Posted on: March 7, 2022, 09:59h.
Last updated on: March 7, 2022, 09:59h.
Peru is losing millions of dollars every year because it doesn’t have a regulated iGaming industry. That could change, however, as new legislation seeks to license operators in the country.
Roberto Sanchez, the head of Peru’s Ministry of Foreign Trade and Tourism (Mincetur, for its Spanish acronym), reported on a draft law the agency is preparing for the regulation of online sports betting and casinos. He claims that this will bring in more than S160 million (US$42.5 million) per year to the country.
Sanchez stated that the government had identified foreign and local companies that have foreign permits that he said target consumers in the country. These operate without any benefit to society. It’s time to eliminate them and bring in a new era for regulated gaming.
Time to Regulate iGaming in Peru
According to estimates, offshore iGaming and online sports betting generate around S4.5 billion (US1.2billion) annually from approximately 150,000 daily wagers. Peru doesn’t regulate it, so the government doesn’t collect taxes on the activity. Capital also leaves Peru for tax havens like Curacao, Malta and Curacao.
Mincetur’s head explained that the government can collect more than S160 million (US$42.5 million) annually by applying 12% in direct taxes on this activity. The rule will allow for increased tax revenue, which will be beneficial to investments in regional tourism and sports.
In a social market economy, we welcome the initiative of freedom of enterprise, but if we see that billions of soles are without tax affectation, then we feel harmed,” asserts Minister of Foreign Trade and Tourism Roberto Sánchez.
The Council of Ministers will evaluate and discuss the preliminary draft at its next sessions. One issue will be if the Income Tax will apply to the “net income.” This is the difference between the gross income (income less cost of sale) and the expenses related to the generation of taxed income. For this reason, the legal proposal should detail how the government will implement a tax scheme if lawmakers approve the bill.
In addition, the draft bill contemplates the application of the Selective Consumption Tax (ISC, for its Spanish acronym). This would be at a rate of 1% of the bets paid by the client. Since the ISC is an indirect tax, the consumer is responsible for it.
Peru Gaming Adds Strength
The move to add regulated iGaming and online sports betting comes at a time when Peru is beginning to see a rebound in its gaming sector. The country still has a long way to go following the COVID-19 pandemic shutdowns, but began making progress last week.
iGaming is gaining traction in many countries, despite concerns that it will cannibalize the land-based market. Analysis has already debunked this FUD. The majority of online gamblers are not the type to prefer visits to the retail alternatives. As a result, they aren’t taking away any business.
The regulatory proposal of the Mincetur would guarantee transparency in gambling, as well as the prevention of fraud, money laundering and tax evasion. The supervisory body of the entities would also work to protect vulnerable sectors (minors, gambling and others). In addition, it would authorize, control and supervise the online gaming segment.