Brazil Implements New 15% Player Winnings Tax

Brazil’s Federal Revenue Service has introduced new guidelines for taxing net prizes obtained from fixed-odds lottery bets, subjecting them to a Personal Income Tax (IRPF) rate of 15%. This development marks another step forward in the country’s efforts to finalize its updated gambling legislation, ushering in a safe and sustainable market that will benefit all stakeholders.

The New Rules Align with the Government’s Vision

The most recent regulatory update aims to ensure transparency and efficiency in tax legislation application. It states that net prizes from fixed-odds lottery bets will be subject to a 15% levy, defining net prizes as the difference between the prize value and the amount wagered, calculated for each bet or session.

According to the new rule, the 15% personal income tax will only apply to prizes and winnings exceeding BRL 2824 ($550). The task of calculating and collecting the new tax will fall to individual operators, reducing the regulatory burden on state institutions. Such an approach aligns with the Brazilian government’s goal to ensure transparency and accountability within the broader industry.

These updates are part of Brazil’s ongoing efforts to finalize its gambling legislation and officially launch its new gaming market. Recent updates clarified several vital technology and security requirements, ensuring the protection of customer data and preventing operators from evading inspections. The government will roll out additional updates targeting other emerging concerns.

Tax Calculation Could Cause Unintended Issues

Despite Brazil’s intentions to implement this tax with as little friction as possible, the move sparked debate, particularly with the impending launch of the betting market. Brazil’s National Association of Games and Lotteries (ANJL) has urged the government to reduce the tax burden on players to ensure the sector’s sustainable development and integrity.

ANJL representatives called out some potential unintended consequences of the new levy, highlighting edge cases where the government could tax players who lost more bets than they won and earned no real income. The organization noted that such an oversight could undermine public trust in the new gambling legislation and lead to long-term problems.

“Poor assessment of the effective tax burden on net income tends to drive players away from the formal market, jeopardizing potential revenue and the extra-fiscal objectives of the legislation.”

ANJL official report

Brazil’s government has previously demonstrated a willingness to consider stakeholder input so it can still review any contentious issues and improve the current iteration of its gambling regulations. The country’s Secretariat of Betting and Prizes will oversee the remaining procedures to launch the Bets market, aiming aims to strike a balance between tax revenue generation and fostering a sustainable gambling sector.