Brazilian President Jair Bolsonaro has signed a law that will alter the country’s sports betting taxation system to a revenue-based one.
President Jair Bolsonaro Signs New Sports Betting Taxation Law
Last week, Brazil’s Official Gazette published Law No. 14,183, of July 14, 2021, which changes the rules on sports betting taxation. The new law modifies Chapter 30 of Law No. 13,756/2018, changing the tax base applicable to sports betting, which will now consider gross gaming revenue (GGR) rather than turnover.
The new law was enacted by President Jair Bolsonaro and followed the approval of the regulatory changes by the Chamber of Deputies back in June. According to the adjustments in the legislation, the tax base will be applied after the taxes on winnings and social security payments are paid out.
According to lawmakers, changing the tax base to GGR will improve sports legislation since the tax collection from physical and virtual entities will go for bonuses. Previously, taxes were collected from turnover rather than revenue and amounted to 3%.
Some 95% of the taxes will be directed towards covering fixed-quote lottery operators’ costs and maintenance expenses. Another 0.82% will go to support schools with excellent performance in national exams, 2.55% to the National Public Security Fund (FNSP), and 1.63% to sports clubs.
In addition, the new law introduces control on the financial movement of lottery operators that pay prizes in cash or real estate. The supervision will be carried out by banks and other financial institutions, which must report their findings to the Financial Intelligence Unit (FIU) of the Central Bank.
Last month, after the Chamber of Deputies, approved the changes in the law, Deputy Moses Rodrigues welcomed the adjustments in sports betting, saying:
“Experience in Europe shows that it is better to adopt the operator’s gross profit as a basis, providing stable flows of public revenue and prizes and making bettors use the services of local operators.”Moses Rodrigues, Federal Deputy, Brazil
Additionally, the chamber approved the provisional measure 1034/21, which introduces tax hikes on financial institutions and the chemical industry.
Sports Betting a Priority Since Last Year
Last August, President Bolsonaro put sports betting on the list of the country’s priorities. He signed a decree to include sports wagering in Brazil’s Investment Partnership Program (PPI) portfolio and national privatization program.
In March this year, the newly elected president of the Tourism Commission, João Carlos Bacelar, insisted on the debate about the legalization of Brazil’s gambling and betting industry before the Chamber of Deputies.