Rio de Janeiro seeks to attract international operators with tax cut

Rio de Janeiro could be set to reduce its municipal service tax (ISS) from 5% to 2% as the city looks to entice international operators to set up operations in the coastal city.

Brazil is gearing up for regulated online sports betting this year after seeing former President Jair Bolsonaro fail to give the green light in December before he left office.

There is renewed hope that the market could finally launch before the end of the year with a new tax regime, regulation and a requirement for firms to have a headquarters in the country.

Writing in O Dia, Rio de Janeiro councillor Pedro Duarte confirmed the city is hoping to follow Brazil’s largest city, São Paulo, in reducing its ISS from 5% to 2%.

In Brazil, ISS is a tax levied on the prevision of services listed under Supplementary Law 116/2003. ISS is imposed on a cumulative process, with the rates varying between 2% and 5% throughout the country.

Breaking down the opportunities posed by the impending regulation, Duarte laid out how Rio de Janeiro would position itself as an attractive location.

Duarte said: “The big question is which cities will these companies choose to set up their headquarters?

“Whoever has the best business environment comes out ahead: qualified labour, vocation for sports and entertainment, little bureaucracy and lower taxes. In this case, the ISS. São Paulo has already moved ahead, reducing from 5% to 2%.

“We wasted no time and already presented a project to have the same reduction here in Rio, putting ourselves on an equal footing in this dispute. Our city is the birthplace of the sport and the natural destination for these companies,” he added.