Belo Horizonte Lowers Betting Tax to Attract Operators

The Belo Horizonte municipal government has tabled a plan to reduce the city’s betting tax from 5% to 2%, following approval by the Committee on Legislation and Justice (CLJ). Proposed by Mayor Álvaro Damião (União Brasil), the initiative is aimed at encouraging digital gambling companies to establish operations in the city and broadening the local tax base despite the lower rate.

Lower ISSQN Rate to Strengthen Local Gaming Market

Under the current law, gambling activities—including lotteries, bingo, raffles, and betting coupons—are subject to a 5% service tax (ISSQN). The proposed drop to 2% is intended to make Belo Horizonte a more competitive hub for operators in Brazil’s growing online betting sector.

Mayor Damião described the measure as a targeted economic strategy:

“As virtual betting expands under national regulation, operators are searching for favorable jurisdictions. Reducing the tax encourages them to base operations in Belo Horizonte while ensuring ISSQN contributions.”

City estimates indicate that even at the lower rate, R$2.8 million in revenue could be collected by 2025, after accounting for estimated fiscal concessions of R$11,685.

Legal Backing and Legislative Pathway

The CLJ has verified the bill’s legal and constitutional compliance, with rapporteur Councilor Dr. Michelly Siqueira (PRD) confirming it is within the city’s authority to regulate municipal service taxation.

Before final approval in the plenary, the proposal must pass through three further committees: Education, Science, Technology, Culture, Sports, Leisure and Tourism; Urban Mobility, Industry, Commerce and Services; and Budget and Public Finance.

Opposing Proposals Target Gambling Ads

While the mayor’s bill focuses on attracting operators, other council members are pursuing restrictions on betting advertising. Councilor Wagner Ferreira (PV) cited public health concerns and recommended limiting promotion of both online and traditional gambling.

Similarly, Councilor Pedro Rousseff (PT) has introduced legislation aimed at reducing the visibility of gaming ads, arguing that it would curb compulsive betting behaviors and protect community well-being.

Property Tax Relief for Clubs and Recreational Entities

Alongside the betting tax cut, Damião’s administration is proposing reforms to the IPTU (Property Tax) system. Sports and leisure clubs with overdue debts could benefit from extended relief, moving the eligibility period from 2014 to 2020. Approximately 95 institutions could benefit, with R$15 million in liabilities addressed and R$12 million forgiven.

The mayor emphasized that these measures are intended to stimulate social, sports, and recreational programs, balancing short-term revenue reductions with long-term economic and community gains.

National Betting Tax Debate in Context

Belo Horizonte’s move comes amid federal discussions on taxing digital betting. Recent proposals include increasing the Financial Operations Tax (IOF) and a bill by Congressman Lindbergh Farias (PT–RJ) seeking to double betting taxes from 12% to 24%.

Unlike these nationwide initiatives, the city’s approach is to incentivize operator investment rather than increase taxation, balancing economic opportunity with social responsibility in Brazil’s rapidly evolving online gambling industry.