Illegal gambling in Brazil costs economy R$ 300 billion says senator
Senator Izalci Lucas has called for greater oversight of online gambling. He stated that the government has yet to adopt measures to regulate the sector and criticized the lack of oversight from the Central Bank, the Federal Revenue Service, and the Ministry of Economy. According to Izalci, illegal gambling sends funds abroad without paying taxes, resulting in a loss of R$ 300 billion in 2023 for the economy.
“The Central Bank does not exercise any control, nor does it supervise payment institutions. Therefore, many illegal operations transfer money abroad through payment institutions without paying a cent, totalling over R$ 30 billion per year. We’ve noticed, and the Central Bank itself has acknowledged that it lacks the instruments to monitor these payment institutions because, in many cases, the ones being used are not under the Central Bank’s control. We suggested a change, and I hope the government addresses this as soon as possible,” he said.
According to the Senate News Agency, Izalci also criticized the proposed increase in the rate of the Tax on Financial Transactions (IOF). The tax was recently rejected by both houses. He stated that the government disrespected the principle of annuality established in the Tax Code by seeking to increase the tax by up to 300% without prior notice.
“The IOF is not a revenue-generating tax; you cannot impose a tax on businesses or individuals without proper scheduling. The law is clear. The Tax Code mandates adherence to the principle of annuality; you cannot establish a tax and have it take effect the next day.”
On 25 June Brazil’s Congress overturned a government decree that had raised the Tax on Financial Transactions (IOF), with a significant majority of 383 votes in favour and only 98 against in the Lower House. This decision was a major setback for the government, with even its own allied parties participating in the vote. Without the anticipated IOF revenue, the government may need to cut up to R$12 billion in spending to meet fiscal targets. Disagreements continue as the government considers taking the matter to the Supreme Court, arguing that Congress violated constitutional powers by overturning the decree.
Meanwhile, a provisional decree to offset the lost IOF revenue is facing resistance in Congress. This decree which also includes a raft of other taxes, would increase the tax burden on online gambling, raising the tax rate on betting companies’ revenues from 12% to 18% Gross Gaming Revenue (GGR).
