Brazil set to revert to 3 percent turnover tax for sports betting

The Brazilian government sets to levy a 3 percent turnover tax on licensed sports betting operators, instead of the reduced 1 percent rate in a draft Presidential Decree that was published earlier this year.

According to a legal source close to the matter, this is due to the 3 percent rate being included in Law Number 13,756/18, passed in December 2018 that legalized sports betting and created a 2-year window for the legislature to develop regulations.

The country’s Presidential Decree setting out the regulations governing sports betting can’t override the law, resulting in the tax rate that is reverted to the original sum, the legal source of iGamingBusiness.com explained.

Operators will also be required to pay an R$3m (about £546,135/ €655,360/ US$730,332) fee for a licence in nine years, with monthly fees differing for land-based and online channels, per the draft Presidential Decree published last September. Retail operations will incur a monthly charge of R$20,000, which will be to R$30,000 for online. However, those active in both two channels receive a R$5,000 discount, and will pay R$45,000 monthly.

It appears that an element referred to in documents as a quarantine clause, however, to the industry as a bad clause, will be removed. This would have blocked any operator that has already active in the Brazilian betting market from raking part in the regulated market.

Operators will also be required to sign a declaration that states they haven’t been involved in any illegal sports betting activity or lottery verticals in the whole country.

It appears that the bond operators are required to provide to secure that their licence could be increased to BRL18m. It was originally set at BRL6m, in order to ensure that licensees have the necessary funds to pay winnings to players.

Operators will be required to employ an accredited company to certify that their platforms, equipment, and payment processing methods are all compliant with the country’s law.

The legal source also suggested that the Presidential Decree is now to be released in January of 2020, most likely in the second half of the month. It will come ultimately into force 6 months after being published in the country’s Official Gazette.