Brazil plans to raise the tax on betting revenue (GGR) from 12% to 18%: reasons and consequences
A temporary measure (MP) has come into force in Brazil to increase the tax on online betting operators from 12% to 18% of their gross gambling revenue (GGR). Although the law comes into force immediately, it must be approved by Brazil’s National Congress within 120 days before it becomes law if passed without amendments, although President Lula da Silva can amend or veto it.
The decision to raise the GGR rate comes after the Brazilian government suddenly cancelled a planned increase in the financial transactions tax (IOF), which was set to rise from 0.38% to 3.5%. Critics have seen the IOF move as ill-timed at a time when the country is looking to increase capital inflows and build confidence in fiscal policy.
The betting industry is perceived by the Minister of Finance as a politically acceptable way to replenish the budget, unlike other sectors where new taxes can cause a sharp negative reaction from consumers or economic imbalance. That is why the increase in the tax on gross gaming revenue (GGR) was used to compensate for the revenue shortfall.
How did the industry react to such changes?
The Brazilian Institute for Responsible Gaming (IBJR) expressed strong disagreement with the proposed increase in the tax rate, emphasizing that such a change would create an excessive burden on legal operators and could destabilize the market.
Now operators and industry associations warn that such an innovation will increase the outflow of players to unlicensed platforms, which contributes to the growth of the black market for betting and the lack of legal certainty. And such consequences, naturally, do not correspond to the goals of regulating the industry.
Despite the resistance, the government believes that these changes should provide the necessary funding for social programs and help stabilize the gambling sector in the long term.
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