Brazil’s IBGR lambasts Lula administration’s betting tax ‘burden’

Lula to bring sports betting forward but sidelines online casino

SBC News Lula to bring sports betting forward but sidelines online casino
Lucía Mouriño

Fernando Haddad, Brazil’s Minister of Finance, has shared that the Presidency of Lula da Silva will focus on moving forward on “electronic gaming”, and sanction a  sports betting regime. Yet, new details of a federal bill show that online casinos will not be included in upcoming plans. 

Sports news outlet Panorama Deportivo cited Ministry sources and explained what the regulation will include and how the government seeks to proceed with its legislation. 

Following Haddad’s comments, the author of the proposal Deputy Felipe Carreras received the green light from the President of the Chamber of Deputies Arthur Lira to start collecting the 171 signatures needed for an investigative commission (CPI) to analyse the bill.

Haddad had recently highlighted the need to tax gambling, as this would “help avoid illegalities” and would position Brazil on par with other global markets that have already taxed the sector.

“Online gambling is subject to taxes all over the world, it can’t be different in Brazil. There’s an absurd evasion in the country, as a lot of money leaves the country,”Haddad said to UOL.  

“There’s no control because they’re not land-based casinos, they’re online casinos. The discussion is about the taxation of online casinos, which exist and need to be regulated.” 

For the Treasury, the difficult goal is to offset an increase in income tax exemptions in Brazil. The government would require to balance the state income that will be lost due to the increase in the minimum of the tax thresholds – which went from $365 to $507 – “taxes that electronic games currently don’t pay”.

However, according to sources from the Ministry of Finance, the final text of the measure is entirely focused on fixed-odds sports betting.  Other gambling types/games will require to be eventually discussed by Congress.

Although online casinos won’t be part of this regulation, the Government will share ordinances that explain how companies will be governed and what the next steps will be so they can legalise their operations.

Another important point of the regulation is that it brings the topic of match-fixing and manipulation to the forefront of the discussions. In fact, the conversation about sports betting regulation started just a few weeks after Lula was force to intervene due to a series of match-fixing scandals in Brazil’s lower football leagues.

Globo reported that the text of the ordinances is being drafted in conjunction with the Ministry of Finance, the Ministry of Sports, the Executive Secretariats, the Secretary of Economic Reform and the National Treasury.

“The manipulation of results in Brazilian soccer matches is increasingly evident. There are speculations and insinuations that external forces are acting to interfere in the matches. We are seeing dissatisfaction everywhere. In Europe, there are cases that were proven after investigations. Brazil is not immune, it’s part of a dark circle. Let’s act,” Carreras urged.

Tax Issues Rise Again… 

Although Haddad had elaborated on the need to tax electronic games, the measure only covers online betting, leaving behind casinos or even “video games”, something that had been mentioned by the Minister.

The Government believes that online gambling should generate between $385m and $1.1bn in taxes annually.

Nevertheless, Haddad said that one of the reasons why the project is moving slowly is because it’s difficult to point out the exact amount that would be collected from a taxed betting regime. 

“We’re not missing a provisional measure, but the legal obligation to evaluate how much would be collected,” he explained.

“As it’s something totally new, we’re gathering the available information to be able to include the collection forecast in the law or in the provisional measure.”

In addition, he said that the absence of regulations, and the fact that online casinos are not based in Brazil, are “unfair” to the local population since the profits don’t stay in the country.

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