A new legislative proposal in Peru aims to raise the selective consumption tax (ISC) rate to 5% for online betting, a substantial increase from its current rate of 1%. Initiated by the Civic Works Party, the bill applies exclusively to online wagers, leaving land-based gambling untouched.
This proposed ISC will operate independently of the existing 12% gaming tax imposed on the gross gaming revenue (GGR) of both remote gaming and sports betting operators. Furthermore, the increased ISC rate will apply uniformly regardless of whether the operators are based in Peru or operate from abroad.
If enacted, the new law would take effect the day after being published in El Peruano, the official government newspaper, with the 5% tax rate beginning on the first day of the following month.
Since its launch in February 2024, Peru's regulated online gambling market has drawn substantial international interest, including licenses granted to companies such as Stake, Rush Street Interactive, and Betsson. However, the initial wave of optimism has been tempered by the introduction of the 1% ISC on July 1, 2025. Prior to the market's launch, the government had abandoned a proposal for a consumption tax but revisited it in 2024. Legal experts warned at the time that the tax could have a "catastrophic" effect on market viability.
The rationale behind the proposed ISC increase focuses on two main issues: public health related to digital betting and revenue generation. The bill underscores the growing prevalence of digital gambling and its possible health impacts, particularly for youth. According to the Ministry of Health, there were 14,409 recorded cases of gambling addiction treatment in 2025. This statistic underlines the need for enhanced measures for prevention, early detection, and treatment.
In its text, the bill articulates that raising the ISC could aid in developing a comprehensive strategy for addressing problem gambling, suggesting that increasing the tax burden is not meant to be a standalone solution but part of a broader set of measures for regulation and care.
Additionally, the bill emphasized the revenue-generating potential of the ISC increase. Currently, the 1% tax yields around S/324 million ($94.1 million) annually, which could rise to approximately S/1.62 billion if the tax rate were to reach 5%. Though these figures are described as a "static, illustrative scenario," they reflect the substantial financial implications of the proposal.
The legislative proposal references similar measures in other Latin American countries where additional taxes on online betting exist. For instance, operators in Argentina face taxes ranging from 2.5% to 15% on online gambling, while Colombia has implemented a 16% VAT on GGR for these operators. In light of this regional context, the bill contends that the proposed 5% ISC is not an extraordinary tax rate.
The potential effects of this increased tax rate could impact both operators and bettors. The bill acknowledges various ways operators might respond to the increased tax burden: they could absorb the costs, pass them on to bettors through altered betting conditions, or share the burden. Some Colombian operators have managed to lessen the impact by offering bettors bonuses to compensate for the VAT changes.
