The second supplement to Official Gazette No. 709 dated December 23, 2024, publishes Executive Decree No. 487 containing amendments to the Regulations for the Application of the Internal Tax Regime Law, referring to the Single Income Tax on Sports Betting Operators. Below, we summarize its content.
1.- The reform defined concepts related to the activity of sports betting operators such as bonuses, user account, gaming account, return, event or game, profit, net income from the game or event, player or user, prizes, accrued prediction and digital platforms.
The following concepts deserve particular attention:
(a) Player or user: natural person of legal age who is a tax resident in Ecuador who enters a digital sports betting platform.
(b) Accrued forecast : amount invested in a sports betting event or game.
(c) Prize: value to which a user is entitled when their prediction is verified. This includes the released bonus (the amount granted by the operator to participate in predictions that is available to the user).
This concept (prize) will be computed on a monthly basis. Consequently, a user will register prizes at the end of the month, to the extent that it is evident that the amount invested by it (accrued forecasts) is lower than the amount received as hits.
(d) Net income from the game or event: this is the amount on which the Single Income Tax is settled. It is the result of subtracting, from the gross revenue generated by a game (total accrued tips ), the prizes paid to users
It is important to remember that
accrued forecasts constitute revenue for the forecast operator.
2.- The taxable base will include the deposits made by users, to the extent that these constitute accrued forecasts. In the event that the taxable base is negative, it will not cause any tax for the period. The negative amount may not be carried forward to subsequent periods nor will it be considered a deductible expense.
The Single Income Tax rate is 15%.
3.- The costs and expenses generated in the operation of sports betting may not be used to determine the profit of the exercise of other economic activities or sources of income. In the event that the taxpayer cannot distinguish the activity to which his costs and expenses are attributable, he must apply a proportionality factor .
4.- The tax must be declared and paid, with respect to the integrity of operations executed in each monthly period, in the form and terms established by the Internal Revenue Service – SRI by resolution.
5.- Notwithstanding the foregoing, sports betting operators must additionally carry out an annual income tax return. This declaration will consolidate the amounts declared monthly.
6.- Operators must issue authorized sales receipts, for all amounts that constitute income for them. Additionally, they may issue and deliver to the user a single sales receipt per month, which consolidates all the amounts delivered by the user and that constitute income for the operator (accrued forecast ). It will be delivered until the fifth working day of the following month .
In addition, the operator must issue receipts when generating events subject to VAT occur .
7.- In order for the sports betting operator
to validly [a través de plataformas digitales]execute its activity, it must obtain the License for the Operation of Sports Betting
– LOPD. The LOPD will be valid for 5 years and the requirements for
obtaining and maintaining it will be defined by the governing body of the sport.
In any case, for the obtainment, maintenance and renewal of the LOPD
, the value of 655 SBU (annually) will be paid to the governing body of the sport.
Amount that will be paid in the first 20 days of the corresponding tax
year or when obtaining/renewing the LOPD. The amount can be modified
by the governing body of the sport.
8.- The prizes paid to the user will be subject to a Single Income Tax withholding of 15%. Withholding must be made based on the prizes generated by the user on a monthly basis, or in the event that the user withdraws their prizes (whichever comes first). However, a single withholding receipt will be issued for all prizes delivered to or accrued by the same user.
Operators will declare and pay monthly the amount they have withheld from users, observing the same deadlines indicated by the Regulations to the Internal Tax Regime Law for the withholding tax system at the source of Income Tax.
Quito D.M. / Guayaquil, December 2024
