Chile's SII clarifies VAT calculation for online betting
Chile's Internal Revenue Service (SII) issued Official Letter 1,658, clarifying the criteria for determining the taxable base for Value Added Tax (VAT) applied to foreign online sports betting and digital casino platforms that provide services to users in the country. This interpretation comes just over a month after the entry into force of Exempt Resolution 69, which established the procedure for these operators to register and pay VAT on digital services, and amidst the political and legal controversy sparked by that decision.
According to the official letter signed by the agency's director, Jorge Trujillo, the general criterion remains that the taxable base corresponds to the total amounts wagered, as the special regime provided for authorized physical casinos is not applicable to online platforms. However, the document incorporates a significant exception. If the taxpayer can reliably prove that the remuneration for the service provided corresponds solely to the margin obtained between bets received and prizes paid, that remuneration will be the VAT-affected taxable base.
The agency adds that the determination of the taxable base will depend on the legal and economic nature of the operation actually carried out and the supporting documentation, which leaves open the possibility for certain operators to pay tax on their Gross Gaming Revenue rather than the total volume wagered. The text also specifies that this interpretation complements, but does not replace, the criteria of Official Letters 3591 of 2021 and 1802 of 2022, which remain in force.
The clarification addresses doubts that arose after the publication of Exempt Resolution 69, which was questioned by tax specialists and the industry because taxing the total amount of bets could imply applying the tax on amounts that are later returned to players as prizes. The SII also reported that it will issue a new resolution with the list of platforms to which the reverse charge mechanism will apply, provided they have not registered to declare and pay VAT. In such cases, payment service providers will be responsible for withholding 19 percent of the tax associated with each transaction and remitting it monthly to the treasury. The agency stated that it is still defining the date from which it will begin publishing this list.
The official letter also reinforces the SII's oversight powers over foreign platforms. It may request information to verify the correct determination of the taxable base and, when authorized by law, access taxpayers' technological systems for exclusively tax purposes, to verify the proper functioning of records and prevent the manipulation or destruction of relevant information.
The issuance of Official Letter 1,658 is a new chapter in the discussion about the taxation of online betting platforms in Chile, which is progressing in parallel with the processing of the bill seeking to regulate the sector. The SII's decision to demand VAT payment from foreign operators generated intense debate in Congress, where parliamentarians questioned the enablement of a mechanism to collect taxes from platforms whose activity still lacks a specific regulatory framework and has been considered illegal by various judicial rulings. In this context, the Senate requested the opinion of the Supreme Court on the resolution, while the SII itself defended its actions by arguing that its powers are exclusively tax-related and that collecting the tax does not imply a pronouncement on the legality of the operations.
Tags: Internal Tax Service, Jorge Trujillo, VAT on online betting in Chile, Exempt Resolution 69