A new normative ordinance in Brazil has confirmed a 15% tax on player winnings above BRL2,824 (PS437.77/EUR508.05/$547.25).
On Tuesday, the Special Secretariat of Federal Revenue of the Ministry of Finance published the Normative Ordinance no 2,191 on the Official Diary of the Union. This ordinance outlined Brazil’s tax structure for gambling after the Federal Revenue Service confirmed that it would impose a Personal Income Tax (IRPF), which is based on the betting industry.
Brazil’s betting laws are currently being clarified. On 21 December, the country adopted legislation regulating sports betting and online gaming. President Luiz Inacio Lula da Silva signed Bill 3,626/2023 into law in late December.
The Economic Affairs Commission decided in November that there will be a personal income tax of 15% in Brazil. The tax is only applicable to net winnings exceeding BRL2,824. Taxes will be applied at the moment winnings are paid. They will also be collected at source, before winnings can reach a player. Both the betting operator and tax collector will be in charge of calculating, as well as collecting, any contributions.
Net prize is the difference in value between winnings after each sports event or igaming sessions and bets. The losses incurred are not deductible.
The National Congress will discuss the presidential veto
The national congress will meet today (9 April) to review 34 vetoes of Lula.
The congress will discuss the Brazilian taxation of players as the 24th agenda item. Lula vetoed an exemption from income tax on winnings under BRL2,112 in the past. Lula has vetoed six of the Bill 3 626/2023 articles, three of which are related to taxation of bettors.
To reject the vetoes, 257 deputies will need to vote against them and 41 senators. To keep the vetoes in place, only one condition must be unmet.
IBJR: Tax on players frustrates the industry
Some people are concerned that the taxation of player winnings will negatively impact the Brazilian gambling industry when the market is fully regulated.
The Brazilian Institute of Responsible Gaming, or IBJR for short, is one of those who oppose the proposed measures. The tax structure has been characterized as being “harmful” or “legally doubtable”.
IBJR said: “By forcing the taxation on prizes to be treated separately, without compensating for losses (because bettors lost more than they won), the federal revenue understanding allows bettors to pay tax even if they did not have any income at all. This weakens constitutionality and is perverse to the consumer.
The rule is a threat to all of the work that has been done to regulate the market by the National Congress and the MF Prizes and Betting Secretariat. It also does not understand the purpose of the regulation, which is to promote positive behavior from operators and players and to contribute to the tax collection.
More Brazil regulation to come
Brazil has divided its gambling regulation into four phases. The lawyer Regis Dudena, who was named leader of Regulatory Policy at the Prizes and Betting Secretariat in April, is now responsible for the implementation of this regulation.
Normative Ordinance 615 is one of the many ordinances that have been published. This ordinance prohibited operators from accepting cryptocurrency or credit card payments.
Normative Ordinance No. 722 outlined the exceptions that allowed data centers to be situated outside Brazil. These included countries that have an agreement for international legal co-operation with Brazil.
Brazil plans to announce the full regulation of its regulations by July 31. The third stage of implementation includes rules on advertising requirements and gaming. In the fourth and final stage, industry contributions will be put towards socially responsible projects.
