Chile Enforces VAT on Gambling: Payment Providers Become Tax Collectors

Chile is taking a decisive step towards taxing the online gambling industry. The national tax authority, Servicio de Impuestos Internos (SII), has activated a new system that integrates VAT collection directly into the flow of financial transactions. This move is a strategic response to the growing market of offshore operators who have previously avoided local taxation. The pressure is already yielding results, with 25 platforms registering for the simplified tax system within just two days.

This is not a mere request for cooperation. The authorities have introduced a significant change: if an operator fails to register, their transactions will be subject to a direct levy at the bank and payment provider level. This method marks a turning point in Latin American gambling regulation, as it reduces dependence on the voluntary compliance of foreign firms and instead utilizes the domestic financial infrastructure as a filter.

Numbers and facts

The registration peak occurred on July 14 and 15. A total of 25 portals, including prominent names such as Betway, Betano, 1xBet, Novibet, Betsala, Jugabet, and DoradoBet, were officially recorded. These companies have committed to declaring their turnover data and paying the digital VAT independently. However, the SII will not take these declarations at face value. The agency plans to use automated comparisons with transaction data from payment providers to identify any discrepancies.

For ten other entities, the situation will become significantly more difficult starting August 1. These firms failed to complete the registration process and will now fall under Resolution No. 94. The list includes major players such as bet365, Stars, 1Win.com, ElectraWorks, TheLotter, PokerStars, GGPoker, Betcris, LeoVegas, and Roobet. For every payment made by a Chilean customer to these organizations, the payment intermediary must withhold 19% VAT and remit it to the Treasury on a monthly basis.

"Automated processes will check the registration process and confirm if the platforms have paid the right amount. The crucial factor will be whether what has been declared by the platform is consistent with what the authority can see from its payments." - Carolina Saravia, Deputy Director of Audit at SII

Background

Chile has been utilizing digital transaction data to enforce VAT on foreign services since 2021. The intense focus on online gambling stems from the complexity and high turnover of the sector. The tax authority has clarified that the mere payment of taxes does not equate to a legal gambling license. The primary goal is fiscal fairness. While local operators are subject to strict rules, international firms often operated in a grey area.

Looking at other markets, companies like Sun International in South Africa have recently reported massive growth in the iGaming sector. Sunbet, their online division, saw revenue jump 70% to ZAR 871 million. In that region, staffing costs, levies, and VAT were identified as primary expenditures impacting operating profits. Chile aims to ensure that such growth within its borders provides a fair share to the national budget. Using payment providers as withholding agents is a potent tool that might be adopted by other jurisdictions.

Why it matters for German players

The Chilean model echoes certain aspects of the German Interstate Treaty on Gambling 2021 (GlüStV 2021). Germany also maintains a strict regulatory environment, though with a different focus on player protection. In Germany, operators must be listed on the GGL white-list to offer legal services. Failure to comply can result in payment blocking, a measure designed to prevent illegal transactions entirely.

German players are subject to specific limits, such as a 1.00 Euro maximum stake per spin on slots and a monthly deposit limit of 1,000.00 Euro across all platforms, monitored by the LUGAS system. While Chile focuses on the 19% VAT, Germany utilizes a specific gambling tax and strict oversight to prevent addiction and debt. Chiles approach of taxing illegal or unregistered flows is a practical fiscal measure, whereas Germany attempts to exclude unlicensed platforms from the market altogether.

What it means for GGL-licensed casinos

Casinos holding a GGL license are in a more stable position compared to the offshore entities currently listed in Chile. They have already demonstrated compliance with German tax laws and technical requirements. The developments in Chile serve as a reminder that tax authorities worldwide are becoming increasingly sophisticated in tracking financial flows. Operators without a German license, such as those relying on Curacao or MGA permits while ignoring GlüStV rules, are facing increased scrutiny from financial regulators across Europe.

The situation in Chile highlights that the anonymity of online casino transactions is fading. As Carolina Saravia noted, automated audits will close the gap between declared revenue and actual turnover. German licensed firms, already required to provide transparency through LUGAS and safe-server connections, are burdened with administrative tasks but protected from the sudden tax interventions and blocking measures currently hitting the ten unregistered firms in Chile.