Brazil’s Ministry of Finance has revised its fiscal policy for legal gambling operators. As part of the new decision, the GGR tax rate has increased from 12% to 18%. This move is part of a broader strategy to adjust the state budget.
About the Government’s Initiative
Previously, the authorities planned to increase the fees imposed on financial transactions from 0.38% to 3.5%. Nevertheless, the country’s Central Bank opposed this measure, citing potential risks to the economy.
As a result, Fernando Haddad, Brazil’s Minister of Finance, proposed an alternative source of budget revenues. The expert’s new idea involved increasing the fiscal burden on the regulated gaming segment, which is still in its early stages of development.
Reaction of the Opposition
The new tax model has raised concerns in the professional community. Simultaneously, 6 industry associations have issued a joint statement calling on the authorities to review the financial policy towards licensed operators.
Among those organisations were:
- IJL;
- IBJR;
- ANJL;
- ABFS;
- AIGAMING;
- ABRAJOGO.
Gambling industry representatives emphasise that excessive fiscal burdens could harm the market and undermine trust in regulation. The proposed increase in the tax rate may prompt businesses and audiences to consider moving to illegal platforms. These conditions will not only weaken the efficiency of tax collection but also strengthen the shadow sector.
According to preliminary estimates, if the situation worsens, the licensed segment could lose up to R$2.8 billion, which is equivalent to approximately US$500 million.
Future of the Legislation
For the changes to take effect, they must be approved by the country’s Congress within 120 days. If the relevant amendments are not adopted during the specified period, the Ministry of Finance will likely have to reconsider its position.
The local iGaming sphere is still in its infancy, and further development depends on the balance of regulation. Increasing the tax rate without considering the industry’s specifics could slow growth and erode the confidence of international brands and investors.
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