APADELA: Peru sports betting tax law threatens thousands of local jobs

The Peruvian Sports Betting Association (APADELA) has expressed tax concerns after Peru’s Congress of the Republic approved a sports betting and remote gaming law.
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The Peruvian Sports Betting Association (APADELA) has expressed tax concerns after Peru’s Congress of the Republic approved a sports betting and remote gaming law.

Specifically, the trade association identified a provision allowing operators to avoid paying a certain tax if they don’t have a branch in the country as an area of contention in the legislation

In a statement, the APADELA argued that this decision was made without considering that all those who operate in the sector must pay the same tax, which could affect thousands of local jobs generated by the industry.

On July 15, Congress voted in favor of a bill that established a 12% income tax only for betting companies residing in Peru and foreign companies with branches in the country.

Article 40 of the proposed law states that: “the taxpayers of the Tax are the legal persons constituted in Peru and the Branches of legal persons constituted abroad…”. 

APADELA noted that with this law, Congress gives tax exemption to close to 100 foreign firms that do not have branches in Peru, but that operate in the country through digital platforms. The rule also doesn’t obligate an operator to establish a branch in the country.

As a result, the association believes the proposed law would cause “unfair competition, violating fiscal neutrality and equality before the law, negatively impacting the economic livelihood of more than 275 thousand people in the country who work or find their economic sustenance in this activity”.

APADELA adds that due to the bill currently factoring in illegal sports and non-sports bets in the Penal Code, authorities must reconsider the law to “discuss this issue adequately, guaranteeing equal conditions for all participants in this industry: domiciled and foreign companies, whether or not they have branches in the country”.

The statement concluded: “From APADELA we want the necessary regulations to be established that allow the industry to modernize in accordance with international standards to continue operating in the country in a formal way, for which it is necessary to correct this serious error in the new law that would only violate free competition and will affect the formal local industry.

“Only in this way can good tax collection be promoted that benefits all Peruvians, protects users and avoids the black market of betting.”

Other features of the online gambling bill’s tax framework backed by Congress saw lawmakers include a direct 10% tax on GGR across online sports and casino wagers.   

The Ministry of Foreign Trade and Tourism (MINCETUR) – the department that will serve as the regulatory agency for Peruvian gambling, distributing its online gambling tax income to Peruvian departments and monitoring the market’s safer gambling advertising – will also collect a 2% net tax.

The tax outcome is below the 20% GGR tax rate originally proposed by Diana Gonzales in May and will impose no ‘consumption tax’ on players as supported by several ministers.

Roberto Sanchez, the Secretary of MINCETUR, outlined his support for the bill’s finalized tax configurations, as MINCETUR anticipates the new law will generate 160m Soles ($40m) in new taxes for the Peruvian government.

Before last week’s vote, MINCETUR had made a market assessment that unlicensed operators “had taken more than $1bn in bets from Peru, without paying any form of taxes”. 

Following Congressional approval, the office of President Pedro Castillo has been given a 60-day period to review and sign the gambling bill into Peruvian law.