Online gambling in Argentina: the evolving tax situation.
Santiago L. Montezanti and María Luján Callaci of Estudio Beccar Varela report here on the tax situation as it pertains to online gambling in Argentina, discussing how an Indirect Tax on Online Bets has been efective since 1 January 2017 yet reportedly no taxes have been collected, while Title II of Law No. 27,430, which amends the law on Value Added Tax and adds a new taxable event related to the provision of digital services by foreign residents whose efective use or exploitation is carried out in Argentina, was published on 29 December 2017.
From a tax perspective, the online gambling sector has been in a constant state of change for the last few years in Argentina. At a federal level, an Indirect Tax on Online Bets (Chapter II, Title III) was created by Law No. 27,346 (published in the Ofcial Gazette on 27 December 2016), efective as from 1 January 2017. It is levied on bets made in Argentina through any type of digital platform (i.e., gambling and betting games developed and/or operated through the internet), irrespective of the location of the servers. The tax rate
is 2% of the gross value of each bet.
Although the taxpayer is the person who is placing the bet from Argentina (i.e., the gambler), the intermediaries that facilitate the payments would have to act as agents collecting the tax and remitting it to the Federal Tax Authority (‘AFIP’ for its acronym in Spanish) every 15 days on the basis of tax returns. The
AFIP has not issued the appropriate regulation and procedure yet. Although this tax has been efective since 1 January 2017, the press has recently reported that no amounts were collected from this tax in 2017. This may be a result of the AFIP’s omission to issue a deep regulation and the applicable procedure on this tax.
For instance, it is not clear:
• how it is possible for intermediaries to know when a transaction relates to an online bet;
• how intermediaries should modify their systems to collect the tax and for compliance with the legal requirements;
• when an online bet should be considered as made in Argentina; and
• what the mechanism to identify those online bets made in Argentina should look like.
On the other hand, Title II of Law No. 27,430 (published in the Ofcial Gazette on 29 December 2017) – a
comprehensive tax reform – amended the Value Added Tax Law and added a new taxable event related to the provision of digital services by foreign residents whose efective use or exploitation is carried out in Argentina, as long as the customer is not subject to the Value Added Tax for other taxable events and does not assume the quality of a registered taxpayer (Subsection e) of Section 1 of the Value Added Tax Law).
Digital services are defined – regardless of the device used for download, display or use – as those services
carried out through the internet or any adaptation or application of protocols, platforms or technology
used by the internet or other network through which equivalent services are provided that, by their nature, are basically computerised and require minimum human intervention. The access to games or the downloading of games – including gambling – are expressly classified as digital services.
Pursuant to the last paragraph of Section 1 of the Value Added Tax Law, it is presumed, without proof to the contrary, that there is efective use or exploitation of such services in the country when the following relates to Argentina:
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