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 Tax reform, golden opportunity




Tax reform, golden opportunity
Origin: Omar Rozo*
Published: 2021-09-16

It is no secret that the sanitary emergency caused by Covid-19 has created the need for liquidity for all persons, companies, including territorial entities and the State itself. For this reason, 5 months after the pandemic was declared in Colombia, the government issued Decree 678 of 2020, which establishes measures for the tax, financial and budgetary management of the Territorial Entities, within the framework of the economic and social emergency caused by Covid-19. Such as establishing benefits to taxpayers in relation to taxes, fees, contributions and fines pending payment.

 

 

In October of the same year the Constitutional Court pronounced through the sentence C-448 of 2020 and established that this part is unconstitutional, throwing down the benefits that it brought, this is why the national government this year bets again on these benefits seeking a transitory reduction of penalties, interest rates so that debtors who have the possibility to pay their debts with a very important reduction.

 

It is for this reason that through the so-called social investment law which is nothing more than a tax reform which seeks to bring the defaulters up to date and thus the entities collect an important amount, as things are in economic matters it would be very difficult to collect without this important incentive, which would bring the taxpayers up to date and the state would collect a significant amount to cover its deficit.

 

But what is this benefit about?

 

This is what the approved text tells us "For the obligations administered by the National Tax and Customs Directorate as well as for taxes, fees and contributions of the territorial order, which are paid until December thirty-first (31), 2021, and for the payment facilities subscribed with the DIAN and the territorial entities until December thirty-first (31), 2021 with respect to the obligations that are in arrears in payment as of June thirty (30), 2021, and whose noncompliance has been caused or aggravated as a consequence of the pandemic generated by the COVID-19, the penalties and the moratorium interest rate shall be reduced and liquidated in the following terms: The penalties, including those that are settled in independent administrative acts, and their updates shall be reduced to twenty percent (20%) of the amount provided for in the customs, exchange or tax legislation."

 

The moratorium interest rate established in Article 635 of the Tax Statute, will be liquidated daily at a daily interest rate that is equivalent to twenty percent (20%) of the current bank interest rate for the modality of consumer and ordinary credits, certified by the Financial Superintendence of Colombia.

 

This benefit may be significant, since penalties and interest are sometimes higher than the tax itself. For example, today an interest rate is paid for debts with the state of 23.79% effective annual, the benefit provides to pay 20% of the bank interest which would be only 3.43% per year,    

 

Saving to catch up...

 

 

* qualified accountant, specializing in gambling industry

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Sports betting the worst has already begun 

Tax reform, golden opportunity

Sports betting, suspended soccer players and teams, rigged championships, scandals the order of the day are the daily news lately. In Chile and other countries in the world, the sponsorship of teams by betting houses is distrusted, because it is not entirely unusual to think that some ally with each other and end up favoring a particular bet.

 

In Europe, especially in Spain, match-fixing is fought by small clubs that have been discovered and where one or two players have finally been personally punished, which is not a deterrent to prevent Premier League matches from being fixed. league.

 

For its part, the Bundesliga is doing everything in its power and knowledge to closely follow the matches, with a very restricted regulation of sports betting but which does not guarantee full transparency of the results.

 

But not only he soccer; A few weeks ago, tennis player Younes Rachidi was banned for life for allowing himself to be beaten at will and collecting betting dividends. Bárbara Gatica Avilés Chilean tennis player suspended 3 years; Premier League top scorer Ivan Toney is facing a ban for illegal betting… and the list goes on. In Colombia we are not the exception and Llaneros has been accused of a shameless arrangement to favor a result.

 

In a column published by Dr. Hernán Peláez, he commented: Thank goodness here, Coljuegos gives a license to betting houses. But I don't know if it monitors the exercise and the yields of these operations and health aid are publicly known —and should be— and education. Or does anyone know? to get out of my ignorance.

 

I answer: if Coljuegos does financial monitoring BUT it is time for Coljuegos to start a crusade in pursuit of Fair Play and be the guarantor of fair play and prevent soccer from being used to launder money through betting; His function, among others, is control, not just the collection of money; he has to see where he comes from, and that is the task he must take on.

 



Evert Montero and his self-regulation strategy in the game. 

Tax reform, golden opportunity

What do you mean by the need to have adequate communication and strategy by industry operators?

 

It is about strategies not focusing only on the brand, a product, or a particular company. Obviously, that is part of the development of the industry, of the individuality that you must have as a brand, but when I talk about strategy it has to do with a much broader 360, where you really consider all the variables that affect the industry in general, not just something. So, I invite companies to get together, review how they are investing, because you also must invest in advertising, in marketing, in all these issues, but also in relationships, in image, in industry positioning.

 

Why do you consider it necessary to have a relationship with the industries associated with gaming?

 

We must be much more open. Our relationship must go a little beyond what the activity of games of luck and chance is, we must have a much broader panorama and see who is involved due to some circumstance or another, not only from the sector. In the case of Colombia, we have to look at the State, the Government, the Legislative Branch, in the private sector, the banking sector, the insurer, the control bodies. The different sectors, because the regulator one knows controls it, regulates it and works with the development of the activity, but there are many other instances in which we must participate and participate in spaces where the message of the industry can be taken to another level.

 

Recently, he had a meeting with the Colombian Banking Association. What can you tell us about that meeting? This activity, I don't know if in the world, but in many countries, there is resistance to the banking sector, and we have to see how we show them how we give them the guarantees so that they open the door to the sector in a broader way.

 

What did the “self-regulation” project presented by Fecoljuegos consist of?

 

Our responsibility is not to stay and see how they regulate us and in what way, whoever is going to regulate us, be it the State, the government, the regulator, whatever body it may be. We have to be proactive and in the case of Fecoljuegos we work on the issue of self-regulation, with the media with how the excess and advertising of online platforms is affecting spaces that should be familiar and where there are children, how we should invest not so much money in advertising but in other types of social issues, generating different options so that there is peace of mind for the public around the issue of inviting people to bet.

 

We put all these issues into a code, we hired a larger self-regulation company in Colombia, and they created a code in which we built with the operators and businessmen some rules where one adjusts to having certain considerations to respect family schedules, which in all the sites do not have betting information, there are alerts so that it is done responsibly. Basically, it is a code focused on social responsibility and responsible gaming. Here I also call for control of illegality, which is a great risk that the industry has.



Casinos in Colombia, it is not a good time to invest in expensive equipment, there are no guarantees. 

Tax reform, golden opportunity

A week ago I was in Medellín and I don't know if I'm the only one, but when I'm in another city I usually walk around machine shops to see “what's new or strange”; To be honest, I do it more to see how the market is and I was surprised to see that what all the machine sellers say is true: a market saturated with products that rotate every six months and that become obsolete with the arrival of a better machine. in the place next door.

 

 

That is why international sellers prefer the mountain capital to do their launches and garage sales.

 

The paisas (name given in Colombia to people born in Medellin) fell into the consumerist trap that ultimately makes them work for companies that offer two-year loans, prices in dollars that “since it is on credit they don't feel like it,” but that perversely end up leading the operator into a vicious circle where they end up quota number 16 out of 24 and production has fallen so much that they must update a new game for a price sometimes of 3rd PART OF THE VALUE OF THE EQUIPMENT.

 

I saw in Medellín that in the most "perrata" place - as the Paisas say -, one can find in a corner state-of-the-art machines that no one seems to play, but that make their owners feel the happiest because they are fashionable and the They make you feel first world.

Possibly some fell into the trap, due to arguments; But without a doubt the Paisa operators have been getting on this train that finally ends up reducing their profits at the end of the year.

 

Updating equipment is very important but do the math so you don't pay the price later. Could it be that many operators have not realized that there are more economical ways to decorate their living room?

 



Tribal Casinos - Economic Giants beyond Las Vegas 

Tax reform, golden opportunity

Native American casinos, otherwise known as Indian Tribal casinos, have long had a major influence on gambling - especially in the US and, for a long time, these were the only establishments where it was legal to gamble, outside of Las Vegas and Atlantic City.

Indeed, there are Indian gambling establishments in over 50 percent of US states (29 in total), and all of these can be found on tribal-owned land, though as a side note, while this land is sovereign, it doesn't necessarily mean that all casinos that are found on tribal land are run by Native Americans.

 

What many people do not necessarily realize, is that Indian casinos are big business. Furthermore, the annual revenue that is generated by tribal gambling establishments significantly exceeds the figure that the entire Las Vegas strip churns out. In 2021, Native American casinos recorded a GGR (Gross Gaming Revenue) of $39 billion - over five times more than Las Vegas, which stood at $7 billion.

There are some misconceptions relating to tribal casinos, with many people believing that to enter one of these, you must be of Native American origin - this couldn't be further from the truth, and, in fact, there are those who prefer Indian casinos.

 

It is understood that the population of Native Americans in the US stands at 6.79 million in 2024 (roughly 2.9 percent of the entire US population). Furthermore, the vast number of Native Americans are considered 'poor', which essentially suggests that they do not have the means to use tribal casinos.



Bets & Prays in Brazil 

Tax reform, golden opportunity

In Latin America (LatAm), somewhat surprisingly, no country has an official state religion. However, many associate Christian denominations with the region, finding LatAm in general synonymous with faith.

The Latin American people are, for the most part, Christian,” says Magnho José, editor of BNLData and president of the Instituto Brasileiro Jogo Legal. “In most countries, this figure exceeds 80%, including Catholics and evangelicals.”

And according to both José and Hugo Baungartner, vice-president of global markets at Aposta Ganha, religion is having an increasing impact on politics in the region.

Currently, the strength of religion on the continent and the advancement of a religious influence in institutional politics is notorious and more and more religious people, whether progressive or reactionary, have come together to propagate their projects in the public sphere,” José explains.

Baungartner adds, “[Religious] influence has been growing year by year with the increase of different religion types. Nowadays they even have their own politicians, including forming groups to execute their power and influence.”

 

Influence on Brazil’s legislative outcomes

Few LatAm countries have seen religious influence on their gambling policy like Brazil, despite being a religiously free country, which even boasts a national day devoted to the principle – 7 January.

According to the Global Religion 2023 study – carried out across 26 countries – Brazil has the highest percentage of citizens who believe in God or a higher power, at 89%. Predictably, this has bled into the country’s political regime.

Over the last 82 years, several topics have caused controversy in Brazil and among them is the legalisation of gambling,” explains José. “Those who do not live in Brazil will have difficulty understanding the lack of objectivity and common sense of Brazilian politicians when it comes to gambling. Religious issues end up contaminating and distorting the debate.”

Brazil has been rocked by the evangelical movement over the last few years, with around a third of its population identifying as evangelical in 2022. It is no surprise, then, that evangelical lawmakers greatly opposed Bill 3,626/2023, the long-awaited law to regulate sports betting and igaming, almost stopping its progress completely.

The most important country that faced [religious opposition] was, and will be, Brazil,” says Felipe Fraga, an expert on Latin America.

The reason is that when we look over the most populated countries, no one has more than 20% of an evangelical population. Also, the movement of neo-pentecostalism is very powerful in Brazil and the political connections they have are very strong.”

 

Unintended effect of the black market

As with any regulating market, concerns remain over the presence of black and grey markets in Brazil. For Baungartner, the religious-centred aspect of the evangelical argument might do more harm than good in this respect.

They say that [gambling] is against their faith and their God which, also, is against it,” he explains. “They use it to influence other politicians.

Literally, for them it is devil’s business. They don’t understand that the world changed and it is better to have it regulated, instead having the grey market.”

Fraga – an evangelical himself – agrees, proposing that regulation will safeguard Brazilian citizens.

They claim about a social point of view, looking to risks of addiction and how it can affect society, also arguing about money laundering and match-fixing,” he explains. “They say that the bill will allow or facilitate bad behaviour and criminal acts, which is completely wrong, since the idea of regulation guarantees for the country itself taxation and societal safety.

It is exactly what the industry is looking for: fair rules for keep offering modern ways of entertainment.”

Right at the forefront of evangelicalism’s strongly-held beliefs about gambling is family values, according to José. He notes that at the recent National Conference of Bishops of Brazil (CNBB), gambling was slated as bringing “irreparable moral, social and, particularly, family damage”.

The following was heard at the event: “A vote in favour of gambling will, in practice, be a vote of contempt for life, for family and its fundamental values.”

But the dispute goes beyond a moral perspective. Evangelicals and other religious politicians also point to legitimate industry concerns, such as money laundering and tax evasion – which regulation would naturally address.

 

A long winding road to regulation

Religion’s influence on gambling law in Brazil stretches back much further than the last few years. Gambling was banned in the country in 1946 due to religious influence and bingo was legalised between 1994 and 2005 before being prohibited once again.

This is why the passage of Bill 3,626/2023 received such a positive reception when it passed in December – it was a long time coming.

Brazil is currently in the process of regulating its igaming and sports betting market. The country’s ministry of finance, in conjunction with the newly established regulator – the Regulatory Policy of the prizes and betting secretariat – is continually publishing rules for the market, which include prohibiting credit card and cryptocurrency payments.

 

Could Brazil backtrack on gambling regulation?

But to those rejoicing in the market regulating, José warns them not to get comfortable.

There is a great risk of backsliding,” he states. “I don’t believe it will get to the point of repealing gambling laws, but the religious will hinder expansion and try to stifle existing gambling operations.

The ecumenical opposition that criticises the possibility of legalising gambling should reflect that the positive benefits of legal gambling far outweigh the disadvantages proposed by any person or group against gambling.”

Baungartner is insistent that, at the end of the day, gambling is a business and its acceptance in other countries neutralises its standing saying: “The mentality has changed over the years.”

So outright revocation might not be on the cards – not yet, at least. As long as the industry plays ball, says Fraga, it should be a smooth road ahead for Brazil’s regulating market.

As much the industry grows in Latin America and shows that it is an important part of society – generating jobs, moving economics, entertaining, controlling addiction, etc – there will be no reason to revoke the laws,” he says.

Even though we can consider the risks, there will be nothing happening soon.”

 


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