Brazilian gambling tax hiked by six points
Just six months after the launch of regulated online gambling, the Ministry of Finance has imposed an increase in the tax rate on GGR.
Brazil.- The Ministry of Finance has announced the approval of a provisional measure (MP) to raise the tax rate on gross gaming revenue (GGR) for Brazil’s newly regulated online betting market by six points. The rate will rise from 12 to 18 per cent with immediate effect, although it will need Congressional approval within 120 days to remain in force.
The decision was taken as the most politically acceptable option to balance public finances, replacing a previous plan to increase the Financial Transactions Tax (IOF) from 0.38 per cent to 3.5 per cent. The IOF, which is charged on various financial services, including international transfers, has historically been adjusted with some frequency since it doesn’t require legislative approval.
However, the Central Bank had suggested that a hike would negatively affect investor confidence in Brazil and could add to inflationary effects pressures. That led finance minister Fernando Haddad to seek other options to plug the revenue gap, and the new gambling market was seen as more politically acceptable target.
Operator groups including the Instituto Brasileiro de Jogo Responsável (IBJR) were already lobbying the government to reconsider the tax burden, which also includes 9.25 per cent towards the Program of Social Integration (PIS) and Contribution for the Financing of Social Security (COFINS), up to 5 per cent in municipal services tax and 34 per cent in corporate profit tax. Associations argue that an increase could drive the tax burden on gambling in Brazil towards 50 per cent, which they say could reduce operator investment and harm competition on the market.
Brazil’s gambling regulator, the Secretariat of Prizes and Betting (SPA) has stressed that a balanced approach is needed to promote market sustainability.
The SPA recently suspended the licences of several operators for failing to submit mandatory cybersecurity reports within the timeframe established in Article 8 of Ordinance SPA/MF No. 722/2024. However, most of the operators in questions quickly rectified the problem and had the suspensions lifted.
