The special secretary of the Federal Revenue of Brazil (RFB), Robinson Barreirinhas, clarified to the CPI of Manipulation of Games and Sports Betting (CPIMJAE) that collecting taxes from betting companies headquartered abroad but with a strong presence in Brazil is a challenge. He expressed hope for effective enforcement starting January 1, 2025, when these betting companies will be required to establish operations in the country, and that cases of fraud are already under investigation.
“There are cases where the very investigation by the Revenue (tax office) and other security agencies shows a simulation: in reality, the company is controlled by a Brazilian, a resident of Brazil. In this case, there is no doubt that we will collect the taxes.”
He praised the taxation model established by Law 14.790 of 2023 and argued that the legal presence of companies in the country will lead to a “qualitative leap” in oversight and revenue collection. However Barreirinhas admitted that there is a lack of legal instruments for the tax office to tax bets that do not fall under Brazilian legislation.
“That’s why the model approved by the National Congress foresaw this obligation for the company to have a legal representative here so that there can be dialogue . . . and tax collection . . . The whole world is debating how to deal with, in the virtual environment, an increasingly intense provision of services and exchange of goods.”
He noted there are doubts worldwide about taxing transnational activities made possible through the internet, such as betting houses, cryptocurrency exchanges, and online stores abroad.
“We are following a global movement for coordination among tax authorities to share information related to financial transactions so that . . . we have conditions to implement the law.”
Barreirinhas also admitted that the tax office expects to collect “practically nothing” from bettors. The original bill provided that prizes up to BRL 2,112 (the limit of the lowest Personal Income Tax bracket at the time) would be exempt from taxation but this was vetoed by the President. However the Brazilian Congress overturned President Lula’s veto by a large majority .
“It’s not a criticism. The Federal Revenue necessarily works with what is approved by the National Congress, which is sovereign regarding this, but the fact is that the way this law was made, with the veto being overturned, basically renders any tax collection on the bettor unfeasible.”
When questioned by Senator Carlos Portinho, Barreirinhas added that even if a bettor makes a profit, oversight would be difficult given the large number of contributors, many of whom have “very low” income levels and are likely within the tax exemption range. He assessed that generalized collection will only be effective when betting companies start providing data linked to the tax IDs (CPFs) of the bettors, but he raised concerns about the cost of overseeing individual taxpayers for minimal revenue.