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UPDATE 14:00 - Additional quotes from Tomás García Botta
Argentina has enacted a new federal online gambling tax through a resolution published by the country’s national tax authority.
General Resolution 5228/2002 was published by the government’s Federal Administration of Public Revenue(AFIP) on July 7, bringing June’s Decree 293/2022 into full effect.
That decree confirmed an increase to an indirect tax on online gambling that was first written into law in 2016, which at the time was a 2 percent tax on the gross value of each bet, to anywhere between 2.5 and 15 percent of deposits, depending on the status of the operator.
A 10 percent tax applies to foreign companies or companies not on the Argentine government’s special tax registry, while a 5 percent tax is levied on deposits for Argentine entities that are registered.
Deposits placed with an offshore operator based in a tax-haven or so called non-cooperative country will be subject to a 15 percent tax, if the government can manage to enforce it.
To qualify for a lower 2.5 percent tax rate, an online gambling operator in Argentina should have invested the equivalent of US$1.6m in the country and grown an employee pool of at least 20 people by at least 20 percent.
A significant difference between the June decree and AFIP’s final implementing resolution is that the resolution stipulates that a fully foreign entity with no tax ID cannot apply for the registry. Furthermore, one of the requirements to be included in the registry is giving local gambling regulators an opportunity to state whether the company that is applying for the lower tax rate has a licence or not.
In the case of offshore operators, the tax collection becomes the responsibility of the payment intermediary that enables the payment of the bet between the Argentine user and the operator.
According to Tomás García Botta of MF Estudio in Buenos Aires: “The law doesn’t say that the operators need to pay the tax, the law says that the payment intermediates need to pay the tax, and this has been kept in the decree for foreign operators, but not for local operators. There is clearly an excess in the decree and the regulation issued by the Federal Tax Authority and this circumstance may allow them to be challenged in a court of law.”
“Considering — and this is solely for local operators — the circumstances that you need to comply with in order to be subject to the lowest rate, there’s discrimination against the smaller companies in favor of the bigger companies; and against foreign operators in favor of local operators. Furthermore, being a tax allegedly levied on a specific consumption, the existence of different rates based on the circumstance of an operator does not make any sense at all. This makes this tax look very much as an additional covert tax on operators,” he argues.
García Botta referred to the fact that a small company with fewer employees and lower investment would be taxed at 5 percent of deposits, while a larger company capable of growth and the required investment would be taxed at 2.5 percent.
Another bone of contention are the dates within the resolution.
"The resolution says that you operators are supposed to request the inclusion in the registry now, make the initial payment on July 21, but operators will only be able to start submitting returns as of July 25.
"Operators will be paying the first period of tax [from] June 2 to June 15, which is a period where you were already operating. I mean, there's no way you could transfer the burden of the tax to the players in connection with that. It's curious to say the least and an additional reason supporting the idea that this is a covert tax on operators,” said García Botta.
