the sector is not regulated on a federal level.

The two most populated jurisdictions – the city and province of Buenos Aires – are in the process of debuting their markets, while there are other regions that still have no regulations in place.

The initiative from Minister of Finance Martín Guzmán, which increases taxes on online gambling from 2% to 5%, was included in next year’s draft budget. The proposal estimates that 95% of the revenue will be distributed among provinces, while 5% will be invested in technological innovations by the Argentinian state telecommunications company Arsat.

According to Política Online, the sector generates around $2.4bn annually in Argentina, but as the business is still not fully regulated, the contributions to the state are virtually non-existent. However, they estimate that each province will benefit once they legalize and regulate online gambling.

The tax, which was enacted on a 2016 law, is applied to the value of each bet and game of chance. In addition, it rises to 10% for companies that operate from “non-cooperating or low-no taxation” countries, or tax havens.

According to the 2021 budget, the government “will check bank and billing data” and will identify online bets “when it’s detected in a mobile phone code on a SIM card or in the IP address of the electronic device of the service recipient”.

Arsat will collaborate by monitoring the activity, and bring in more data about gross income, helping the country “get more resources for the state coffers.”