Brasil Betting News

Betting MP is approved

Betting MP is approved; houses must pay 18% tax

Updated : 26 Jan 2024

Written by :

Heloisa Vasconcelos

Journalist

Reviewed By :

Larissa Borges

Publishing company

The taxation of sports betting in Brazil was one of the first issues addressed by the Finance Ministry of the Lula government, led by Fernando Haddad.

With the approval of the MP that regulates betting , the amount that must be paid by both companies and bettors was decided.

Summary: What Changes With Taxation?

What will be the tax percentage for bookmakers? 18% on revenue obtained from all games played, minus prizes.
How will the distribution of the houses’ profits work? 82% of the amount collected goes to the betting operator. The rest will be distributed to Social Security, Olympic Committees, National Public Security Fund, Ministry of Sports and Tourism, Embratur, sports entities and public education.
Will the bettor also have to pay taxes? Yes. The Brazilian government’s final decision is that bettors will have to pay 30% tax on prizes. However, there is an exemption for prizes below R$2,112.
Why will betting be taxed? In addition to the need to regulate the market, taxation will occur as a way to compensate for revenue losses due to the adjustment of the Income Tax table.

How will the new taxation model work?

News about the process of regulating sports betting in Brazil was released on July 25, with the approval of the MP .

Sports betting companies in Brazil will be taxed at 15% on GGR (Gross Gaming Revenue).

CGR is the revenue obtained by adding the amount collected in all games minus the prizes paid to bettors.

This charging model was inspired by the United Kingdom, where bookmakers are taxed based on GGR and there is no tax charge on bettors.

Additionally, companies will be required to pay a grant of R$30 million , in addition to taxes such as PIS/Cofins, Corporate Income Tax and Social Security Financing, all calculated based on gross revenue.

See the rules that have been released so far:

  • Payment of a grant of R$30 million to the Union;
  • Be headquartered in Brazil;
  • Have a minimum capital of R$100 thousand;
  • Have certificates that prove the security of the betting house, the ability to generate payments and systems that combat fraud in results.

On September 13, some changes to the document were voted on, according to a new text by the rapporteur, deputy Adolfo Viana (PSDB-BA).

One of the changes was in the distribution of the fee, which will be distributed to the following entities:

Bill signed by Lula PL updated by the rapporteur
National Public Security Fund (2.55%) National Public Security Fund (2.55%)
Social Security (10%) Social Security (2%)
Sports entities and athletes who transfer their image rights (1.63%) Sports entities and athletes who transfer their image rights (1.63%)
Ministry of Sports (3%) Ministry of Sports (4%)
Public education (0.82%) Ministry of Education (1.82%)
Olympic committees (1%)
Ministry of Tourism (4%)
Brazilian Agency for International Tourism Promotion – Embratur (1%)

Impacts of taxation for the bettor

The most recent decision by the Ministry of Finance indicates that yes, the bettor will have to pay a tax on the prizes.

Prizes up to R$2,112 are tax-exempt. Winners above this amount will be charged 30% tax.

This exemption is precisely the income bracket free from Income Tax.

Brazil follows the same path as European countries

The 18% tax rate puts Brazil among the best tax practices:

Country Tax Rate
UK 18%
Denmark 20%
Italy 20%
Spain 25%

Keeping the rate close to 20% is important because it makes Brazil an interesting market for international operators.

Another factor that should strengthen the Brazilian market for foreign companies is the unlimited authorization regime for licenses.

In the published text, there is no specific number of operators that will be able to bet in Brazil.

With this combination of measures, it is expected that the regulation of the sports betting law will be more effective against offshore offers , that is, companies that did not find the prerequisites interesting and would continue to offer services to Brazilians, but illegally.

If Brazil follows Denmark’s example and does not limit licenses, we could have good results.

After all, there will be more competition and this may encourage people to bet with local operators rather than offshore bookmakers.

A statement by José Francisco Manssur, special advisor to the Ministry of Finance, indicates that the government’s interest is to have a wide variety of websites hosted in Brazil:

“From the moment of regulation, betting outside Brazil will be illegal. We will have efficient means and the goal is to have the English index of 87% of betting sites hosted and legalized in Brazil”, says Manssur.

Conclusion

The regulation of sports betting in Brazil has been underway since December 2018 and is finally going to happen. Since then, there have been many changes to the proposal.

We believe that the current proposal is advantageous, both for the gaming community, as well as for bookmakers and the market.

After all, it is following the example of European countries, such as the United Kingdom, Denmark, Spain, France and Portugal, known for being successful in this sector.

Having good legislation will be essential to reap positive results. Now we just have to wait for the next news!