Brazil gambling associations unite against potential new tax burden
Six of the biggest gambling trade associations in Brazil have issued a joint statement, hitting out at potential government plans to raise industry taxes.
On Tuesday, associations such as the Brazilian Institute of Responsible Gaming (IBJR) and the National Association of Games and Lotteries (ANJL) responded to a Senate bill which called for a financial transactions tax (IOF) rate increase from 0.38% to 3.5%.
The IOF applies to credit and foreign transactions and can be applied immediately, unlike many other tax changes.
The government issued Decree No 12,466/2025 proposing the change on 22 May, but has since faced pressure from Congress, which hinted at revoking the decree.
But National Bank for Economic and Social Development President Aloizio Mercadante subsequently suggested increasing the Brazilian gambling sector’s tax burden, in order to offset the revenue lost by revoking the IOF decree.
It has been reported the Ministry of Finance would need to collect around 77% of the current monthly revenue made by gambling operators in Brazil, to make up for the approximately BRL20 billion ($3.5 billion) in taxes it is seeking to collect from the IOF increase.
In the joint-statement, the associations warned further taxes could bring the viability of regulated online operators into question.
“Entities representing the betting sector in Brazil express deep concern and vehement disagreement regarding the possibility of increasing the tax burden on operators legally established in the country,” the statement read.
According to the associations, the 79 operators currently licensed have already contributed over BRL2.4 billion in authorisation fees. Their tax and social contributions in 2025 are expected to exceed BRL4 billion.
“In this scenario, it is unjustifiable – from any technical, economic or public policy perspective – to impose new tax burdens on a sector that is already extremely burdened and contributes significantly and responsibly to the country,” the statement continued.
Brazil gambling tax system explained
Currently, alongside a 12% tax rate on GGR, operators also face a 9.25% PIS/Cofins tax, as well as municipal taxes of up to 5%.
Additionally, operators are taxed on around 34% of their profits, with 25% in the form of corporate income tax and 9% in social contribution taxes.
Brazil is transitioning to a new tax system, which would see PIS/Cofins replaced by a dual tax system of tax on goods and services and contributions on goods and services, with the associations estimating this could raise the tax burden by another 13% on gross revenue.
With Brazil also floating a consumption tax, which some have described as a “sin tax” on gambling, the associations warn the industry is nearing a tax burden of close to 50%.
“Brazil currently has a historic opportunity to consolidate a mature model of gambling regulation, with high revenue-raising capacity, commitment to market integrity and citizen protection,” the statement said. “It is essential to avoid irreversible setbacks.”
João Rafael Gandara, tax specialist lawyer at Brazilian law firm Pinheiro Neto Advogados, believes the measures align with the government’s goal of reducing the deficit to zero in 2025.
With Brazil holding general elections next year, Gandara tells iGB the IOF increase could be a desperate last-ditch attempt for President Luiz Inácio Lula da Silva to achieve that target, despite growing pressure to revoke the IOF rise.
Could the illegal market in Brazil be strengthened?
Similarly to the response to the Senate last week approving new restrictions on advertising, the industry warns further taxes could risk the viability of online operators, while empowering the black market.
The associations cited the international experiences of Italy and Spain, where excessive taxation of newly regulated markets has led to the illegal market expanding and a loss of revenue for governments, while also weakening regulation.
“The adoption of measures that compromise legal operations tends to cause the opposite effect to that desired: the strengthening of clandestine platforms that do not collect taxes,” they added.
“In Brazil, the risk is already evident: while the regulated market moved around BRL3.1 billion per month in the first quarter of 2025, the illegal market operated with estimates of between BRL6.5 billion and BRL7 billion per month – figures that are completely beyond the control of the state.”
Could land-based legalisation provide an alternative?
Despite Brazil launching its regulated online betting sector on 1 January, it is still unclear when land-based legalisation could arrive.
Brazil’s Minister of Tourism Celso Sabino previously predicted the Senate vote would happen in H1 this year, although time is rapidly running out on that expectation.
Gandara believes land-based legalisation could provide the government with the tax revenue it desires.
“To look at the bright side for gambling companies, especially with talks about [land-based] casinos, that would be an opportunity,” Gandara adds.
“[At April’s SiGMA Americas Summit in São Paulo] there was the senator that has the bill to allow casinos operations in Brazil and he was discussing it as a compensation for some type of taxes. And I think this may be at least the time appropriate time for that.”