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Mexico – New tax failing in Nuevo León

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The Government of Nuevo Leon’s bid to raise just over a billion pesos with new casino taxes is failing. During the first quarter of the year, the state has raised just over US2.6m pesos via the taxation on gaming only 2.13 per cent of what had been estimated for 2017.

The information comes from the Financial Report delivered by the State Treasury on April 29 to Congress. The treasury announced afterwards that all gaming houses in Nuevo León would now be subject to an audit.

The new tax is part of this year’s tax reform bill. Local officials were hoping that the new tax could raise up to one billion pesos in a year, with 30 per cent going to the fund for a special security fund and the rest to the state coffers in order to reduce the deficit. The new tax rules that for every 100 pesos that the player spends ten per cent tax is payable by the player. The tax is charged the moment the player buys chips or tokens.

At the end of January it was revealed that the government had yet to impose the 10 per cent charge on bets in casinos. According to Deputy Marco González Valdés although the tax has been in force since January 1st the state government had yet to put it into practice which is not only illegal but also puts funds earmarked for security at risk. According to Valdés, the decision was the result of “an agreement in the dark” between the state government and the owners of gaming establishments who are handing money to the government under the table instead of paying the new tax as stated under new laws.
At the same time the Mexican Gaming Association (AIEJA) argues that the new taxes are unfair as other businesses in the entertainment sector do not pay such a high rate of tax and that the new law does not include online gaming, lotteries or illegal gambling machines which are widespread in the state. In a statement published in January the AIEJA said while it recognised the decision of the state to correct flaws in the 2017 budget in order to help the local population it said that the new tax on gaming would hit older people especially hard. It is estimated that around 70 per cent of the income generated by casinos and betting centres in the state derive from senior citizens.

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