Ecuador has moved to remove ambiguity around the taxation of online gambling, confirming that iGaming services are now subject to the country’s 15% VAT. The clarification comes from the Servicio de Rentas Internas (SRI), which has defined how existing tax rules apply to digital betting and related services.
The new guidance closes that gap by stating that digitally delivered services with minimal human involvement fall within VAT scope. This includes sports betting, prediction platforms, certain paid online games, and subscription-based sports streaming.
There is variation in how VAT is treated in relation to the operator’s location. Companies that operate domestically must charge VAT to users, issue receipts, report on and pay VAT in accordance with their normal tax obligations.
If an offshore operator uses a payment intermediary, then the payment intermediary will withhold VAT from the transaction and remit it to the government.
If a payment intermediary does not provide their services, then it is the user’s responsibility to declare and pay VAT themselves. Users have little to no knowledge of this requirement and there are many difficulties in the real world in terms of compliance with this requirement.
Ecuador has not created a new tax, but rather has implemented better controls on an unregulated, rapidly growing industry with very little clarity. By including online gambling in the VAT application, Ecuador has reduced uncertainty and brought the online gambling industry into line with other industries operating under the digital economy.
Another important feature of this approach is that Ecuador is using payment intermediaries as enforcement agents. By targeting transactions rather than operators, especially those that are based outside of Ecuador, the authorities have adopted a more pragmatic solution to collecting taxes.
