Brazil transitions to new GGR-based tax regime

Operators in Brazil will now be charged tax based on gross gaming revenue (GGR), signalling an end to the country’s turnover tax model.

President Jair Bolsonaro passed the newly amended gambling taxation regulation, which will see a fundamental change to the tax system for sports betting operators in Brazil.

Provisional Measure 1,034/21, which proposes changes to article six of law number 13,756/2018, was approved on 2 June, leaving a wait of seven weeks before Bolsonaro signed off on the legislation.

The arduous process saw the Ministry of Economy’s Evaluation, Planning, Energy and Lotteries division lobby legislators in the country to recognise the benefits of switching from a fixed percentage of profits to a GGR-based tax system.

The new legislation also details which state institutions will benefit from the new tax system.

The vast majority (95%) of proceeds will be used to cover the cost and maintenance of the state body in control of the sector, which is still to be properly established.

Additionally, 2.55% of proceeds will go the National Public Security Force, 1.63% to Brazilian sports teams that license their branding to promote betting and 0.82% into the education system.

Moses Rodrigues, one of the key figures in accelerating the transition in tax models, said the European gambling market showed the way forward for Brazil.

He said: “The experience in Europe shows that it is better to adopt the operator’s gross profit as a basis, providing stable flows of public revenue and premiums and making bettors use the services of local operators.”