Working group formed in Brazil to oversee betting tax

In a significant move to enhance compliance within the gambling sector, Brazil’s Secretariat of Prizes and Bets (SPA) has partnered with the Federal Revenue Service (RFB) to oversee tax obligations for licensed operators.

Announced through Joint Ordinance RFB/SPA/MF No. 3, published in the Official Gazette of the Union on January 8, the newly established betting tax working group, called GTI-Bets, represents a critical step towards ensuring transparency and accountability in Brazil’s emerging gambling market.

By collaborating closely, the SPA and RFB aim to monitor tax compliance among authorized operators and curb illicit activities such as money laundering.

The GTI-Bets is comprised of three core members from SPA, the RFB’s Sub-Secretariat for Inspection (Sufis), and the RFB’s General Coordination for Research and Investigation (Copei). The representative from Sufis will oversee the group’s operations, thus ensuring a streamlined approach to their mandate.

Initially, the working group’s tenure is set for six months from January 8, with the possibility for extension contingent on the effectiveness of their strategies.

Both Robin Barreirinhas, Special Secretary of the RFB, and Regis Dudena, head of the SPA, have endorsed the ordinance establishing GTI-Bets, signaling strong governmental will to regulate the sector effectively.

How the Working Group Will Achieve Its Objectives in Brazil

To maintain accountability, GTI-Bets will deliver bimonthly reports to its funding members, culminating in a comprehensive assessment at the end of the six-month operational period. The group holds the authority to solicit information from any unit within the Ministry of Finance, ensuring they have access to the necessary data for effective oversight.

The initiative promotes self-regulation within the licensed betting industry, allowing the RFB the ability to supervise operators independently of the SPA. This dual-layered oversight aims to fortify compliance while fostering a cooperative relationship among stakeholders.

With the legalization of the betting market effective January 1 and currently 14 companies holding full licenses alongside 54 provisional approvals, the regulatory framework is rapidly taking shape.

The SPA and RFB will leverage shared data and insights to pinpoint potential illegal activities, specifically targeting unlicensed operators engaging in financial misconduct like money laundering.

Furthermore, GTI-Bets is tasked with creating a proposal for a comprehensive compliance program that standardizes tax obligations for operators aiming to secure local licenses. This program will play an essential role in fortifying the integrity of Brazil’s gambling landscape.

To enhance cooperation, the working group will also suggest collaborative measures to support Sufis in their inspection efforts and establish a robust channel for sharing vital information.

Addressing Concerns Related to Tax Collection from Foreign Operators

In September of last year, Special Secretary Barreirinhas voiced concerns regarding tax collection from international operators that are not physically present in Brazil. During his testimony at the Parliamentary Inquiry Commission (CPI) addressing match-fixing issues, he highlighted the complexities posed by cross-border services and the disparate taxation frameworks across various jurisdictions.

Notably, Normative Ordinance 827 has stipulated that foreign companies seeking to operate in Brazil must partner with a local entity, which must be at least 20% owned by Brazilian stakeholders. Additionally, licensed operators are required to establish a registered headquarters within Brazil, thus reinforcing the legal framework governing foreign participation in the market.

As Brazil strengthens its regulatory capabilities through initiatives like GTI-Bets, the nation’s gambling sector stands poised for growth, characterized by accountability, compliance, and a well-supported framework for both local and international operators.