Brazil Debates Gambling Advertising Ban and Taxation Amid Regulatory Uncertainty

Discussions over new gambling tax legislation continue in Brazil, as uncertainties persist regarding how tax should be collected on player winnings.

The Sports Commission (CEsp) is set to hold a public hearing to examine two proposed bills: Bill 2,985/2023, which seeks to ban sports betting advertising, and Bill 3,405/2023, which aims to prohibit athletes and celebrities from endorsing betting platforms. The hearing was requested by Senators Carlos Portinho (PL-RJ) and Jorge Kajuru (PSB-GO).

Bill 2,985/2023, introduced by Styvenson Valentim (PSDB-RN), and Bill 3,405/2023, presented by Eduardo Girão (Novo-CE), would extend restrictions on sports betting advertisements to teams, athletes, former athletes, presenters, commentators, celebrities, and influencers. As the request for a public hearing has been approved, the bills were not put to a vote last week and will remain under discussion until the hearing takes place.

Senator Portinho has proposed that the debate be scheduled for April, preferably in the Senate Plenary, with representatives from all relevant sectors invited to participate. However, the exact date has not yet been determined.

Meanwhile, the tax regime for online gambling in Brazil remains a contentious issue. Robinson Sakyama Barreirinhas, special secretary of the Federal Revenue Service, has defended the current taxation model for player winnings. Speaking before the Parliamentary Commission of Inquiry (CPI), which is examining the recently launched regulated market, Barreirinhas argued in favor of taxing gamblers directly.

“My position is that gamblers should pay income tax, because the tax, in this case, does not have a revenue-raising function, it has a dissuasive function, of not encouraging gambling,” he stated. “It is like this all over the world. We are treating gamblers better than we treat a company with real profits in Brazil. It is crazy.”

Senator Soraya Thronicke (Podemos-MS), who serves as the committee’s rapporteur, has called for changes in gambling legislation to increase taxation on certain gaming sectors. “The more harmful the product, the higher the taxation should be. I am shocked by the 12 per cent taxation on gambling activity,” she remarked.

Law 14,790/2023 currently imposes a 12 percent tax on gross gaming revenues (GGR) for licensed operators and a 15 percent tax on player prizes exceeding BRL 2,824 (approximately €530). However, Barreirinhas was cautious about providing definitive figures on tax collection, stating that authorities would have a “clear picture in six months.” Receita Federal has assigned a specialized team to analyze data submitted by companies to monitor compliance.

Regarding taxes that went uncollected before the introduction of the regulated market, Barreirinhas estimated potential losses at BRL 3 billion (€3.3 million). The exact figure is yet to be confirmed by Receita Federal. However, the issue of retroactive taxation for operators that were active in Brazil between 2018 and 2024, prior to regulation, remains a subject of debate.

“In my opinion, those who were physically present in the country, materially or informally, are accountable to Brazilian tax authorities,” Barreirinhas asserted. While retroactive taxation could prove difficult to enforce on foreign operators that operated before regulatory oversight, he suggested that new legislation could hold agents and services facilitating transactions responsible. On the other hand, critics argue that operators that have since obtained licenses should not be penalized for transitioning to the regulated system and should not face abrupt regulatory changes.

Barreirinhas also expressed the view that Brazil requires a dedicated gambling tax law to clarify how players should pay the 15 percent income tax on winnings. Receita Federal has proposed that gambling operators withhold income tax at the source, similar to the taxation model applied to lottery prizes. However, Congress favors an alternative approach in which players would be responsible for declaring their online gambling winnings in their annual Personal Income Tax (IRPF) filings.

By fLEXI tEAM