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Brazil’s National Congress overturns President’s veto on online gambling tax exemption

By - 13 May 2024

The National Congress decided to overturn President Luiz Inácio Lula da Silva’s  veto to sections of the online gambling bill that allowed for the exemption of Income Tax (IR) for prizes in sports betting and online casinos. The override occurred during a joint session, with the presence of deputies and senators. With this decision, the rule that exempts winnings up to R$ 2,259 from taxation was reinstated.

Parliamentarians also reintroduced a section that establishes that IR taxation on bettors will occur once a year.

Deputies and senators also reinstated a provision that states that taxation will only be charged on the net prize, after deducting losses and bet amounts. According to the law signed in December, the tax rate will be 12% on betting houses and 15% on prizes obtained by bettors.

In the Chamber of Deputies, 417 lawmakers voted to overturn the veto and 64 voted to uphold Lula’s veto. Meanwhile, in the Senate, the result was 64 to 8, also continuing the rejection of the veto.

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 had been 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.”

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