Brazil Gambling Trade Associations Unite Against Rising Industry Taxes

Brazil’s licensed betting industry has issued a warning against tax reforms aimed at addressing fiscal shortfalls. Major associations, including the National Association of Games and Lotteries (ANJL), Brazilian Institute of Legal Gambling (IJL), and Brazilian Institute of Responsible Gambling (IBJR), caution that increased levies on regulated operators would be a blow to the legal market while reviving illegal gambling.

The opposition stems from concerns that authorities might raise sector taxes to compensate for revenue losses should Decree No. 12,446 be repealed. The move would increase international remittance taxes from 0.38% to 3.5%.

Heavy Tax Burden

In a joint statement, the gambling associations branded the potential tax hike as “unjustified from any technical, economic or public policy perspective.” They noted that the regulatory framework of Law No. 14,790/2023 remains in its infancy and requires stability.

Brazil currently ranks among the world’s highest-taxed betting markets, where operators currently face a heavy load: 12% federal gaming levy, 9.25% PIS/COFINS contributions, up to 5% municipal ISS tax, 34% corporate income tax (25% IRPJ + 9% CSLL), and regulatory fees reaching R$2 million monthly per licensee.

Additional Constraints

The proposed tax reform could impose an additional 13% burden through new CBS/IBS models. Also, a pending “sin tax” with undetermined rates threatens to push levies close to 50% of revenue. With 79 licensed operators investing over R$2.4 billion annually in entry fees alone, contributions in 2025 are predicted to exceed R$4 billion. These funds are allocated to national priorities, including healthcare, education, public security, and social welfare programs.

Anticipated Consequences

Industry representatives warn the proposed tax hikes could make the business model unsustainable and force licensed operators to abandon the Brazilian market. The statement cautions, “This disruption may result in litigation and systemic imparts, driving away investments and generating instability.”

European jurisdictions like Italy and Spain that applied similar models demonstrate how excessive taxation in newly regulated markets often fuels illegal gambling growth. Brazil already exhibits this risk, with the legal sector generating approximately R$3.1 billion monthly, while the unregulated market handles an estimated R$6.5 billion to R$7 billion.

Trade bodies stress that addressing temporary fiscal gaps shouldn’t destabilize a regulatory framework still in its infancy. As emphasized by the joint statement, “Compensating for temporary tax losses by disproportionately increasing the burden on a sector that is still undergoing regulatory consolidation compromises the very objective of public policy: channeling consumers to a safe, legal, monitored, and socially responsible environment.”