Federal online gambling tax levied as indirect tax on betting
Argentina currently levies a federal online gambling tax as an indirect tax on online betting.
This “online betting tax” is applicable to income derived from bets made in Argentina through any type of digital platform (irrespective of the location of the betting services).
A bet is considered to be placed in Argentina when the SIM card or the IP address of the electronic device used to place the bet is in the country, or when the address of the client or bank account from which the deposit is made is in Argentina.
The tax must be collected by the intermediary that enables the payment of the value of each bet as collection agent, who then must submit payments to the Argentina tax authorities (AFIP) on a biweekly basis. The tax return that must be submitted by the intermediary has not yet been issued.
The tax authorities have not issued regulations on the procedure for paying the tax; however, the tax arises from the application of the tax rate to the net value of the deposits in the betting account. The taxable event occurs at the earlier of: (i) the moment the payment is made; or (ii) for credit/debit card purchases, on the due date established for the payment of the balance on that card.
This provision was expressly amended by Law 27.591 of 14/12/2020, which previously called for the tax rate to be applied to the value of the bet. Consequently, the tax is technically applied on bets or games of chance but in practice, it is applied on deposits in the gaming account.
The general rate to be applied, according to Law 27.346, is 5%. That rate is reduced by 50% in the case of bets involving entities related to the exploitation of games of chance and/or bets that have genuine investments in the country related to the gaming industry.
The 5% rate increases to 10% in the case of bets where foreign persons are involved, directly or indirectly, or to 15% for bets that involve, directly or indirectly, a foreign person located, incorporated, settled or domiciled in a non-cooperating jurisdiction or a low-tax or no-tax jurisdiction.
Non-cooperating jurisdiction are countries or jurisdictions that do not have an information on tax exchange agreement in force with Argentina or an agreement to avoid international double taxation with a broad information exchange clause. Countries that have entered such agreements but do not effectively comply with the exchange of information provision will be considered non-cooperating.
Low-tax or no-tax jurisdictions are those countries, domains, jurisdictions, territories, associated states or special tax regimes that establish a maximum tax on corporate gains that is less than 60% of the rate established locally for companies.
Although the federal gambling tax law is in effect, regulations have not yet been issued. Once the regulations are issued, they should specify the scope of the term “genuine investments in the country.” Furthermore, the regulations should clarify whether the tax reduction applies to those persons that invest, set up a company or generate employment in Argentina, even if they are related to a foreign person.
The tax authorities also will have to issue a general resolution to implement a collection regime. This resolution should provide details on who will be considered an agent, how should collections made be registered, and the terms for filing the tax return.
Alejandra V. Sarni
Alberto Fabián Mastandrea