Chile’s Internal Revenue Service (SII) says it has been informed that online gambling is illegal and that offshore operators cannot use it to pay VAT, even though it had earlier ordered them to do so.
In Resolution 26, dated March 14, the SII declares that although “this service does not have the power to and does not have the competence to qualify the lawfulness or unlawfulness of a given activity … it does not mean that this Service is empowered to register as taxpayers those who carry out illicit activities or those who carry out illegal activities or those that have been declared illegal by other State bodies”.
In late January, the SII was removed from the list of digital VAT systems accessible by online gaming platforms, rendering them unable to pay. The March statement is the first time that the SII has officially acknowledged the reason why.
The move came even though the SII moved last summer to ensure that all offshore online gambling companies were registered and paying VAT, which it said was owed to the government no matter where an offshore online gambling company was based.
The other state body the SII references is revealed in the resolution to be the Superintendency of Gaming Casinos (SCJ), the country’s casino regulatory body created in 2005 and given powers by the Ministry of the Treasury.
It informed the SII through two separate letters that “games of chance constitute a regulated economic activity in our country, in principle of an illicit nature”.
The only exceptions, according to the SCJ, are the state-run lotteries administered by Polla Chilena de Beneficencia S.A., Lotería de Concepción S.A., racetracks and gaming casinos.
These institutions are among those currently duking it out in the Economy Commission, as hearings continue over a bill that would allow for online gambling licences.
Carlos Baeza, a gaming lawyer who represents unlicensed operators Coolbet, Betano and Betsson, among others, criticised the move.
He lambasted “the absurdity of this change of criteria without any basis, after the internal tax service has maintained the opposite for months and months, even in a presentation made by the director of the internal tax service himself last year in Congress to the Sports Commission”.
The online gambling bill will continue to be debated in the Economy Commission next week.