SBC News Apuesta Total, CEO: "ISC tax unnecessarily exposes Peru to bad actors"

Apuesta Total, CEO: “ISC tax unnecessarily exposes Peru to bad actors”

Peru’s Executive Branch has decided to go through with the implementation of its Selective Consumption Tax (ISC) on the nation’s online gaming sector. 

Despite confirming that the ISC tax will be applied to the online gaming industry, the Peruvian government has announced that the initial 1% tax rate will be temporarily reduced to 0.3% until July. 

As Gonzalo Pérez, CEO and Partner of Apuesta Total spoke out against the tax towards the end of last year, SBC Noticias reached out to understand his opinion on the new structure. 

He explained: “It might seem like a reasonable decision in terms of gradualism. However, we believe that any tax burden on the amount wagered is a mistake because it does not reflect the real dynamics of the business, as it does not take into account that companies operate on a reduced margin after paying prizes to players.

“By taxing the total amount wagered and not the actual profits (GGR), the impact becomes disproportionate, affecting the sustainability of formal operations.” 

On the other hand, Pérez quoted tax specialist Luis Durán Rojo, and described the ISC as a “tax that was born dead” because “it does not exist due to an error in legislative technique, since it lacks an essential component for it to be valid.”

The Apuesta Total CEO also warned that applying the tax will require an extended period of certification of brands’ platforms with laboratories and approval from the nation’s gambling regulator the Ministry of Foreign Trade and Tourism (Mincetur). 

He estimated that this could take at least eight months, which is significantly longer than the  “the period of five months established by the decree for the adaptation to the new technical framework”, which he suggested is “not the appropriate time, nor optimal to be able to develop all the necessary changes that this new regulation requires.” 

Pérez emphasised that Apuesta Total “understands the importance of complying with regulatory standards” and warned that, even if the platform is modified to comply with the ISC, if it is operated without certification and, therefore, without approval, “they are exposed to very high fines and even cancellation of the authorisation.” 

Referring to the impact that the ISC tax could have on the gambling industry, Pérez explained: “We are committed to adapting to the deadlines provided for by law, but we reiterate the need for these measures not to be designed to generate extraordinary expenses that may affect the development and competitiveness of the sector.”

The CEO explained that “formal companies will be subject to a tax burden that does not reflect their real income, while unregulated platforms will continue to operate without tax obligations, which will allow them to have a larger marketing budget.”

As the tax could pass the cost on to players and reduce promotional incentives handed out by operators, Pérez suggested that a “GGR-based scheme, as used in most international markets, would be much fairer and more efficient”. 

He continued: “This model ensures that taxes are proportional to real income, fosters the competitiveness of the regulated market and ensures sustainable revenue for the State in the long term.”

According to Pérez, despite a disdain for the tax, his company maintains its “commitment to regulatory compliance and we trust that dialogue with the authorities will allow us to find a balance that benefits all parties.” 

However, he added that they will use “all available legal tools to defend a recently regulated industry against a disastrous measure, which could have a very large impact on the regulated market, affecting not only us but also all the sports we sponsor.”

Check Also

SBC News Peru lowers betting’s Selective Consumption Tax to 0.3%

Peru lowers betting’s Selective Consumption Tax to 0.3%

The Selective Consumption Tax (ISC) on online gaming and sports betting in Peru will be …

SBC News Dina gets approval to impose 1% excise tax on all gambling transactions in Peru

Dina gets approval to impose 1% excise tax on all gambling transactions in Peru

The government of Peru has been allowed to impose a ‘selective consumption tax’ (ISC) measure …

SBC News BGaming makes Peru entry with new Mincetur license

BGaming makes Peru entry with new Mincetur license

BGaming has been granted a licence in Peru for the provision of igaming content, expanding …