Brazil Implements 15% Tax on Player Winnings: Navigating the Regulatory Landscape of the Betting Industry

In a move to provide clarity and structure to Brazil's betting landscape, the Special Secretariat of Federal Revenue of the Ministry of Finance has issued Normative Ordinance No 2,191, introducing a 15% tax on player winnings exceeding BRL2,824 (£437.77/€508.05/$547.25). This ordinance, published in the Official Diary of the Union, marks a significant step in the country's efforts to regulate sports betting and igaming, following the enactment of Bill 3,626/2023 into law on December 21.

The decision to implement a 15% personal income tax was preceded by discussions within the Economic Affairs Commission, which determined the tax threshold and framework. Under this structure, only net winnings exceeding BRL2,824 will be subject to taxation, with betting operators responsible for withholding the tax at the time of payout. The definition of net prize, calculated as the difference between winnings and the amount bet, excludes losses from deductible calculations.

Today's session of the national congress holds particular importance for Brazil's betting industry, as legislators convene to discuss 34 of President Lula's vetoes, including those related to taxation on players. President Lula's veto of proposed exemptions for income tax on player winnings under BRL2,112 has sparked debate, with the outcome of the congress's decision likely to shape the future taxation landscape for players in Brazil.

Despite the government's intentions to formalize betting regulations, concerns have emerged regarding

the potential impact of taxing player winnings on the industry's vitality. The Brazilian Institute for Responsible Gaming (IBJR) has raised objections to the tax framework, characterizing it as "harmful" and "legally questionable." The institute argues that taxing bettors who have experienced net losses may undermine the fairness and effectiveness of the regulation.

As Brazil progresses towards a comprehensive regulatory framework for its betting sector, further developments are anticipated under the leadership of lawyer Regis Dudena, tasked with overseeing the Regulatory Policy of the Prizes and Betting Secretariat (SPA). Existing ordinances, such as Normative Ordinance No 615 prohibiting certain payment methods and No 722 outlining data center location exceptions, serve as initial steps in the phased rollout of regulations. Subsequent stages are expected to address advertising guidelines, igaming requirements, and mechanisms for industry contributions to social causes. The culmination of these efforts is projected to result in a fully-fledged regulatory framework set to be unveiled by the end of July, signaling a new era for Brazil's betting industry.

By fLEXI tEAM