Brazil introduces sports betting taxation at 18%

Following months of deliberation, Brazil has finally decided to introduce a finalized tax frame for its sports betting industry. This is done with the blessing of President Luiz Inacio Lula da Silva and is part of his plan to increase the revenue for the state coffers amid a more ambitious economic plan.

The sports betting tax is set at 18% and is kicking in with immediate effect. To carry on, however, the measure must pass Congressin the next four months. The rate is charged to sports betting companies’ gross gaming revenue and the President’s office is confident that the newfound revenue stream would fatten the state’s purse.

The proposal also allows companies that are established in the country– whether they are domestic or foreign – to also apply for a license to run fixed-odds betting lotteries. The Finance Ministry is the institution that will be sorting such applications and issuing the relevant licenses.

There is confusion surrounding sports betting in Brazil as the country did in fact allow sportsbooks to begin operation in 2018, but failed to muster many details after that leaving operators second-guessing what the government would arrive at next.A formal go-ahead was never given under the stint of the former country president, Jair Bolsonaro.

Change in leadership eventually led to the election of President Silva who set out from his very first days in office to amend the taxless limbo that betting companies enjoyed. At the behest of the President, Finance Minister Fernando Haddad started working on a plan to introduce a sports taxation framework that would contribute to the country’s budget.

The intention was confirmed as early as March 2023 when Haddad said that the industry could raise $423m in tax windfall, but even this estimate could be a bit of an understatement given the size and reach of the Brazilian sports gambling market.

All the while the government has been working on financial measures, prominent companies such as Betano, Betfair, and bet365 have found footholds in the country. One thing in the new measure that may displease consumers, though, is the way how their own gains will be treated.

Any winnings above $445 will be subject to a 30% levy. Anything below that will not be levied by the state. Meanwhile, the country has had to deal with a series of high-profile match-fixing offenses that have been taken seriously by local and the federal government.

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