On 13 September 2024, the Executive enacted Legislative Decree 1644, incorporating a 1% rate for an excise tax applicable to online gaming and online sports betting that was introduced by Law 31557. Likewise, the Decree introduced amendments to the excise tax and gambling tax.

Background

On 13 August 2022, Peru enacted Law 31557 to regulate online gaming and sports betting conducted on digital platforms and introduce a new 12% gambling tax applicable to those business activities. (For more information, see EY Global Tax Alert, Peru enacts law establishing a tax on online gaming and sports betting, dated 25 August 2022).

In addition, Law 31557 incorporated in the General VAT and Excise Tax Law an excise tax (the Excise Tax) for online gaming and sports betting conducted on digital platforms.

However, Law 31557 did not establish the tax rate for the Excise Tax, which was to be established later. Absent an established tax rate, the Excise Tax was not applicable.

Legislative Decree 1644

Key aspects of Legislative Decree 1644 are highlighted below.

Excise Tax

Taxable transactions and taxpayer

Online gaming and online sports betting rendered or consumed within Peru is subject to a 1% Excise Tax. Online gaming or online sports betting is considered rendered or consumed within Peru when the bettor has habitual residence in Peru. For such purposes, it is considered that the habitual residence of the bettor is located in Peru when they have any of the following:

• A Peruvian IP address
• A Peruvian SIM card
• A Peruvian credit or debit card
• Peruvian domicile

The bettors of online games and online sports betting are considered to be taxpayers.

Withholding and payment

The nonresident provider of online gambling or sports betting services will act as the withholding agent and must file a tax return within the deadlines established by the Peruvian Tax Authority. This withholding is made upon placing the bet on an online gambling or online sports betting site.

The amount to be withheld equals the value of each bet times the applicable tax rate.

The filing and payment of the tax to the Peruvian Tax Authority can be made in US dollars (USD) or Peruvian sols (PEN). This election must be made upon filing the January tax return, and the choice of currency shall be maintained for the rest of the fiscal year.

A Resolution establishing the conditions, requirements, information and formalities concerning the filing and payment of the tax is still pending (i.e., yet to be enacted).

Noncompliance

If for two or more consecutive or alternate months, the nonresident provider fails to file the return and/or pay the Excise Tax within the established deadlines the following will apply:

• The Ministry of Economics will include the nonresident provider on a published list of nonresident entities that have failed to perform withholding.
• The withholding shall instead be made by a Payment Facilitator, which must file the corresponding return on a monthly basis in accordance with the deadlines established by law.
• The following are considered as Payment Facilitators:
• Peruvian financial entities and electronic money issuers
• The Peruvian National Bank
• Any other entity designated by law
• Transactions made in foreign currency will be converted to local currency in accordance with the rules established by the applicable regulations.

A Resolution regarding the conditions, requirements, information and formalities concerning the filing and payment remains pending.

Gambling tax

Additionally, Legislative Decree 1644 introduces amendments to the gambling tax for the online gaming and sports betting conducted on digital platforms.

Payment

Tax returns must be filed on a monthly basis within the deadlines established by the Peruvian Tax Authority.

The filing fees and tax payments can be made in PEN or USD. The choice-of-currency election must be made upon filing the January tax return, and such currency choice shall be maintained for the rest of the fiscal year.

Nonresident providers are entitled to offset payments due in one month with overpayments made in a prior month or request a refund.

Noncompliance

If for two or more consecutive or alternate months, the nonresident provider fails to file the return and/or pay the tax within the established deadlines, the tax would be withheld by withholding agents.

The Peruvian Tax Authority would verify the compliance of the filing and payment by the nonresident providers.

The Ministry of Economics publishes a list of the nonresident providers whose operations would require withholding.

The withholding of the tax would be considered as a monthly advanced payment of the tax. The tax rate would be determined by Supreme Decree. The following are considered withholding agents:

• Peruvian financial entities and electronic money issuers
• The Peruvian National Bank
• Any other entity designated by law

Withholding agents must issue withholding certificates to the nonresident providers.

Legislative Decree 1644 will come into force when its regulations are enacted.