Brazil Set to Undergo Major Tax Reform
Brazil’s federal legislative body The Chamber of Deputies has approved major regulatory changes to the country’s taxation system, set to shift it away from its current turnover-based tax system to a more “European-style” revenue-based one. The move follows heated opposition to 3% turnover tax law passed in 2018, which will now likely be thrown out.
Brazil’s Chamber of Deputies has passed significant regulatory changes to the country’s taxation system, shifting it away from its current turnover-based tax system to a more typical revenue-based one. ©12019/Pixabay
Tax Base Taken After Both Winnings & Taxes Paid Out
The main federal legislative body of Brazil, The Chamber of Deputies, has gone ahead and approved some major regulatory changes set to transform the country’s somewhat byzantine taxation system. It is set to shift away from its current turnover-based tax to a more typical revenue-based one.
Brazil is looking to the European taxation model as a source of inspiration here, hoping that it will “provide stable flows of public revenue and premiums and mak[e] bettors use the services of local operators.”
Initially signed into law in 2018 and drawing fierce opposition, the current 3% tax on turnover is likely to be scrapped entirely in the face of this new tax regime. When handling specifically gaming, Brazil’s new taxation system will take tax out after both winnings and taxes on these winnings are paid out, as well as after social security payments.
And when concerning taxation income, 0.82% will go to schools that have achieved the country’s set performance goals in national exams, while 2.55% will be sent to the National Public Security Fund (FNSP), 1.63% to sports clubs and 95% for national lottery operators.
Brazil Reverted to 3% Turnover Tax on Sports Betting in Late 2019
In December 2019, the Brazilian government made moves to once again levy a 3% turnover tax on licensed betting operators in the country, flying in the face of the lower 1% rate which had been put forward in a Presidential Decree draft earlier in the year.
The dispute between the two turnover rates is most likely due to the 3% rate being mentioned in a bill passed in December 2018 that legalized sports betting Brazil in the first place, while simultaneously establishing a two-year grace period for the country’s legislature to adopt the necessary regulations.
Simply put, while it may set out the specific regulations which end up governing sports betting in Brazil, the Presidential Decree cannot override the actual law which has been passed. Therefore, the original 3% turnover sum had to be reverted to.
Aside from the short-lived 1% turnover tax rate, the Presidential Decree also required applicants for operator licenses to pay an R$3 million (£546,135/€655,360/US$730,332) fee for a nine-year license, with subsequent monthly fees differing for online and land-based providers.
Retail operations, meanwhile, incur a R$20,000 monthly charge, which increases to R$30,000 for online. A R$5,000 discount exists for those operators working with both retail offerings and online ones, therefore having to pay R$45,000 per month.
Sports Betting Launch Got off to Rocky Start in February 2020
The launch of sports betting in Brazil got off to a slow and uncertain start back in February 2020, when the country’s Secretariat of Evaluation, Planning, Energy and Lottery (SECAP) announced a third consultation on fixed-odds sports betting.
While this move symbolized a major change in the approach to regulating Brazil’s nascent sports betting market, it more than certainly delayed the actual launch of the market in the country.
The SECAP’s consultation called for the public’s input on a potential shift to a concession model, in which a fixed number of sports betting licenses would be put on offer. This was a far cry from the initially proposed qualitative model, which would have seen any operator able to meet the license conditions be able to secure the necessary approval to operate sports betting in Brazil.
The proposed change to a concession model for sports betting licenses arrived from Brazil’s Attorney General’s Office of the National Treasury (PGFN), which typically consults the Ministry of Finance on legal matters.
The argument here on behalf of the PGFN was that such a concession-based model for licensees would enable the Brazilian government to enact more control over the country’s sports betting market — both in being able to crack down on any abuses of the law by operators and in combating illegal unlicensed operators working in the market.
Esports Technologies Recently Launched Wagering Platform in Brazil
Brazil has evidently adopted an online betting regime which allows for foreign operators to offer their services in the market, with Las Vegas-based company Esports Technologies announcing in June 2021 the launch of a new wagering platform in the country — Gogawi.
As a leading global provider of advanced eSports products and technology solutions, Esports Technologies is targeting Latin America’s leading gaming market, with the company’s CEO Aaron Speach accounting for the growing popularity of eSports in Brazil:
“Brazil is on the precipice of becoming an esports betting giant, and as such I am delighted to see Gogawi available to Brazilian esports fans and bettors. Brazilian esports has taken off, with a record-breaking number of people viewing major tournaments and competitions, like the Brazilian League of Legends Championship. With this increase in esports popularity and engagement from fans we are excited to bring an innovative and dynamic layer of engagement to esports competitions in Brazil, giving fans a chance to win big.”– Aaron Speach, CEO, Esports Technologies
