Brazil Increases Tax on Sports Betting, Industry Reacts
Brazil is set to increase the tax rate on sports betting, sparking strong reactions from industry stakeholders. The new tax rate will represent a 50% increase from the previous 12% rate on Gross Gaming Revenue (GGR) and will be in addition to social and economic contributions.
Finance Minister Fernando Haddad confirmed the tax on gambling in the country would rise from 12% to 18% of GGR.
This increase comes as an alternative to a proposed increase in the Tax on Financial Operations (IOF), which was initially planned to rise from 0.38% to 3.5% but was later revoked. The sports betting tax changes could take effect immediately.
Aloizio Mercadante, president of the National Bank for Economic and Social Development, had previously suggested increasing the tax burden on the sports betting sector to compensate for revenue lost due to the IOF decree revocation.
The tax rate change was included in an amendment to the IOF policy in Brazil.
Haddad stated that the IOF provisional measure would allow them to “recalibrate the IOF decree, reduce expected rates, and bring compensatory measures to maintain fiscal obligations.”
João Rafael Gandara, a tax specialist, recently noted that the measures align with the government’s goal of reducing the deficit to zero by 2025.
João also suggested that, with general elections approaching, the IOF changes might represent a last-ditch effort by President Luiz Inácio Lula da Silva to achieve this goal, despite legislative pressure to revoke any IOF increase.
In addition to the GGR tax, operators currently collect PIS/Cofins taxes of 9.25% and municipal taxes of up to 5%.
PIS is a federal social contribution calculated as a percentage of revenue, while Cofins is a monthly federal social security contribution also based on revenue calculation.
The country is currently transitioning to a new tax system that would replace PIS/Cofins with a dual tax system of taxes on goods and services and contributions on goods and services.
The provisional measures announced require approval by the Chamber of Deputies and the Senate before taking effect.
Industry Responds to Tax Increase
The Brazilian Institute of Responsible Gaming (IBJR) expressed its “vehement indignation” at the proposed tax increase for the sector.
“The measure is unacceptable and makes it impossible for many companies that trusted and invested in the regulated market to operate, creates legal uncertainty, and threatens public revenue,” the IBJR said in a statement.
The IBJR noted that since the beginning of 2025, legalized operators in the market have paid R$30 million (US$5.2 million) each for a five-year concession, totaling approximately R$2.3 billion already collected by the Ministry of Finance.
“The sector’s planning was structured based on the current 12% rate, and any change in the middle of the contract compromises the economic-financial balance and confidence in the regulatory environment,” the IBJR stated.
The institute also warned that an increase in taxes on online betting would result in a 50% to 60% growth of the black market.
While the organization said it would continue to seek dialogue with the government and the National Congress on the issue, it did not rule out the possibility of legal action.
Brazilian Sports Betting Operators Already Concerned
Earlier in the month, six of Brazil’s largest sports betting trade associations issued a joint statement warning about the damage the tax increase would cause to the market.
The IBJR and the National Association of Games and Lotteries presented a letter in response to the bill, currently in the Senate, which proposed increasing the IOF rate from 0.38% to 3.5%.
According to the associations, the 79 currently licensed operators have already contributed more than R$2.4 billion in authorization fees. Their tax and social contributions in 2025 are expected to exceed R$4 billion.
“In this scenario, it is unjustifiable – from any technical, economic, or public policy perspective – to impose new tax burdens on a sector that is already extremely burdened and contributes significantly and responsibly to the country,” the associations said in their joint statement.
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