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Brazil – IBJR welcomes bill but expresses concerns over tax on winnings

By - 8 January 2024

The Brazilian Institute of Responsible Gaming (IBJR) has welcomed the signing of the country’s new online bill. However it has expressed concerns over the way players could be taxed on winnings. President Luiz Inácio Lula da Silva vetoed a section that provided a tax exemption for prizes of up to R$2,112. With the veto, income tax will be levied at a rate of 15% on bettors’ winnings.

The change was made so that the Federal Government would not promote “Income Tax taxation different from that applied in other lottery modalities, thus establishing a tax distinction without plausible justification.”

It will be up to the Federal Revenue Service to decide the period for measuring the bettors’ winnings in order to apply the charge. Previously, the idea was to carry out this analysis annually. Now, the body will create an ordinance to define how often taxes on winnings will be collected.

In a statement the IBJR said:

“The Brazilian Institute of Responsible Gaming (IBJR) celebrates the promulgation of Law 14,790 by President Lula on the night of this Saturday, December 30, 2023.

“The act means that Brazil begins 2024 with the prospect of structuring a new production chain in the national economy. The sanction of the text, in addition to regulating the betting sector, officially legalizes the iGaming sector in the country, ending a long wait for society.

“As already stated on other occasions, Brazil is fully capable of becoming an international reference for the online gaming sector. The emergence of this new industry, which has innovation and technology in its DNA, was only possible thanks to the joint effort of the Legislative and Executive powers, in collaboration with the private sector. The broad dialogue forged a modern text, in line with best global practices, which means that potential national and foreign investors begin, in the first days of 2024, their analyzes and planning for billion-dollar investments in the country.

“However, the IBJR is concerned about the lack of definition of the basis and method of calculating the Income Tax levied on premiums paid to the end customer. As the consumer is the reason for the existence of the entire sector, this definition needs to happen quickly and rationally. The Institute is now available to build a sustainable model for this issue in conjunction with the responsible bodies. Bad customer experience, both in relation to excessive taxation and as a result of a complex verification system, tends to push consumers towards the informal market in the short term.”

The IBJR finished by thanking “ the commitment of everyone involved so that Brazil had the regulation of the betting sector and the recognition of iGaming, an activity already so widespread in the country.”

President Luiz Inácio Lula da Silva sanctioned, Bill PL 3626/2023 on December 30 which regulates the operation of sports betting in Brazil and allows for online casinos as well. The measure was published in an extra edition of the Official Gazette of the Union.

As well as vetoing the tax exemption on player bettors’ winnings President Lula also vetoed proposed standards for the authorization of commercial promotion and the filing of complaints, investigations and accountability related to the distribution of prizes and draws of up to R$10,000.

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