Legislation

Brazil – Lawmakers propose amendment to resolve tax on player winnings

By James - 11 March 2024

The government could be close to resolving the issue of the tax rate on player winnings. President Luiz Inácio Lula da Silva sanctioned online sports betting and casino games on December 30. The original bill provided that prizes up to BRL 2,112 (the limit of the lowest Personal Income Tax bracket at the time) would be exempt from taxation but this was vetoed by the president.

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.”

Since then there has been considerable uncertainty over how players will be taxed on thier winnings. However two lawmakers have presented an amendment to a wider bill covering the exemption rage on taxes and it is expected to be analysed this week.

The leader of the Liberal Party Congressman Luiz Philippe de Orleans e Bragança  and the Leader of the Union Block, Congressman Kim Kataguiri  presented a floor amendment to Bill (PL) 81/24, authored by the government leader in the Chamber of Deputies, Congressman José Guimarães.

Bill (PL) 81/24 determined an increase in the exemption range from the collection of Income Tax for Brazilian citizens. The amendment put forward by the two lawmakers cover taxes on bettor’s winnings as part of that bill.

According to the lawmakers’ proposal, the tax rate will apply to net prizes exceeding the first bracket of the annual progressive income tax table. In addition, the income tax rate will apply to the positive result obtained from bets placed each year, after deducting losses incurred from bets of the same nature. According to the proposal, the tax will be calculated annually and paid by the bettor by the last day of the subsequent month.

The proposal is being processed under urgent regime and may be directly considered by the plenary, without going through thematic committees, and it is expected to be analyzed this week.

In January The Brazilian Institute of Responsible Gaming (IBJR) welcomed the signing of the country’s new online bill. However it expressed concerns over the way players could be taxed on winnings. 

In a statement the IBJR said that it was “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 . . . 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.”