The Brazilian Institute of Responsible Gaming (IBJR) has slammed the proposal to raise the gross gaming revenue (GGR) tax rate to 18%, claiming such a move would make it “impossible” for many operators to remain live in the market.
Brazil launched its regulated market on 1 January 2025 with a GGR tax of 12% and operators paying BRL30m (£3.8m) for a five-year licence.
However, just six months in and the country’s Ministry of Finance has approved a provisional measure to increase the tax rate on operators’ GGR to 18%, with the measure set to be put in front of President Lula next Tuesday, 10 June.
Should it move to congress, the proposed tax hike would be implemented with immediate effect if approved within 120 days.
The Ministry cited the rebalancing public finances and budgetary measures as reasons behind the increase, as well as being an alternative to raising Brazil’s Financial Transactions Tax from 0.38% to 3.5%.
But, the IBJR has warned a tax hike would push players towards the illegal market.
Estimating Brazil’s illegal market share could grow from 50% to 60% and generate a loss of BRL2bn a year in revenue, the trade body argued the focus should instead be on combatting the black market and protecting players who gamble with unlicensed operators.
A statement read: “The IBJR expresses vehement indignation at the proposal to increase taxation for the online betting sector.
“The measure is unacceptable and makes it impossible for many companies that trusted and invested in the regulated market to operate, generates legal uncertainty and threatens public revenue.
“The sector’s planning was structured based on the current rate of 12%, and any change in the middle of the contract compromises the economic and financial balance and confidence in the regulatory environment.
“In the face of this violation, the sector continues to seek dialogue with the government and with the National Congress and, if necessary, will appeal to the courts.”
When Brazilian lawmakers were thrashing out a legal framework for the regulated sports betting and igaming market, a tax rate of 18% had been originally proposed, before being dropped to 12%.
However, operators in Brazil face a host of other levies, including municipal taxes and taxes on profits.
Brazil is in the middle of attempting to simplify its tax structure for all businesses and sectors, with a new three-pronged model having been proposed.
The IBS, a new VAT, will service as a point of consumption levy and replace the existing tax on the circulation of goods and services (ICMS) while the CBS will streamline the taxation of goods and services at the national levy. The IS is a selective tax on specific products deemed harmful to public health or the environment.
Speaking to Brazilian daily newspaper Folha, Rei do Pitaco chief legal officer Rafael Marchetti Marcondes said the rise to 18% on GGR, coupled with the IS tax, had the potential to take the effective tax burden for licensed firms to 55%.
At the start of June, KTO deputy CEO Jeff Tabone noted the current tax rate of 12% was proving to be a hurdle for smaller operators, before adding that the black market has found a way to remain relevant despite Brazil regulating earlier this year.
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Brazilian Institute of Responsible Gaming claims increase would make it “impossible” for some operators to remain live, as government lays out six percentage point hike
The post Brazilian trade body hits out against “unacceptable” 18% GGR tax proposal first appeared on EGR Intel.