Peru's operators may challenge taxes, demand million-dollar refunds
Just over a month after the Peruvian government decided to review the draft law aimed at correcting the application of the Selective Consumption Tax (ISC) on online betting, the future tax outlook for the iGaming sector in the country remains uncertain.
While the Congress of the Republic considers the possibility of approving the initiative by insistence, legal and tax experts warn of the risk that online operators may resort to the courts to challenge the payment of taxes and demand million-dollar refunds. Carlos Mesía, lawyer and former president of the Constitutional Court (TC), explained in an interview with Infobae that the proposed legal framework — subsequently rejected by the Executive — aimed to prevent betting houses from going to the Judiciary or the TC to question the tax collection. According to Mesía, Legislative Decree 1644, issued by the Ministry of Economy and Finance (MEF) and which set the ISC for online bets, "was poorly conceived."
The expert argues that the decision to review the new regulation has favored the betting houses and virtual gambling, as they would now be enabled to file legal challenges against the tax charge. Mesía warned that if operators obtain favorable rulings in the courts, "the Peruvian state would be forced to return millions of soles already collected as ISC, which would represent a significant detriment to public accounts."
For his part, tax expert José Verona pointed out that the approval of the law would modify substantive aspects of tax collection by incorporating iGaming as operations subject to both the General Sales Tax (IGV) and the ISC. Verona emphasized that currently, since they are not formally included, tax collection lacks legal support, which opens the door to judicial challenges. The tax expert also highlighted the controversy surrounding the taxable base established in the current regulation, since the ISC is applied to all bets placed and not only on the money actually wagered. "If a user wins and bets the same balance again, the tax authority taxes that operation again.
The tax office ends up charging the tax multiple times on the same amount," Verona explained, warning that this situation could "raise the tax burden to levels considered unsustainable." In this context, the lack of a clear legal framework and the controversial application of the ISC on online bets not only jeopardize tax collection but also open the door to litigation that could have a strong impact on the country’s public finances.
Tags: Peru, betting, taxes, ISC, selective consumption tax