Brazil gambling tax hike set to hit online operators
Brazil’s gambling tax rate is set to rise by 50%, moving from 12% to 18% of Gross Gaming Revenue (GGR), with additional socio-economic contributions mandated.
Recently, Brazilian Finance Minister Fernando Haddad confirmed this substantial increase in gambling taxes, a move that reflects the government’s evolving fiscal strategies.
On June 3, the government proposed a Senate bill to raise the financial transactions tax (IOF) from 0.38% to 3.5%. However, that initiative was subsequently retracted.
This increase in gambling taxation serves as an alternative to the IOF hikes, which primarily impact foreign transactions and can be enacted more swiftly than other tax modifications.
National Bank for Economic and Social Development President, Aloizio Mercadante, previously suggested raising tax liabilities in the gambling sector to recover revenues lost from the abandonment of the IOF proposal.
This tax adjustment is now part of an amendment to Brazil’s IOF policy framework, demonstrating the government’s attempts to recalibrate fiscal obligations.
According to Haddad, the provisional measure concerning the IOF “will enable us to recalibrate the IOF decree, introduce lower expected rates, and implement compensatory measures to sustain tax responsibilities.”
Tax expert João Rafael Gandara of Pinheiro Neto Advogados emphasized that these moves are consistent with the government’s objective to achieve a zero deficit by 2025. He suggested that the timing may reflect President Luiz Inácio Lula da Silva’s urgency to meet fiscal targets amid pressures from legislators to reverse any IOF increases.
Alongside the elevated GGR tax, Brazilian operators are currently burdened with a 9.25% PIS/Cofins tax and local taxes reaching up to 5%. The PIS tax is a federal social contribution based on revenue, while Cofins functions as a monthly social assistance contribution, also revenue-based.
Brazil is presently transitioning to a reformed taxation system that will replace PIS/Cofins with a dual tax framework targeting goods and services.
It’s important to note that the newly announced provisional measures will not be enacted immediately; they must first receive approval from the Chamber of Deputies and the Senate.
Industry Responses to the Tax Increase
The Brazilian Institute of Responsible Gaming (IBJR) has expressed strong disapproval regarding the tax hike. Their statement described the proposal as “unacceptable,” asserting that it jeopardizes operational capability for numerous companies that have invested in the regulated gaming market, meanwhile creating legal uncertainty and diminishing public revenue.
Since 2025, legal operators have paid R$30 million ($5.2 million) each for a five-year concession, leading to approximately R$2.3 billion collected by the Ministry of Finance to date.
IBJR emphasized that the sector’s financial planning was based on the previous 12% tax rate, positing that adjustments mid-contract could destabilize the economic balance and undermine confidence in the regulatory framework. The organization warned that a tax increase on online betting could escalate the black market’s share from 50% to 60%.
While the IBJR intends to maintain dialogue with government officials and lawmakers, it has not ruled out legal action to contest this development.
Concerns from Brazilian Gambling Operators
Earlier this month, six of Brazil’s premier gambling trade associations penned a joint letter, underscoring the detrimental impact that increased taxation would impose on the industry.
In response to the Senate bill proposing an IOF increase, both the IBJR and the National Association of Games and Lotteries highlighted that the 79 currently licensed operators have already delivered over BRL 2.4 billion in authorization fees. Expectations indicate that their tax and social contributions for 2025 will exceed BRL 4 billion.
The associations articulated that it is unjustifiable—on technical, economic, or public policy grounds—to impose further tax burdens on a sector already strained and contributing significantly to the national economy.
