Brazil to impose 1% turnover tax on sports betting
Country’s Ministry of the Economy details first regulations for sports betting licensing following month-long consultation
The Brazilian government has released the first details of its forthcoming regulatory regime for sports betting, confirming operators will pay an annual tax rate of 1% on turnover.
Under the proposed regime from the Ministry of the Economy, operators will also be required to pay a one-time licence fee of R$3m (£600,000) for a nine-year licence. All licensed operators will be required to then pay a monthly fee dependent on the medium used.
Retail sports betting operators are required to pay a monthly fee of R$20,000 (£4,000) per month, while online betting firms are required to pay a higher monthly fee of R$30,000 (£6,000) per month.
Those firms which operate across both media will be required to pay a monthly fee of R$45,000 (£9,000) per month.
During the recent consultation process, several parties had called for the imposition of a tax on gross gaming revenues, rather than on a turnover basis.
However, the Brazilian government has claimed a 1% tax on turnover will be broadly equivalent to a tax rate of between 5% and 7% of operator gross gaming revenues but still at a level acceptable for the Brazilian government.
Key issues covered in our response to the Brazilian consultation on sports betting we publish today on our website:
✔️Licensing, Regulation and Taxation principles
✔️Betting Product Availability and Integrity
✔️IBIA Betting Alert Data 2015-2018
Check the full version here👇— International Betting Integrity Association (@IBIA_bet) September 6, 2019
In addition to the tax and licensing details, the Ministry of the Economy said all licensed operators will be required to operate a mandatory financial reserve of R$6m (£1.2m).
Details of the sanction process for unlicensed operators have not been confirmed, due to the need to change the Brazilian penal code to include this under the list of offences.
However, it is understood ministry officials favour a system where unlicensed operators receive fines and prison sentences.
Over 1,849 responses were received by the Brazilian government to its consultation document on the regulatory process, issued last month, having been fast-tracked.
In one response, the International Betting Integrity Association (IBIA) claimed the imposition of a tax on turnover would create betting products that are “less competitive and are unappealing to consumers compared to operators offering the same products taxed on GGR”.
The IBIA also claimed a turnover tax would affect channelization to regulated operators, potentially reducing the number of licence applications and making the market less competitive in the long term.
“There is a clear danger that many Brazilian consumers will be attracted to sports betting products in other more fiscally advantageous markets, negating Brazilian regulatory measures,” the IBIA adds.
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