Chile: Deputies present bill to regulate online betting

In the presentation that the Executive made last week, he made a comparison of how the government's indications are being adjusted to the current legislation for physical casinos, which is one of the objectives of the government's proposal.
Thus, one of the principles is that a single taxation of gambling is established in Chile (inspired by the taxation contemplated for gambling in land-based casinos in accordance with Law No. 19,995). Added to this is the fact that the specific activity tax must be additional to the general taxes paid by all companies (income and VAT), taking care of the externality, and not a substitute for one of them.

In addition, a specific tax rate is set according to international experience and a contribution to the sport will be established that should not be based on those federations with the most popular betting objects, to the detriment of the rest.
In the breakdown of the indications, a tax will be applied for operation. Users of face-to-face gaming casinos must pay a tax of 0.07 UTM (approximately $4,500) for entering the rooms. That is what is sought with the application of this tax of 0.07 UTM for account opening. According to the government, this is an incentive for responsible gaming, to prevent users from having accounts on all platforms.

The proposal mentions that in the event that the platforms decide "not to charge" said amount to their users, assuming it directly -as some casinos do with this tribute-, the same interpretation of the SII would apply as indicated with respect to Gaming Casinos, which These disbursements constitute a necessary expense to produce income.

In particular, the doubts were expressed by the UDI deputy, Joaquín Lavín and the pro-Republican independent, Gonzalo de la Carrera. In his argument, de la Carrera pointed out that this could be costly for people to charge for each account that was opened, and this would discourage competition between bookmakers, since people could not freely change platforms, for the associated cost. This indication was rejected in the commission by the opposition legislators.

At another point, it is specified that the bill originally contemplated a specific tax on the player, a substitute for income tax, at a rate of 15% and withholding at the time of withdrawal. However, the diagnosis of the regulator, the industry and the Executive is that a withholding tax at the time of withdrawing the funds could affect the channeling of demand, since many people could opt for illegal platforms to avoid paying this tax. For this reason, this user tax is replaced by a duty to inform the SII, in the same terms that financial institutions do. In this way, the platforms must report annually the income received by the users (total amount of the prizes minus the total number of bets made in the period ending on December 31 of the previous year), for the purpose of determining the taxes on pay.

The bill does not contemplate a rule for the local destination of taxes, unlike article 60 of Law No. 19,995 in the case of gaming casinos. The foregoing, because the constitutional requirement for the destination is not met: that activities or goods that have a clear regional or local identification be taxed (article 19 No. 20 of the Constitution).

It is explained that the bill originally considered a specific tax of 20%, a substitute for VAT. However, land-based Games Casinos have a specific tax of the same rate, which is not a substitute for VAT. “As we pointed out before, the objective of the indications is to establish a single taxation of gambling and not one that distinguishes the modality in which it is carried out. This is because the Executive's diagnosis is that a specific tax must be established on gambling activity, as happens in physical casinos. This tax takes care of the externality of the activity”, points out the Executive.

It is detailed that the tax base that is proposed recognizes the particularities of this business and its different modalities. "The total amount of bets made by users is included, less the prizes awarded within a month, and incorporates the hypothesis of crossed bets, when the operating company charges a commission or other remuneration for facilitating bets between users (adding that remuneration to the tax base).

The bill contemplates a mandatory contribution of 1% of gross income to actions that promote responsible gambling, allowing disbursements made in accordance with the national responsible gambling policy to be deducted from it. That was part of the responsible gambling title in the article on the development of betting platforms – first article. Now it is an independent article –article seven of the bill- applicable to the entire gaming industry and not only to online games.
Thus, the indication of the Executive transfers this contribution to the title of taxes, in order to clarify its legal nature as an additional percentage of the specific tax. In this way, its rate (1%) and the possibility of discounting the disbursements made are maintained in accordance with the national responsible betting policy.

Rules for the exchange of information between these organizations are also contemplated in order to be able to control the gross income of the operating companies and the income according to the object of the bet, which allow the Superintendency to control the payment of taxes. The foregoing without prejudice to the information exchange rules regarding other control rules contemplated in the bill, such as means of payment (with CMF, Central Bank), blocking of websites (Subtel), crimes (UAF and Ministry Public).