In the following column, Constante Traverso, legal advisor for ATCE PERU, analyzes the main regulatory, tax, and operational challenges facing the gambling industry in Peru.
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Established in June 2020, the Association of Tourism and Entertainment Centers of Peru (ATCE – PERÚ) celebrates five years of existence, striving for the correct regulation of gambling and the defense of its members’ rights, based on the fact that this institution groups the most significant part of the entertainment offerings in the country.
It is very difficult for a business organization to withstand the closure of its operations for a period longer than eight months, even more so when expressly excluded from government protection programs, such as Reactiva – Perú. Amidst this serious context, ATCE – PERÚ was born to defend the rights of its members, demanding the restart of operations and respect for their constitutional rights.
Having achieved the first objective, ATCE – PERÚ has embarked on new challenges, starting from considering gambling operations as a fundamental part of the entertainment industry, a primary activity for the development of national tourism offerings, considering the significant contributions in special taxes, the creation of hundreds of thousands of direct jobs, and the promotion of private investment.
SELECTIVE CONSUMPTION TAX
As we know, this tax, created in September 2018, faces serious legal challenges; not only in its form but also for violating the authorizing norm; let us recall that Law No. 30823 granted powers to the Executive Branch, establishing an express limitation in the delegation “…taking into account the parameters established by the Constitutional Court”.
This tax, in addition to the aforementioned, faces substantive challenges by establishing an anti-technical (“blind”) rate that does not affect the ability to pay but rather the ownership of assets, by taxing slot machines and casino tables regardless of their operational results, thus affecting and further taxing mere operation.
To what has been stated, we must add that, by establishing the payment of this tax based on the value of the UIT (Taxable Unit); in the last five years, the effective rate of the ISC has increased by approximately 27%, while operations have not recovered in the same proportion.
Without prejudice to the foregoing, the fiscal years 2023 and 2024 allow us to clearly conclude that the impact of the Gambling Tax, added to the ISC, constitutes approximately 18% of the net income obtained. Therefore, ATCE – PERÚ is continuously working to achieve the modification of the current tax framework, as it not only violates what was expressed by the Constitutional Court’s Ruling (Case No. 009-2001 TC/AI), which declared the 20% Gambling Tax rate unconstitutional, but also significantly affects the very viability of businesses.
MODERNIZATION OF THE REGULATORY FRAMEWORK
Next July, Law No. 27153, the first law regulating the operation of Casino Games and Slot Machines in Peru, will complete 26 years of validity, having been published on July 9, 1999.
While it is true that this legal framework was the product of significant modifications, both in 2002 and 2006, through Laws No. 27796 and No. 28945, at ATCE – PERÚ we currently believe that, due to successive anti-technical tax impacts, a legal modification is necessary.
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As we know, entertainment and tourism activities are very dynamic, and the experience gained over the last fifteen years, since the completion of the reorganization and formalization process, provides us with opportunities to improve regulation. This is even more true considering the consolidation of the General Directorate of Casino Games and Slot Machines of MINCETUR (DGJCMT), which has become an exemplary regulatory body in the region and has achieved significant accomplishments that place us at the forefront of this activity.
GUARANTEE REGIME
According to official figures obtained from MINCETUR, currently, for the operation of slot machines and gaming casinos, more than two hundred million dollars (740,000,000 million soles) are held as guarantees in favor of MINCETUR. If we also consider that,
also according to official figures obtained from MINCETUR, in the last ten years, the DGJCMT has only executed seventeen guarantees and maintains the permanent financial evaluation of authorized companies, we can conclude that it is necessary to reduce the guarantee amount by at least 50% of the current value. We are confident that the financial resources required for issuing guarantees can be better utilized, as this measure will not affect the regulator’s interests in any way.
OWNER’S CONSENT
As we know, both to obtain authorization and to renew Express authorizations to operate Casino Games and Slot Machines, the DGJCMT of MINCETUR has maintained a very strict legal interpretation regarding the requirement established in letter i) of article 14 of the Law. We believe that, without prejudice to being able to achieve the correction of the legal interpretation, this legal norm must be modified, as it constitutes a compliance standard that is irrationally affecting operators.
According to figures obtained from MINCETUR, in the last three years, more than five operations have failed to achieve renewal due to the lack of Express Consent from their owners. This situation occurs very frequently due to causes beyond the operator’s control and can be overcome as long as legitimate possession of the property is proven.
INFRINGEMENT REGIME
Since the promulgation of Legislative Decree No. 1272, which modifies Law No. 27444 – Law of General Administrative Procedure, especially modifying the Administrative Sanctioning Regime, we consider it necessary to modify the Regime of Infringements and Sanctions established in Supreme Decree No. 020-2010-MINCETUR.
It is a legal mandate to adapt these MINCETUR norms to the general framework and thus respect and apply, among others, the Principle of Reasonableness. This requires the sanctioning entity to apply criteria such as the illicit benefit resulting from the commission of an infringement; the gravity of the damage to the public interest or protected legal asset and the economic harm caused; reasonableness criteria that, with a closed Table of Infringements like the current one, are being violated, affecting the rights of operators.
Finally, we are confident that with the constant and transparent work that ATCE – PERÚ is carrying out, always accompanied by the regulatory bodies (Ministry, Vice-Ministry, and DGJCMT), we will be able to achieve the set objectives for the benefit not only of our members but also of the tens of thousands of families of our collaborators who depend on this activity.
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