Vague Morena mandate causes confusion on Mexican gambling taxes

Mexican gambling stakeholders have been left confused by Morena Party’s intended tax frameworks, which seek to modify the nation’s governing ‘Federal Law of Games and Sweepstakes (LFJS)’.

This October, Morena Deputy Emmanuel Reyes Carmona presented the party’s LFJS tax modifications, reported by national media as a ‘20% excise increase’ on online gambling activities.

The miscommunication relates to a poorly worded statement presented by Reyes Carmona, which was subsequently misreported by Mexican media.

LFJS current tax frameworks do not distinguish wagering between land-based and online gambling services, which at present are both uniformly taxed at a 30% rate.

In his statement, Reyes Carmona outlined that Morena would introduce further tax provisions to online gambling, placing operator services on an ‘equal footing with other Mexican gambling segments’.

Mexican media interpreted Reyes Carmona’s vague statement as a further 20% increase on online gambling services, when in fact Morena the biggest party in Mexico’s governing NRM coalition seeks to separate LFJS tax verticals – charging online gambling operators at a discounted 20% rate.

On closer inspection, Morena will modify articles 2-to-4 of LFJS current mandate in order to better regulate ‘consumer increase in online casinos with improved controls, as well as secure conditions for users who play in online casinos and sports betting’.

Despite tax modifications, Mexican stakeholders remain apathetic to Morena reforms. Speaking to SBC NoticiasAndrea Avedillo – a lawyer at Lazcano Sámano – detailed “that reforms had a limited scope, with benefits only reaching a segment of the sector and not the entire industry in general”.

She maintained that ‘no major legislative changes are expected to be processed for the remainder of 2019’ and that stakeholders should monitor further modifications to gambling legislature.

“Given the work style demonstrated by the administration of Andrés Manuel López Obrador and the legislative bodies predominantly formed by the same political block of Morena, once the topic is included in the agenda it is possible that the change will happen quickly,” Avedillo added.

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