Brazil Keeps 12% Betting Tax, Adds Retroactive Regime
The Joint Committee of the National Congress of Brazil reviewing Provisional Measure 1303 has voted to uphold the current 12% tax rate on Gross Gaming Revenue (GGR) for betting operators, rejecting the government’s push to raise the rate to 18%. However, the approved report introduces a contentious retroactive taxation model called the Special Regime for Exchange and Tax Regularization of Betting Assets and Litigation (RERCT Zero Litigation Bets).
Under this mechanism, operators will have to pay a 15% income tax retroactively from 2014 through 2024, alongside a 100% penalty, with a 90-day period to settle their obligations.
The vote was narrowly passed, with 13 in favor and 12 against. While some government tax proposals remain, several others were amended including the removal of fintech tax increases. After lengthy negotiations, Carlos Zarattini withdrew the betting tax hike but added the retroactive clause aimed at licensed companies under the Secretariat of Prizes and Betting (SPA).
Stronger Measures Against Illegal Gambling
The new text introduces measures to tighten control of Brazil’s unregulated betting market. One provision mandates that internet service providers block unauthorized betting platforms within 48 hours of notification, aiming to curb illegal activity and protect the regulated ecosystem.
The retroactive taxation measure is designed to resolve ongoing disputes between betting operators and the federal government. Companies that join the RERCT program can regularize their tax situation by paying the 15% rate plus penalties, potentially avoiding future legal conflicts over undeclared revenues.
Industry Reaction and Legislative Deadline
Lawmakers opposing regulated betting voiced frustration at the removal of the proposed 50% tax increase, arguing for steeper industry contributions. Supporters countered that excessive taxation would harm legal operators, reduce overall tax intake and drive players to the black market.
Despite the scrapped hike, the retroactive measure has sparked concern among SPA-licensed companies, which now face hefty financial liabilities as they settle old tax bills.
The government views MP 1303 as a central tool for fiscal recovery in 2025 and 2026, especially after shelving plans to increase the Financial Operations Tax (IOF). With the retroactive provision, officials aim to boost short-term revenue without risking legislative delays.
The text must now be approved by both the Chamber of Deputies of Brazil and the Federal Senate of Brazil before 11:59 p.m. on October 8. Failure to pass both chambers by this deadline would invalidate the measure and force the government to restart tax negotiations.
This decision will be pivotal for Brazil’s regulated betting landscape, shaping not only future taxation but also compliance strategies to tackle unlicensed operators.
