As Courts rule online betting illegal, the IRS will require Digital VAT Payments
Gonzalo Navarro, Director of the Technology practice at Aninat Abogados, said that the Servicio de Impuestos Internos’ (SII) decision would be “consistent with rules issued years ago regarding the collection of Digital VAT from service providers located abroad that generate income from Chile (…). This is a natural evolution the Service could arguably have reached even earlier”.
“Reversing the exclusion of these companies from this regime, introduced under the Boric administration: The Service stated that it is not its role to assess the “unlawfulness” of an activity, but rather to ensure that the taxes owed are paid.
Even though the Supreme Court issued two separate rulings over the past two years declaring online betting activity illegal, foreign online betting sites and casinos will now be able to pay Digital VAT on their operations in the country.
That was the determination of the Servicio de Impuestos Internos (SII, Chilean Internal Revenue Service), following a ruling — signed by its current director, Jorge Trujillo — issued on June 2. Through this measure, the door is opened for such gambling platforms, which have no residence or domicile in Chile, to become subject to this tax, applied to “the total amount of all consideration received as compensation, regardless of its nature, for the provision of the aforementioned services”.
The SII’s move comes after the Finance Ministry made urgent the legislative debate to regulate online betting, given that this initiative could raise around US$300 million a year. That amount would offset other tax cuts included in the Reconstruction bill, such as the First Category Tax.
It also highlighted the request from the state-owned Polla Chilena de Beneficencia, which argued that “it closes the door to illegal operators and opens the door to online gambling for existing regulated players,” according to its president, Felipe Dalgalarrando, in an interview with El Mercurio published on May 25.
Consistency and Pragmatism
Gonzalo Navarro, Director of the Technology practice at Aninat Abogados, told El Mercurio that the SII’s decision would be “consistent with rules issued years ago regarding the collection of Digital VAT from service providers located abroad that generate income from Chile (…). This is a natural evolution the Service could arguably have reached even earlier”.
Navarro acknowledged that “online betting activity is illegal in Chile. However, since it is offered by companies located outside the country, there is a pending regulatory debate that will need to be resolved by Congress, especially considering that the rulings issued by the Supreme Court in constitutional protection proceedings have limited scope”.
The Agrupación de Plataformas de Apuestas en Línea (Online Betting Platforms Association) welcomed the ruling, saying that “it restores the path for declaring and paying taxes in the country, providing greater legal certainty and strengthening tax collection tied to digital services provided in Chile”.
The Asociación Chilena de Casinos y Juego (Chilean Casino and Gaming Association) stated that “this measure is not simply a tax-collection act. In practice, it operates as a form of covert regularization, by bringing into the state system operators that carry out an activity the Supreme Court has ruled illegal”.
Navarro acknowledged that “online betting activity is illegal in Chile. However, since it is offered by companies located outside the country, there is a pending regulatory debate that will need to be resolved by Congress, especially considering that the rulings issued by the Supreme Court in constitutional protection proceedings have limited scope.”
Five Key Facts About Online Gambling
- In October 2023, Betsson terminated its commercial contract with the Asociación Nacional de Fútbol Profesional (ANFP, National Professional Football Association), under which it had acquired the naming rights to the national First and Second Division tournament.
The Supreme Court has ruled the activity illegal and ordered internet providers to block access to the platforms. - The debate over the bill to regulate online betting has also drawn criticism. It moved to the Senate in late 2023 and remains in the legislative process. May 29 was the final deadline to submit amendments. The Finance Ministry did not submit its proposed amendments on time.
State-owned company Polla has criticized the activity, noting: “it will close the door to illegal operators, but open the door to regulated gambling”. - According to a study presented by the Corporación de Juego Responsable (Responsible Gambling Corporation) and Red Preventiva Chile (Conprovego) in October 2025, the average age at which online bettors start gambling is 15.5.
- Once registered in the system, companies that “have provided services during the last thirty-six tax periods must pay the corresponding VAT owed,” the SII said.
Read the full article published by El Mercurio at the following link.
