Dominican Republic lottery and sports betting operators have strongly opposed a proposed 16% Selective Consumption Tax (ISC) that is included in the Abinader government’s fiscal reform plan. Representatives from the sector argued before the Chamber of Deputies’ Finance Committee that such a tax would be detrimental to the industry, as reported in Hoy.
Antonio de Jesús, president, and José Castillo, advisor of the National Federation of Lottery Banks, described the ISC as “unworkable.” They warned that if the tax is approved, the Tax Agency (DGII) would essentially be preparing a “graveyard” for the thousands of betting shops operating nationwide. There are more betting shops than neighborhood grocery shops in the Dominican Republic.
The industry representatives estimate that the Dominican government is currently losing between RD$4 and RD$5 billion due to the informal sector (or non-authorized betting shops), which accounts for about 50% of the market and avoids paying taxes. They cited a DGII report showing a 15.6% decrease in tax revenue from lottery and sports betting between January and March 2020 compared to the same period in 2019.
The operators attribute this decline to the disorder and corruption allowed by previous administrations, which they claim destroyed the sector and forced hundreds of small legitimate betting businesses to close.
Jefry Espinal, vice president of the Dominican Association of Sports Betting, argued that passing on the ISC to consumers would be unfeasible. He warned that the tax could have the opposite effect of what the government intends and suggested that the government instead enforce the existing Law 139-11, which regulates the sector.
Espinal explained that this law mandates the interconnection of all sports betting shops and slot machines through a single system. This platform could be used by the government to collect the revenue it seeks through the fiscal reform. He also revealed that the informal sector represents 50% of the market and that the proposed ISC could increase this figure to 75%, thereby undermining the government’s goal. Espinal added that sports betting contributes RD$1.5 billion to the government annually and supports around 200,000 jobs.
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Hoy
17 October 2024