Chile lawmaker asks Comptroller to review VAT regime for offshore betting operators

A Chilean lawmaker has asked the Comptroller General’s Office to review the legality of the country’s new VAT regime for offshore online betting operators, arguing that allowing unlicensed platforms to pay tax is incompatible with the government’s position that the sector remains illegal.

Diego Schalper, leader of the Renovación Nacional (RN) caucus in the Chamber of Deputies, submitted the request following the Internal Revenue Service’s (Servicio de Impuestos Internos, SII) implementation of procedures enabling offshore betting platforms with no domicile or residence in Chile to register and pay value-added tax (VAT).

The challenge comes shortly after the SII stepped up enforcement of its Digital VAT regime. Between 14 and 15 July, 25 online betting platforms registered under the simplified tax regime after the authority warned that operators failing to register would be subject to enforcement under Exempt Resolution No. 94, issued on 15 July.

The resolution identifies platforms offering remote betting, gambling and casino services to customers domiciled or resident in Chile using transaction data provided by banks, non-bank financial institutions and payment service providers.

For operators that fail to register voluntarily, the SII has begun applying its “change of taxpayer” mechanism. Under the scheme, liability for collecting Chile’s 19% VAT shifts from the offshore betting platform to the payment service provider processing the transaction. The payment provider must withhold the VAT on each qualifying transaction and remit the funds to the Chilean Treasury.

Schalper met Comptroller General Dorothy Pérez on 31 July and requested that the watchdog determine whether the SII’s actions comply with Chile’s legal framework. He argued that the Comptroller had previously concluded that offshore betting platforms operate outside Chilean law and that the Superintendency of Casinos should refer such cases to the Public Prosecutor’s Office.

“The administrative act is illegal and, therefore, we hope the Comptroller will rule accordingly,” Schalper said. “It seems inappropriate that, for the Ministry of Security, betting operators are illegal, while for the authorities of the Ministry of Finance they are legal. We find that incomprehensible.”

Schalper has consistently opposed the SII’s approach. Speaking in June after the tax authority announced the new VAT framework, he argued: “It is not possible for the State to declare an activity illegal while simultaneously giving it a degree of legality by charging it taxes.”

The SII, however, has presented the Digital VAT measures as a tax administration initiative designed to ensure compliance by non-resident digital service providers, rather than a regulatory framework for online gambling.