Tax reform in Brazil has moved one step closer as the Senate’s Committee of Economic Affairs (CAE) approved a plan to raise taxes.
Under the proposals, the current 12% tax will rise to 15% by 2027, before reaching 18% by 2028.
The reform has been merged with a shakeup of taxes on fintechs as Brazil’s Government seeks to raise funds to support widespread welfare spending.
Brazilian outlet Agência Senado reported: “The rapporteur defended the proposal as an instrument of tax justice and federal balance, highlighting that highly profitable sectors will begin contributing more fairly. According to official estimates, the project should generate a positive fiscal impact of nearly R$ 5 billion in 2026, R$ 6.3 billion in 2027, and R$ 6.7 billion in 2028.”
Though a long way to go before the changes are cemented, given the proposal must be considered by the Chamber of Deputies and lower house, opponents have rallied against the hike, warning that more effective regulation of the black market would be more effective to boost gambling tax revenue.
Andre Gelfi, Director and Co-founder of the Brazilian Institute for Responsible Gaming (IBJR), stated that the rise could “destroy a newly regulated market”, while noting that illegal gambling still accounts for approximately 51% of Brazil’s betting landscape.
He emphasised that the illicit sector generates approximately R$38bn per year, depriving the government of a significant portion of tax revenue.
Black market operators have also been able to operate uninterrupted, while regulated operators have been forced to adapt to new rules surrounding bonuses and incentives, as well as the prevention of gambling spending using funds from welfare payments.
“The regulated online betting and gaming sector has the potential to generate jobs, stimulate technological innovation, and contribute to economic chains linked to entertainment and sports,” emphasised Eduardo Biato, Chief Strategy Officer at 1PRA1.
“For this to occur continuously, a regulatory and tax environment with predictability is essential, enabling long-term planning and ongoing investments in security, integrity, and responsible gaming.”