New year gambling tax news from argentina

The Argentine government delivered a nasty surprise for the new year to offshore digital service providers – including online gambling – in the form of new legislation imposing Value Added Tax (VAT).

The move did not surprise analysts monitoring the government’s intentions, who noted on December 8 that plans were progressing in the Argentine Congress which sought to extend the application of national VAT to a range of “digital services” based outside the country but accessing Argentine residents.”

The bill targets Argentine consumers of digital services provided by non-resident providers.

The draft included the following as digital services: downloads or streaming media and games; software provided over the cloud; e-books; web-hosting; and aps. It defined the place of taxation on IP address; SIM card for mobiles; or credit card billing address, and proposed that settlement of the tax would be by the tax payer, including their credit card provider, via a withholding of any applicable VAT.

The draft bill progressed rapidly, passing the Senate on December 27 and signed off by state president Mauricio Macri two days later.

The VAT rate to be applied is not yet clear, but could be as high as 27 percent – the rate currently allocated to transactions regarding the supply of telecoms, water, electricity and gas not used exclusively in a dwelling.

Operators are already struggling with a hefty 41.5 percent tax rate based on corporate income, along with a 0.75 percent gambling tax on each bet, while a 2 percent tax is imposed on each bet for online gambling. The taxpayer in the former case is the casino, while in the latter it is the gambler; credit card companies and other payment intermediaries must act as withholding agents.

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