SBC News Voice of the Sports Betting Industry
A further tax conundrum is emerging for licensed operators in the newly launched Brazil Bets market, who are warned to review the ordinances establishing the ‘GTI Bets’.
On 8 January, the Secretariat for Prizes and Betting (SPA) and the Federal Revenue Service (FRS) announced a cooperative agreement to form an ‘Inter-Secretarial Working Group’ tasked with monitoring the fiscal compliance of online gambling licences.
Named the ‘GTI Bets’, the strategic unit has been charged with identifying illegal activities, such as money laundering, on behalf of the SPA, as well as determining potential tax liabilities of online gambling operators for the FRS.
Closer scrutiny of the ordinances establishing the unit reveals that the GTI Bets is also responsible for “supporting the proposal of a compliance programme for the regularisation of tax obligations related to periods prior to authorisation, for licensed legal entities.”
In light of this, Ricardo Assis, Editor of SBC Noticias Brazil, consulted legal experts on the scope of GTI Bets’ responsibilities and whether the unit could propose a programme to impose retroactive taxes on Bets licences issued before the market’s official launch on 1 January 2025. Assis received mixed responses from Filipe Rodrigues, a lawyer and CEO of Jogo Positivo, and Andréa Ueda, an associate lawyer at AMIG Brazil.
Specific Law needed to apply Retroactive Taxes
The tax responsibilities assigned to GTI Bets have been established through “joint ordinances”. Filipe Rodrigues of Jogo Positivo argues that the SPA and FRS have not defined whether retroactive taxes could be imposed as direct or ancillary obligations.
Rodrigues explains that “the principal obligation pertains directly to tax payment, whereas ancillary obligations concern the actions and procedures ensuring the proper calculation, inspection, and control of taxes.”
He emphasises that for retroactive taxes to be imposed, the SPA and FRS would need to introduce a specific law; otherwise, they risk breaching fundamental principles of Brazil’s Tax Law. Businesses cannot be penalised for failing to comply with laws that were not in place at the time.
Rodrigues provides context by highlighting that the tax framework for the Bets market was only approved by the Senate in December 2023, under Law No. 14,790/2023. This law established a 12% tax on gross gaming revenues (GGR) for licensed operators and a 15% tax on player prizes exceeding BRL 2,824 (approximately €530), authorised by President Lula da Silva.
Further pre-market proceedings in October 2024 saw the SPA announce that 89 operators were eligible to continue operating in the market until 31 December, provided they had submitted licence applications by the 30 September deadline.
“In my view, retroactive principal tax obligations do not apply. Such an action would constitute an abuse of state power. The principle of tax legality sets limits on the state’s taxation powers, ensuring taxes can only be collected when explicitly prescribed by law. No tax can be demanded without a clear and precise law establishing it. Furthermore, retroactive tax collection would undermine legal certainty and fairness,” added Rodrigues.
He concluded: “The purpose of the tax legality principle is to ensure fiscal justice and protect taxpayers’ fundamental rights while enabling the state to collect resources necessary for its functions. Any retroactive tax collection before authorisation would be arbitrary and illegal. Citizens should not be penalised for six years of state inaction.”
GTI Bets can provide a basis for Retroactive Taxes
A contrasting opinion was provided to SBC Noticias Brazil by Andréa Ueda of AMIG, who suggested that joint ordinances could enable GTI Bets to propose criteria for the relevant authorities to take action on retroactive taxes.
Ueda highlighted GTI Bets’ role in evaluating the fiscal compliance of licensed operators and “proposing measures for regularising prior tax obligations of current operators authorised to provide fixed-odds lottery betting services”.
“The initial interpretation suggests that the study aims to assess what taxes should have been collected during the period when these operators were offering sports betting and online games to Brazilian consumers without the required licences, which were only issued at the end of 2024.”
Ueda noted that debates on retroactive taxation of the Bets market are not new. Conflicts arose during meetings with the Ministry of Finance in 2023 and throughout discussions leading to the passage of Law No. 14,790/2023, which set the tax framework for the betting market.
As such, she argued, ordinances allowing GTI Bets to review past compliance and propose a regulatory framework should come as no surprise to operators who have been engaging in discussions with the Ministry of Finance since early 2023.
Ueda concluded: “The feasibility of retroactive tax collection hinges on constitutional and tax law principles. Legal foundations such as prescription periods, the existence of a taxable base at the time of the activities, and active and passive legitimacy will be pivotal considerations for GTI.”
“What matters most is transparency in these studies, discussions with licensed operators, and adherence to existing legal and regulatory frameworks to maintain legal certainty, which protects both society and the rule of law.”
Supreme Court’s unclear stance on past infringements
Both experts referenced a judgement made by the Supreme Federal Court (STF) last April regarding retroactive infringements, including tax charges prior to Bets regulation.
In such cases, businesses affected by the ruling could avoid fines for future fiscal contributions made under a regulated framework.
Rodrigues observed: “The decision of April 2024 was controversial, involving retroactive collection of the Social Contribution on Net Income (CSLL) back to 2007. While the STF ruled the tax constitutional, taxpayers argued against retroactive effects, but no modulation was applied.
“In the case of online betting, however, there was no taxable event from 2018 to 2023. Any retroactive collection would violate the principle of tax legality enshrined in the Constitution, Article 150, Section I, and create fiscal uncertainty.”
Ueda noted that the ordinance might seek to address income tax on bettors’ winnings from companies operating in Brazil before licences were issued, a move facilitated by migration measures under SPA Ordinance 1857/2024.
Tax determinations obstruct Bets launch
The forthcoming scrutiny by GTI Bets ensures that the Bets market remains accountable to further tax liabilities.
At the close of 2024, the Senate received a determination that online gambling could be classified as a new criterion for selective taxes. This determination was made by Senator Eduardo Braga (MDB-AM), who leads the government’s project to overhaul Brazil’s federal tax system.
Deliberations on so-called ‘sin taxes’ will begin in 2025, as the Senate has requested a complementary bill to outline specific sin taxes and rates to be applied to Bets licences.
The industry response, led by the National Association of Gaming and Lotteries (ANJL), warned senators that excessive taxation could push players towards illegal markets, arguing that “taxes are no substitute for federal controls”.
