Tax reform paves the way for collecting $10 million in taxes from sports betting organizers and regulating them

People and companies engaged in sports forecasting will not only have to pay income tax as stated in the Government’s tax reform, but will also be regulated.

Project from Organic law for Strengthening the family economy, which was submitted to the National Assembly, and which, after the death cross, was sent to the Constitutional Court as a decree law, indicated that sports prediction platforms are not considered games of chance and as a consequence are subject to regulation and have payment options.

The decree law sent by President Guillermo Lasso to the Constitutional Court establishes a uniform income tax of 15% for individuals and companies that manage sports forecasts.

The tax reform introduces a 15% tax on sports forecasting activities

Both the Minister of Economy and Finance, Pablo Arosemena, and the Director of the Tax Administration (SRI), Francisco Briones, mentioned that they plan to collect more than 10 million dollars with this tax, which would take effect on January 1, 2024. A similar amount is expected for the collection value added tax (VAT) on public emissions, which is also foreseen by the reform.

In the explanation of the reasons for the project that reached the Assembly, it was explained that sports forecasting platforms are defined as a website or mobile application that provides users with information and tools for predicting sports events, and can also cover a wide variety of sports.

A clarification has been made regarding gambling and these sports prediction operators.

Games of chance were banned in the public consultation from 2011, however, the State Attorney’s Office decided in official letter number 07017 of December 13, 2019 that the ban on games of chance “cannot be extended to economic activities. are not expressly included in the criminal law and which, on the contrary, are regulated by the legal system and are subject to obtaining permits and work permits, which must be issued by the competent public authorities”.

In this sense, according to the document, “activities carried out by sports forecasters are an evident phenomenon of taxable capacity”, which is why they are subject to regulation by competent entities.

In the explanation, the government states that companies and individuals have been identified in the country associated with sports forecasting activities that operate through digital platforms in the country, and “more than a dozen platforms that advertise at sports events without representation in the country of Ecuador and with which there are transactions in Ecuador. in this sense, it is necessary to create a new tax that will allow the collection, in accordance with the tax principles, of those generated by these sports forecast operators, in order to reveal the true taxable capacity.

The current proposal states that if a bet is placed with an operator that is not a resident of Ecuador, the player must take this tax on the value of their bet at the time of placement.

These are the tax changes that will occur with the first legal decree issued after the death of the cross

SRI director Francisco Briones said this Friday, May 19, that in the last year they have analyzed the entire sector and activated audit controls and control processes in all companies that own these sports concept sites to determine if they pay all the taxes that are obliged to pay. “From this whole study, we came to the conclusion that, like part of the world, it is necessary to create a scheme and a general tax regime,” he said in an interview with Mach Sports.

Within a year from the adoption of this legal regulation, the Main Legal Secretariat of the Presidency, together with the Ministries of Tourism and Telecommunications and the Information Society, as well as the State Institute for Regulation, will regulate the activities of sports forecasters.