Brazil to raise betting tax to utopian 18 %

The Brazilian government is planning to increase the tax on sports betting from 16% to 18%. This could result in a tax of €18 on every €100 wagered. Germany has also had a betting tax since 2012, but it is significantly lower. There is now much debate as to whether the increase in tax in Brazil could encourage illegal gambling.

As recently as April this year, we published a news article about how betting fraud is rife in Brazil's football leagues. The government of the world's seventh most populous country has been working on a new sports betting law for several years. Now it seems that the politicians have finally reached an agreement. One of the plans is to increase the national betting tax by two percentage points to 18%. A new regulation on sports betting advertising is also planned.

How sensible is the new utopian betting tax in the amount of 18 %?

Earlier this month, the Brazilian Ministry of Finance announced that new regulations will apply to the taxation of bets and the advertising of sports betting. According to the current decisions, operators in Brazil will have to pay 18% of their bets as tax.

By way of comparison, the betting tax in Germany will be 5.3% when the new State Treaty on Gambling comes into force in 2021. In previous years, betting customers had to pay 5% of their stakes as betting tax under the Racing and Lottery Act. The Brazilian betting tax is therefore more than three times higher than the current German betting tax!

International gaming operators may obtain Brazilian sports betting licence

The Brazilian government's new bill also allows foreign gambling companies to apply for a sports betting licence. However, the cost of applying for such a licence is said to be the equivalent of around €5.7 million.

In addition to the utopian betting tax, there are other levies that betting operators have to pay. In Brazil, for example, there is a minimum two per cent tax on services (ISS). Experts estimate that operators will have to pay around 30% of their profits in taxes in the future.

What changes should be made to sports betting advertising?

Anyone advertising as a sports betting provider in Brazil will be required to include a clearly visible responsible gaming statement. Back in March 2021, we published a helpful article on how responsible gaming works.

However, it is likely that the Brazilian online betting market will experience a significant deterioration as a result of the planned tax increase. This in turn could lead to channelling being jeopardised and players switching to illegal gambling sites where they can avoid the utopian 18% betting tax. As recently as July this year, another article discussed whether less regulation could lead to fewer illegal operators.

It should be noted, however, that the planned changes have not yet been approved by Parliament and have therefore not yet come into force.

Image source: https://pixabay.com/de/photos/rio-de-janeiro-brasilien-berg-809756/