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Peru’s Ministry of Economy and Finance has published a decree that modifies the controversial selective consumption tax (ISC) for online sports and gaming, lowering the rate from 1 percent to 0.3 percent for the next six months.

The temporary relief, published on Sunday (January 19), has been heavily criticised by industry representatives who warn that the consumption tax is unconstitutional and threatens investment in Peru’s online gambling industry.

Lawyer Nicolás Samohod Rivarola said that after June 30 of this year, the rate will return to 1 percent of turnover.

“The root of the problem is not being attacked, nor is the ‘cause of the disease’,” Samohod said.

The ISC was first introduced in September of last year, and was later modified by a decree in December. 

The December decree (254-2024) clarified that the tax will be due whenever money or credits are taken from a player’s account when the bet is placed. Operators protested that it would take them considerable time to implement technical changes to their platforms that would allow them to collect 1 percent from every wager.

Although the tax rate has now been decreased, it is still applied to every wager.

“Nothing, nothing, nothing has changed,” Samohod told ���ĺ������� GamblingCompliance. 

All laws in Peru must have an explanatory basis so that citizens can see the justification for the rule, he said.

“The Supreme Decree published today by the Ministry of Economy does not say why,” Samohod said.

“What I am going to do is to send a letter to the ministry asking them to inform me by law of transparency. As a Peruvian citizen, I want to know what are the technical and economic grounds that the Ministry of Economy has had to decide to issue a Supreme Decree in that sense.”

Samohod said the decree “means that the state is tacitly acknowledging that the ISC is burdensome, harmful, anti-technical and confiscatory, and instead of making efficient, thoughtful, comprehensive and effective administrative decisions, it is exhibiting a short-sighted, informal, unserious and short-term vision towards national and foreign investors and entrepreneurs”. 

The lawyer's primary concern is for licensed foreign operators who, he said, “come from far away with great effort to do business in our country, and upon arrival we change the rules of the game for them”.

The Peruvian market has come a long way since lawmakers first enacted an online gambling law in 2022.

At the time, a headline 12 percent tax rate on gross gambling revenue was welcomed and applauded by international operators seeking to establish a foothold with the prospect of an attractive local rate. 

MINCETUR, the Peruvian tourism ministry that also oversees Peru’s online gambling regulatory body, announced in mid-August that regulators had “successfully completed the evaluation” of 145 applications from operators and service providers.