Government to raise taxes on betting in Brazil
The Minister of Finance, Fernando Haddad, announced on Sunday (8th) alternative measures to the decree that increases the Tax on Financial Transactions (IOF). As a result, the estimated amount to be collected to comply with the fiscal framework will come through other means.
After a lengthy meeting with the party leaders of the Chamber of Deputies, Haddad communicated that the compensation will involve a greater taxation on sports betting companies and the end of the exemption for earnings from fixed-income securities.
According to CNN among the changes are the recalibration of the IOF decree, a provisional measure with revenue compensations, a proposed amendment to the Constitution (PEC) for the review of tax benefits, and a commitment to control and review primary spending.
The proposals still need to be approved by the National Congress. Haddad confirmed the increase in taxation on betting to cover part of what will be revised with the rollback of the IOF. As a result, the charge on sports betting companies will rise from 12% to 18%.
Haddad explained that the 18% rate on Gross Gaming Revenue (GGR) from betting was the original proposal from the Treasury, when the regulation of the sector was sent to Congress.
The increase in the IOF was enacted by President Luiz Inacio Lula da Silva to boost revenue and mitigate a significant spending freeze and was designed to comply with this year’s fiscal regulations. It has sparked considerable backlash, as it promptly escalated the cost of credit for businesses, contributions to pension funds, and certain foreign exchange transactions at a time when financial expenses are already high due to Brazil’s elevated interest rates.
