The country has recently vowed to ensure that sports betting companies are taxed, which was supposed to happen under the presidency of Jair Bolsonaro, who ultimately failed to sign an essential piece of legislation on his way out of office.
Sports Companies in Brazil Would Need to Set Headquarters in Brazil
Bolsonaro is now bickering over his loss of office and blaming voter fraud for his displacement. In the meantime, though, Da Silva’s office is determined to ensure that betting companies are held to high standards, which begins with accountability. Asking sportsbooks to be based in the country and set up headquarters there will allow authorities to use oversight mechanisms that allow them to tackle fraud, manipulation, match-fixing, and more.
The ordinance comes from the finance ministry, which has been working around the clock to introduce a new taxation regime for the sector and the companies involved in it, which are primarily overseas entities. While sportsbooks were allowed to set up shop in 2018, their taxation has been largely left to lose regulation, resulting in Brazil missing out on significant sums of money.
“The regulation will require that betting companies are based in Brazil,” the ministry stated. However, there are still some questions that remain. For example, it’s not clear at this point what the ministry means when it wants companies to be based in the country.
Does it refer to a subsidiary with local headquarters, which is what GamblingNews understood? However, other arrangements may also be enforced. Finance minister Fernando Haddad has been scrambling to ensure that sportsbooks begin paying their dues in Brazil and also looking for new revenue sources to plug a hole that a new exemption program on tax proposed by da Silva would open.
Spikes in social spending are not the only reason why Haddad seeks to ensure that betting companies are paying their due. The minister argues that lack of regulation and collection of taxes also make sports in Brazil susceptible to manipulation and fraud. This should help crack down on money laundering and other illegal activities. Once again, the ministry kept shtum on what rates it’s mulling regarding the upcoming sports betting tax.