## Brazils Sports Wagering Levy Sparks Unease – iGB
Brazil’s suggested 15% levy on total gambling income for sports wagering has ignited worries from diverse parties involved. One prominent player in the industry believes the actual tax rate could reach 26.25% after extra payments.
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Brazil’s Sports Wagering Levy Sparks Unease
On April 12th, the Brazilian Ministry of Finance convened a public discussion in Brasilia, announcing a 15% tax on total gambling income for sports wagering.
This public gathering was held between the Ministry of Finance and industry participants to debate the proposed Provisional Measure (PM) that will outline the structure for Brazil’s regulatory system.
According to Neil Montgomery, founder and managing partner of Brazilian law firm Montgomery & Associados, the PM is nearing completion. It is likely to be released after President Lula returns from his trip to China.
Montgomery stated that Brazil’s sports wagering tax rate is based on the UK model. However, it is unclear whether the proposed 15% is the total amount operators will need to pay, as operators claim the tax is levied on top of existing federal social contributions and municipal service taxes, which would bring the total tax rate to 26.25%.
Should the Brazilian model be validated, it will significantly diverge from the 15% model implemented in the United Kingdom,” Montgomery stated.
“This disparity is the primary reason for the industry’s discontent with the announcement and their ongoing efforts to advocate for revisions within the forthcoming legislation.”
Legislative Process
Representatives from various organizations representing Brazilian gambling interests participated in the gathering. Leading Brazilian football clubs also attended, having recently issued a collective statement urging the ministry to include them in the ongoing discussions.
Other organizations present included several newly established trade bodies representing Brazilian sports betting companies and foreign operators.
“All these stakeholders retain the capacity to influence the Ministry of Finance and other governmental entities in shaping President Lula’s impending provisional measure,” Montgomery remarked.
“It’s also crucial to acknowledge that even following its publication, the provisional measure – which takes immediate effect upon its publication in the Official Gazette and possesses the same legal standing as federal ordinary law – remains subject to adjustments during congressional review.”
According to Montgomery, Congress will have a 120-day window to transform the provisional measure into federal ordinary law. If Congress fails to accomplish this, the provisional measure will be revoked.
Instant Lottery Reintroduced
Its whispered that the head of government will address fixed-odds sports wagering, or concurrently release a separate Prime Ministerial announcement declaring the revival of LOTEX, the scratch-and-win lottery that the administration attempted to privatize in 2019.
“The lottery failed in its second year because the winning group, composed of IGT and Scientific Games, declined to sign the agreement,” Montgomery stated.
This was primarily attributed to a 2020 Federal Supreme Court decision that shattered the federal union’s monopoly on lottery operations in Brazil.
“There are whispers that the federal government intends to have the federal savings bank CAIXA, which currently manages the federal lottery, also manage LOTEX, even if only for a short time,” Montgomery added.
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