Brazilian Government Introduces 15% Tax on Online Betting

Brazilian media outlet Poder360 reported that the Brazilian government has recently announced that online betting will now be subject to a 15% tax on Gross Gaming Revenue (GGR), with the license fee set at BRL30 million ($5.9 million). 

Brazilian Government Anticipates Billions in Revenue with New Measures

The next step for Brazil’s Finance Ministry is to gather opinions from representative entities and other ministries in the period between April 10 and April 16. Major soccer clubs from Rio de Janeiro and São Paulo have been scheduled to be heard on April 11, and Brazil’s soccer federation CBF on April 13.

Brazil’s finance minister Fernando Haddad has stated that the government anticipates that the measure will produce a revenue of approximately BRL12 billion ($2.37 billion) to BRL15 billion ($2.96 billion) for the state treasury.

Furthermore, the Brazilian government expects to raise BRL5 billion ($988 million) a year by bringing back the Lotex, a scratch card lottery that was discontinued during Michel Temer’s government. Caixa Econômica Federal holds the monopoly on lotteries in the country, but Lotex was auctioned off in October 2019. The return of Lotex is part of the government’s fiscal effort to increase revenue. 

Companies Request Payment Flexibility for Sports Betting License Fee in Brazil

In addition, there will be a BRL30 million ($5.9 million) license fee valid for five years for companies to continue operating in Brazil. The details of how the payment will be made for sports betting companies to function in the country, however, may be left for after the provisional measure is passed. The companies are requesting flexibility in the payment of the license, such as instalment payments so they can continue sponsoring the teams. There are doubts about whether some of the smaller companies will be able to afford the license fee. 

The draft of the provisional measure is being analyzed by the Attorney General of the National Treasury, which will contribute to the text. The government is open to negotiations with the confederation and the gambling companies. However, the draft of the measure proposes, for now, the continuity of the allocation of 1.63% for entities that assign brands to bookmakers. The confederation is pleading for 4%. 

Since a law was passed in 2018 permitting betting firms such as Bet365, Betano, and Betfair to operate in Brazil, they have experienced a significant increase in demand. These companies have become major sponsors of football teams, allowing them to gain brand recognition during matches over the last few years.