Peru – Peru’s casinos under threat from new taxationBy Phil - 16 October 2018
The government has admitted that new taxes on gaming establishments could lead to closures. According to the head of The General Directorate of Casino Games and Slot Machines (DGJCMT) Manuel San Román Benavente, some casinos could close after the new taxes go into place in 2019.
The Selective Consumption Tax (ISC) an excise tax will now be applied to casinos and slot parlours for the first time after the government approved Legislative Decree 1419. The decree modifies the General Sales Tax Law and the ISC meaning that casinos and slots will be subject to a specific system of money payable for each table and slot.
In Peru, there are around 83,000 slot machines and 18 casinos. Of these, 15 are in Lima while the rest are located in Tacna, Ica and Chiclayo. Around 60 per cent of slot machine activity takes place in the capital and the sector generates around 70,000 direct jobs.
Manuel San Román said. “Suddenly the rooms that have few machines and that have just managed to remain profitable will be in a situation where they will have to reduce their machines or close,” he said. However, he pointed out that it was still very early to make too many predictions. “But it’s a matter of reengineering, going over what the implications will be now would be very risky, premature, we have to wait for how the market reacts and see the implications ,” he said.
Although The Peruvian Association of Entertainment and Gaming (APEJA) plans to fight the imposition of a new tax in the courts as they argue it will damage Peru’s growing gaming sector San Román argued that this would not be the case. “I do not think that the investments are affected, I see that they will continue to come from abroad and they trust in regulation and how things are in Peru,” he said.
Gaming tax revenue is already on the increase. In 2017, the collection of taxes stood at 300 million soles and, according to Foreign Trade and Tourism Ministry (MINCETUR) this year it will stand at around 320 million soles.
The excise tax has until now been imposed on the sale and import of certain goods such as fuels, cigarettes, beer, liquor and soft drinks but it will now apply to casinos and slots as well for the first time. Constante Traverso, President of APEJA told press last month that the new rate in effect raised taxes from 12 per cent to 17 per cent.