SBC News Voice of the Sports Betting Industry
The tax framework applied to player prizes and winnings has been settled for Brazil’s Bets market.
Yesterday, the Federal Revenue Service (RFB) of Brazil confirmed its ruling on personal income tax (IRPF) that will be applied to ‘net prizes’ obtained via betting, lotteries, and online gambling.
As anticipated, the RFB approved the government’s modality to impose a 15% personal income tax on prizes and winnings above BRL 2824 (circa €530).
The RFB will exempt the 15% tax charge on net winnings/prizes below BRL 2824 – a figure reported to be equivalent to two average monthly wages for Brazilian consumers.
Net prizes of the Bets market will be determined as the difference between the prize amount won and the total amount wagered by the customer.
The 15% tax charge will be applied ‘at source’ by operators when crediting customer winnings, a mechanism replicating the same functions as state lotteries.
The framework was authorised by RFB General Secretary Robinson Sakiyama Barreirinhas, and in turn, will apply changes to Brazil’s federal tax laws on the Income Tax on Individuals (IRPF) and the Declaration of Income Tax Withheld at Source (DIRF).
The tax charge applied to player prizes has been viewed as a point of conflict in the pending launch of the Bets market.
The measure was imposed by President Lula da Silva upon signing Bill No. 3,626/2023 into law, authorising the legislative framework for Brazil to launch its federal sports betting and online gambling marketplace. Sanctioned as a federal law, the tax plan of Bill No. 3,626/2023 needed to be reviewed by the RFB to be incorporated within the government’s general tax framework.
ANJL, Brazil’s National Association of Games and Lotteries, pleaded with the government to remove the “tax burden on players” ahead of Bets launch.
The trade body lobbied for an intervention by Congress, who previously revised the gambling tax rates applied to businesses from 18% to 12% – viewed as necessary to protect the market’s competition and integrity for licensed operators.
As noted by SBCNoticias, the ANJL previously warned the PT government “that international experiences show that taxing users encourages clandestine gambling. That is why they called to ‘adjust the details to ensure the sustainable development of this promising sector.’”
At present, the PT government will launch the Bets market, imposing a 12% tax rate on gambling income and a BRL 30m (circe €5.5m) fee for federal licenses valid for a five-year period.
The remaining procedures to launch the Bets market are led by the Secretariat of Betting and Prizes (SPA), tasked with finalising technical ordinances on payments, IT security, crime prevention, and safer gambling duties.
Rules and technical guidelines issued by the SPA, ban the use of credit cards for payments, and detail that all customer deposits and withdrawals will require authorisation from the Banco Central do Brazil (BACEN).
New developments saw the SPA issue its ordinance on IT security, in which the authority applied strict rules on data management, as operators must ensure that IT-relevant data is stored in Brazil and can be accessed by the Ministry of the Economy and Finance.
The SPA expects to publish its remaining ordinances on crime prevention and safer gambling by the end of July, helping the PT government maintain its pledge to launch the Bets market in 2024.
