Legislation

Peru – Government defends new tax on gaming industry

By Lewis - 21 September 2018

Economy and Finance Minister Carlos Oliva has defended the new taxes on the gaming industry arguing that the new taxes are not only fair but will lead to a significant growth for the country’s economy. The Selective Consumption Tax (ISC) an excise tax that will now be applied to casinos and slot parlours for the first time “is not confiscatory” as operators have claimed and the same tax was applicable to a number of other sectors as well. “We are putting this tax on an activity that did not have it, when similar activities have it,” he said.

He added that if the reality of the casinos and slots sector had been taken into account in the 1990’s, then the ISC rate would now stand at as much as five times the amount of the newly applied rate.

“I think this is not confiscatory but it is obvious that any person or company can complain about it but we are sure of the constitutionality of this measure that has obviously been consulted over with experts,” he said.

Oliva added that no other products would be impacted by the new tax in the short term but that the tax had been pending for the industry for some time due to the negative spill over affect cost of the industry. At the same time the new tax on gaming as well as recently passed tax reform legislation would allow for a well needed boost for the economy as it would lead to an additional 1.1 percentage points for Peru’s Gross Domestic Product (GDP) , which would allow tax revenues to return to levels not seen since 2014.

Last week The Peruvian Association of Entertainment and Gaming (APEJA), announced that it planned to fight the imposition of the new tax in the courts as they argue it will damage Peru’s growing gaming sector. The tax has until now been imposed on the sale and import of certain goods such as fuels, cigarettes, beer, liquor, soft drinks but it will now that apply to casinos and slots as well for the first time. Constante Traverso, President of APEJA told press that the new rate in effect raised taxes from 12 per cent to 17 per cent.

The government recently approved Legislative Decree 1419 that modifies the General Sales Tax Law and the ISC, which specifically means that casinos and slots will be subject to a specific system of money payable for each table and slot.