An administrative order issued on Thursday outlined that entities facilitating financial transactions for illegal betting must be held accountable for taxes and are required to block such transactions within 24 hours of notification from the Ministry of Finance. This directive is encapsulated in Ministry of Finance Ordinance No. 1,766, which establishes the tax liability of financial and payment institutions connected to illegal online betting and gaming companies. This measure aims to combat clandestine activities and curb unlicensed operations, with immediate effect for the joint and several liability of these financial institutions.
The ordinance specifically addresses tax obligations related to unauthorized fixed-odds betting operations, as detailed in Article 6 of Complementary Law No. 224/2025. Banks and financial institutions will now bear responsibility for taxes owed by operators lacking a federal license, following formal notification by the Ministry of Finance.
Additionally, the ordinance extends liability to individuals or entities that advertise or promote illegal betting operations, requiring no prior notice for their accountability in publishing content related to unlicensed betting websites.
The Secretariat of Lotteries and Betting (SPA) and the Federal Revenue Service will be tasked with notifying the relevant financial institutions. These institutions will have a 24-hour window to restrict transactions; failure to act will result in their liability for the associated taxes.
Details of the ordinance clarify that formal notifications regarding the liability of financial institutions will be jointly issued by the SPA and the Special Secretariat of the Federal Revenue Service of Brazil, both part of the Ministry of Finance. This notice will set a deadline of 24 hours for institutions to implement restrictions on transactions linked to the illegal operation of fixed-odds betting.
The notification must identify the illegal operator, which includes providing essential information such as the business name and registration number in the National Register of Legal Entities (CNPJ), details of the financial transaction in favor of the non-compliant operator, the identifying financial or payment institution, and any other available information useful for implementing the restrictions mandated by the ordinance.
Administrative tax proceedings will formalize the tax liabilities, ensuring the involved parties' rights to a fair hearing and comprehensive defense. Furthermore, the ordinance governs the joint and several liability of third parties concerning taxes on betting operations and the distribution of net winnings to bettors.
