Six months into allowing legal online betting, Brazil’s Ministry of Finance announced an unexpected increase in the tax rate on gross gaming revenue (GGR) from 12% to 18%. This change is effective immediately, but it requires congressional approval within 120 days to remain.
Finance officials argue that this increase, which applies to the net amount sportsbooks retain after prize payouts, is essential for balancing the national budget. Previously, there was consideration for increasing the Financial Transactions Tax (IOF) from 0.38% to 3.5%, but concerns from the Central Bank about investor impact and potential inflation led Finance Minister Fernando Haddad to shift focus to online gambling as a revenue source.
However, this move has raised concerns within the industry. The Instituto Brasileiro de Jogo Responsável (IBJR) and other groups warn that Brazil’s already high tax rates are becoming punitive. Besides the new 18% GGR rate, operators are subject to 9.25% in PIS/COFINS, up to 5% in municipal service tax, and 34% on corporate profits. This could push the effective tax burden over 50%, which, according to the IBJR, might reduce operator investment and market competition.
Additionally, tax exemptions on several investment products are being removed. Previously tax-free options like LCIs (Real Estate Credit Letters) and LCAs (Agribusiness Credit Letters) will now face a 5% tax. The same applies to CRIs (Certificates of Real Estate Receivables) and CRAs (Certificates of Agribusiness Receivables). The government aims to correct imbalances, arguing these exemptions provided unfair advantages.
Regulators are urging caution. The Secretariat of Prizes and Betting (SPA), Brazil’s national gambling authority, calls for a balanced approach to support both tax revenue and market sustainability. Recently, the SPA suspended several operators for not submitting required cybersecurity documentation under Article 8 of Ordinance SPA/MF No. 722/2024, though most issues were resolved quickly with licenses reinstated.
As lawmakers review the tax increase, discussions on regulating and taxing Brazil’s burgeoning betting sector remain ongoing.
- SCCG Management. The Gambling Industry’s Global Connector. Access Here.
- Source: SCCGManagement.com