No Online Betting Operators Have Yet Registered to Pay VAT in Chile
Chile’s internal revenue service, the Servicio de Impuestos Internos (SII), plans to increase enforcement action against online gambling operations from overseas countries once confirmation is obtained that none of them has registered in the new Value Added Tax (VAT) regime.
Earlier in the year, the SII defined the taxation methodology used for VAT to apply to betting, gambling, and casino services offered by companies from abroad. This announcement is part of a larger initiative to improve tax compliance in the rapidly growing online betting industry.
As per the SII, “the measure has been taken against a backdrop of the development of this business sector which is evidenced by ads placed on public roads, sports clubs, and media by such companies.”
Operators Have Not Registered in the New System
While the rules were published earlier on June 2, Chilean authorities confirmed that there are still no operators of online betting platforms who registered under the new system for the VAT.
As stated by the SII, “as of today, no operator of an online betting platform has registered and thereby complied with this requirement.” Consequently, the agency has made an announcement that enforcement actions against operators will start from July 15.
Instead of depending only on voluntary compliance of operators, the SII will identify operators through the analysis of banking and non-banking information. Where needed, the payment service providers will be responsible for holding VAT taxes from the transactions with non-compliant platforms.
The Role of Payment Providers in the Process of Enforcement
As per the new enforcement plan, payment intermediaries will have to retain 19% VAT taxes from each transaction that involves betting operators who failed to fulfill their tax obligations.
As explained by the SII, this new enforcement model will be based on the experience accumulated starting from 2021, when VAT for foreign digital service providers was introduced. In this time period, the SII managed to establish monitoring systems that helped identify foreign digital platforms working on the territory of Chile by analyzing information about debit cards, credit cards, prepaid cards, and other types of payments.
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The use of this method allowed tax authorities to detect foreign operators who serve Chilean customers even in cases when these companies did not have any physical presence in Chile.
Calculation of VAT Taxes
In addition to the above changes, the SII made a clarification on the methodology to calculate the taxable base for the betting transactions.
For the most part, the calculation will be done on the basis of the received consideration, which is the total value of bets put forward by individuals resident in Chile. But in certain cases, an alternative calculation will be used when operators submit evidence about the value of prizes awarded to clients.
In such cases, the taxable base will be the total bet amount minus the value of prizes won by players. After the establishment of the taxable base, the standard VAT rate for Chile of 19% will be applied.
The new clarification gave more clarity on the issue of tax payments from online betting services while reaffirming the intent of the government to make foreign gambling operators pay the taxes in Chile using similar rules to international digital service providers.
As enforcement is to start from mid-July, the next couple of weeks will determine the fate of enforcement based on either voluntary compliance or a payment intermediation mechanism used for collecting VAT taxes from the industry.
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Source: SBC Noticias
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