Brazil’s sports betting prospects have received a boost this week, as Minister of Finance Fernando Haddad assured federal stakeholders that he will soon present a ‘provisional tax framework’ for licensed businesses.
Speaking to media in Brasilia, Haddad stated confidence that the Finance Ministry would propose a ‘working framework’, to be showcased following “President Lula da Silva’s trip to China at the end of March”.
The announcement sees Haddad stand by his previous declaration that sports betting taxes were required to offset a desired “income tax exemption for workers who earn up to twice the minimum wage” – a campaign pledge endorsed by Lula.
“I will regulate online gambling,” said Haddad. “These businesses don’t pay any taxes and take a fortune of money from the country.”
This March, Haddad had authorised his Deputy Felipe Carreras to analyse the previous Sports Betting Bill approved by Congress, but which failed to secure a federal sign-off by former President Jair Bolsonaro.
The rejected Bill 846/18 had settled for Brazil to impose a GGR tax base but was rejected by Bolsonaro, who wanted guarantees that foreign operators would pay all domestic business taxes.
A tax appraisal in 2021 estimated sports betting income at R$2bn (€380m) – a basic result required to offset Treasury projections that worker exemptions will account for R$3bn (€600m).
Haddad stated that the Ministry would make no current estimates on potential tax income. However, the Finance Ministry believes that an effective framework for sports betting could reap the government +$1bn in taxes annually
In related affairs, Senators Jorge Kajuru (PSB/GO) and Hamilton Mourão (Republicanos) have submitted the new Bill 845/2023 to be reviewed by the Senate.
The Senators’ bill seeks for the government to guarantee that any business involved in federal gambling or sports betting will be required to “establish domiciled headquarters and pay a $3.8m fee to obtain a five-year operating license.”
Licensing fees generated from the Bill will be allocated to “state schools in low-income communities.” Kajuru and Mourão stated that changes to federal laws related to gambling and sports betting must guarantee a positive social outcome for communities.
Kajuru stated personally: “From my point of view, the time has come to address this issue due to the rapid growth of the sports betting market and the problems arising from the lack of regulation
“This lack has led companies to establish their businesses abroad, which generates losses for public coffers due to the lack of tax collection.”