Proposed Brazilian Gambling Tax Grab Halted

(Sponsored) Having introduced regulated online gambling at the start of this year, the Brazilian government has been looking for ways to increase the amount of tax the industry is paying.

Lawmakers initially hoped for a 50% gambling tax rate hike, but, more recently, it seemed a ten-year retrospective tax would be more likely, after proposals were initially accepted for bill PM 1303.

However, Congress did not give the legislation its backing, and the bill has now been shelved. Operators and commentators do expect further movement in this area, but it is not clear what form this will take, or when it will happen.

Online Gambling Popularity

Online gambling is becoming increasingly popular across the globe. From horse racing in the UK to Australian online pokies, bettors can find a wide range of betting services and markets.

According to online betting expert Robbie Purves, the availability of online bonuses and the variety of available games has seen iGaming’s popularity grow.

Regulation In Brazil

Until the beginning of this year, gamblers in Brazil had limited options. iGaming was unregulated, which meant players had to turn to offshore websites, or Brazilian sites that were headquartered overseas, to enjoy online gambling.

Brazilian gambling was estimated to account for around a fifth of all online gambling, and that was before it was legalized.

As the country’s economy started to fall behind others, the Brazilian government turned to iGaming as a potentially huge money grab, with some parties estimating it could be worth USD$1.5bn to the economy.

License Applications

Such is the size of the Brazilian iGaming market that more than 130 operators applied for gambling licenses.

By the time the deadline for initial applications passed, the Brazilian government announced 89 operators had been granted licenses.

Each operator is permitted three skins each, which means there is the potential for hundreds of permitted betting sites in the country.

Major names to have been included in the initial tranche of applications included Bet365 and Betsson.

In order for these companies to operate lawfully in the Brazilian market, they must use official bet.br domains.

All other domains are set to be banned, and overseas operators who are found to flaunt the rules face fines of up to R$2bn.

Despite these significant fines, the most recent estimates suggest there are still around 2,000 unlawful sites offering services to Brazilians.

Gambling Tax Implications

In the first half of 2025, which was the first 6 months of the regulated market, regulated companies made R$17.4bn of gross gaming revenue and paid R$3.8bn in taxes.

This came from 182 websites operated by 78 licensed operators and represents a significant amount of money that would have previously been unclaimed.

Under current regulations, operators pay 12% of GGR in tax. Financial experts point to high licensing fees and the need for operators to pay VAT and other taxes, meaning that they will actually be subject to a total tax of around 30% – higher than in a lot of other regulated countries.

Proposed Tax Increases

Regardless, the government sought to increase the tax rate by 50%, meaning operators would pay 18% tax on GGR.

However, in recent weeks, a proposal was amended so that the tax rate would remain the same going forward, but a retrospective tax would be applied.

This would see operators pay 15% tax and a 15% fine on activities in the country over the past ten years.

Understandably, operators balked at the proposal, but equally expectedly, the country’s finance minister, Fernando Haddad, gave it his support.

A joint committee passed the new proposal with a narrow vote of 13-12. However, it came under intense scrutiny in front of the Chamber of Deputies and was eventually voted down by 251 to 193 votes.

As a result, this means that the retrospective tax will not be applied, and it also means that the existing 12% tax rate remains – a win-win for iGaming operators. However, it is unlikely that the issue will end there.

What Next?

The Workers Party’s Carlos Zarattini said, “There are several things that can be done by decree. There are tax rate definitions that don’t require a law, such as IPI, IOF, and others.

The Supreme Court recognized that the government has the autonomy to increase or decrease the IOF rate and doesn’t have to consult Congress.”

Global Tax Considerations

Brazil isn’t the only country considering gambling tax increases. The UK and the Netherlands governments are considering raising taxes, along with a host of other countries.

Gambling is viewed as being a relatively safe industry to hit with taxes because it is a luxury rather than a necessity, and governments can easily justify so-called sin taxes.

However, it is worth noting the financial sway that betting operators have, and if tax rates do become unfeasibly high, companies may be convinced to leave certain jurisdictions.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error