Ana Maria Menezes – SBC Noticias Brazil
Tax deliberations have re-emerged once more in Brazil’s Senate and the Chamber of Deputies related to the future governance of the Bets regulatory regime reports Ana Maria Menezes
On Friday, prominent media outlets O Globo and Folha de S.Paulo reported that the government’s economic team had “held discussions to raise the Gross Gaming Revenue (GGR) tax on betting operators from 12% to 18%”.
The move follows the government’s abrupt reversal of a planned hike in the Financial Transactions Tax (IOF), which was due to increase from 0.38% to 3.5%.
The IOF, is a long-standing instrument of Brazilian fiscal policy, applied to a wide range of financial services, including loans, insurance, currency exchange and international transfers.
The federal government frequently uses it as an economic lever — one of the few it can adjust without legislative approval. But Finance Minister Fernando Haddad shelved the increase amid growing concerns from the Central Bank that the measure would jeopardise investor confidence.
Critics, including monetary officials, viewed the move as ill-timed and inflationary, particularly at a moment when Brazil is seeking to bolster capital inflows and consolidate fiscal credibility. For now, the IOF remains unchanged — but the government still needs to make up the revenue shortfall.
Fiscal focus moves to the Bets regime, as a tempting target to fill the budgetary gaps. Unlike sectors where new taxes might provoke consumer backlash or economic distortions, the betting industry is perceived as an easy fiscal win for the Minister of Finance (MEF), politically tolerable and increasingly profitable.
According to estimates cited in BNLData, the Brazilian betting market is generating around R$2.8bn (€440.5m) in monthly turnover, with federal receipts via DARF Form 5862 (the payment channel for fixed-odds betting tax) already contributing approximately R$755m in the three months between February and April. That represents around 9% of a total GGR estimated at R$8.38bn over the same period. Add to this the R$2.4bn already collected from 80 licence grants, and one begins to see why Brasília’s gaze has fallen upon the sector.
Yet, taxing gambling is not merely a matter of accounting. A proposed GGR rate of 18% would place Brazil near the upper end of international comparisons and some fear it may prove counterproductive.
The Instituto Brasileiro de Jogo Responsável (IBJR), the industry’s main lobbying body, has formed a coalition with five other trade associations to call on ministers to acknowledge the already substantial tax burden facing licensed operators under the Bets regime.
The coalition notes that the current framework includes a 12% gaming tax, 9.25% in PIS/COFINS, up to 5% ISS (municipal services tax), and 34% in corporate profit tax. Adding a potential Selective Tax (a form of “sin tax” under discussion) could push effective tax rates close to 50% — a threshold that many fear would deter investment and undermine market sustainability.
A study by H2 Gambling Capital indicates that as of 2024, 86% of Brazilian GGR was captured by regulated operators — with 70% of market share belonging to holders of provisional licences, and 17% to permanent ones. Unregulated activity had dropped to 14%, reflecting broader success in legal market channelisation. Tipping the balance, some argue, could threaten this fragile equilibrium.
In the Chamber, the powerful Centrist Bloc are presenting the tax hike as an alternative to more controversial austerity measures including curbs on social welfare and other programmes.
Internal government memos have reportedly dismissed revisiting previously rejected proposals, such as tightening eligibility for the BPC (a non-contributory pension), as politically unpalatable. By contrast, taxing betting firms — many of them foreign — offer both fiscal promise and public approval.
If implemented, the 18% GGR tax would not require the creation of a new tax instrument, nor impinge on existing consumer subsidies. But economists warn that the rate must be calibrated carefully. Raise it too much, and operators may scale back investment or exit the market entirely.
However, Brazil’s Secretariat of Prizes and Betting (SPA), has cautioned against overreach. In a recent technical note to Congress, the SPA outlined rules for the inclusion of promotional incentives needed to calculate GGR, which requires a technical settlement. On fiscal policies the SPA has warned ministers to maintain a balanced approach for the development of a nascent market and its licences.
Transparency on proceedings following the Congress meeting with the economic cabinet may prove decisive. With the government under pressure to deliver fiscal discipline while preserving social programmes, the betting tax may emerge as a compromise between political viability and economic necessity.
