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Mexico – Mexico’s slot machine imports facing tax rise

By - 10 January 2014

Mexican President Enrique Peña Nieto has issued a decree which puts in place a 15 per cent tax increase on slot machine imports.

The tax increase comes as part of wider package of measures aimed at raising import and export taxes under a new law called the General Import and Export Taxation Law which went into effect at the beginning of this month.

According to the decree, the reason behind the tax increase is to limit gaming in Mexico which has proliferated rapidly in recent years. The decree stats that: “The gaming industry  is a social  and economic phenomenon which has increased in our country and the exposure of those involved  increases the risk that this activity can interfere in  family , social and work relationships.”

According to the latest statistics released by the Mexican Gaming Association (AIEJA) in 2013 there were at least 90 thousand slot machines operating in around 750 slot parlour authorised by the government  under brand names such as Play City, Caliente, Yak and Palmas. Meanwhile, some of the largest foreign suppliers to Mexico are Win Systems, Cadillac Jack and Boss Gaming followed by local suppliers such as Eibé Games and Promotora Latinoamericana de Entretenimiento.

In October last year President Enrique Peña Nieto enacted a major amendment to Mexico’s gaming laws also by Presidential decree, banning casino licence holders from renting out their permits to other operators.  The decree also set a 25 year limit for gaming licences and granted the Mexican Gaming Control Board, which is part of the Interior Ministry (SEGOB), wider powers when it comes to end the licences of those operators found to be operating illegally. Crucially for the slot machine industry the decree also involved quite a complicated manoeuvre to allow for the continuation of slot machines in casinos.

The decree  was enacted primarily in order to avoid an imminent ruling of Mexico’s Supreme Court regarding the legalisation of slot machines.  In October 2012, a few weeks before leaving office, ex President Felipe Calderon had reformed gaming regulation to clarify that slot machines were banned, except those which had been given permission to operate by the government. However, in response to this the Chamber of Deputies challenged the ruling before the Supreme Court, arguing that Mexico’s gaming laws prohibits slot machines without any kind of distinction.

President Enrique Peña Nieto’s October reform ensured that the Supreme Court no longer had the legal requirement to discuss the legality of Calderon’s order meaning that slot machines in casinos could continue to operate. This is because according to the wording of the decree slot machines classified as “sweepstakes of numbers or symbols through machines” are still permitted.

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