Online gambling and betting will pay Selective Consumption Tax (ISC) in Peru

The Ministry of Economy and Finance (MEF) clarified that the application of the IGV from October to streaming platforms, such as Netflix and Spotify, will not be applicable to online gambling and betting. “Remote gambling and remote betting are not within the scope of application of the IGV, so they will not be taxed with this tax,” it said.

It explained that these activities, by generating negative externalities, will be taxed with the Selective Consumption Tax (ISC). “The ISC will be levied on remote gambling and remote sports betting, as well as with a tax on the activity, which will be done within the framework of the delegation of powers granted to the Executive,” it said.

IGV ON DIGITAL SERVICES

The MEF specified that the initiative to apply the IGV to digital services is not recent.

“It had already been in the works for some years, with previous conversations about its feasibility with representatives of the platforms,” it noted.

“However, it had not been possible to implement it yet because, among other reasons, it was necessary to publish a regulation with legal status and when the Executive Branch requested delegation of powers to regulate it, these were not granted,” he said.

Finally, the MEF assured that this measure allows the tax base to be expanded.

This is because it will allow the collection of VAT applied to digital services provided by non-domiciled companies to natural persons, who did not previously pay VAT, he explained.

The implementation of this VAT collection mechanism will not necessarily raise the price paid by end users, said the MEF.

“The experience of Latin American countries in which VAT collection was implemented on digital services shows that the increase in the prices of said services was minor and insignificant,” he said.

He said that in other service intermediation services such as Airbnb, Uber or Amazon, the effect would be very limited since the VAT that will be collected is not on the total price of the service, but on the commissions charged by the companies.