Peru: Warnings emerge that ISC payment for online gambling would be inapplicable due to legal inconsistencies

In light of the application of the Selective Consumption Tax (ISC) for online gambling, set at 1% for each game and in force since January 1, 2025, there are warnings about the eventual inapplicability of this new tax.

Tax lawyer Luis Durán Rojo, in an interview with Peruvian newspaper La República, questioned the implementation of the ISC and stated that it would not be applicable due to legal inconsistencies and lack of clarity in the regulation, which was issued by the Ministry of Economy and Finance in mid-December 2024.

The professor of the Pontificia Universidad Católica explained that Law 31.557, which regulates the online sector in Peru, was the first to establish the categories of remote sports betting and remote games in Peruvian legislation.

He argued that, if they were not previously regulated, "legally they did not exist for tax purposes" of a tax that was thought and regulated for the land-based gaming industry.

"We are facing a new type of gambling and betting that cannot be included in the traditional definitions of physical games. The law tried to extend its scope, but this goes against the principle of reserve of law," he specified.

Furthermore, Durán Rojo warned that the problem is aggravated in the base of the tax, since the regulation does not adequately define the essential elements for the tax to be valid, such as the specific object to be taxed. "They have not said what thing is taxed. Without a 'what', it cannot be taxed. This tax is dead,” he stated.

Based on this, he argued that the defined taxable base does not fall on consumption, property, or income, but on movements in networks that do not necessarily translate into tangible goods. This situation, according to the specialist, poses a possible conflict of constitutionality.

Finally, the tax expert said that the lack of discussion and adequate design of the regulations generates “chaos and unnecessary tensions between the State and the operators” of the industry. "When regulations are poorly designed, the result is a legal conflict that harms both parties," he concluded.

Apuesta Total's stance

At the time, the CEO of  Apuesta Total, Gonzalo Pérez, expressed his opinion on the application of the ISC to online betting, and, in an interview with Yogonet, stated that the new tax generates "a very complicated situation."

The executive stated that the 12% tax on online gambling, which is levied every month, does not cause "major inconvenience"; but that the ISC generates a complicated situation "because, to apply it at the moment the bet is generated and to transfer it to the player, critical components of the platform must be modified."

"It will be necessary to certify before the laboratories and approve before Mincetur again, a term that we estimate will not be less than eight months. [...] If the platform is modified and we operate it without certification and, therefore, without homologation, we are exposed to very high fines and even the cancellation of the authorization,” he cautioned.