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Brazil to begin taxing online sports betting companies

Brazil betting

Brazil‘s minister of Finance, Fernando Haddad, has confirmed that the country will begin taxing the online betting and casino industry to compensate for lost revenue due to the recent reduction in the individual income tax rate in the country. The minister added the tax measure will kick into action as early as the first week in March.

Brazil’s President Luiz Inacio Lula da Silva has made good on his promises and reduced the personal income tax of people earning up to twice the minimum wage. The country increased tax rates from BRL1,903.98 to BRL2,640 (US$368 to $509) but to protect low-income earners, the government enacted a tax exclusion for them.

Consequently, the Brazilian government will be facing a loss in revenue of up to BRL3.2 billion (US$617.92 million). The government has added it may be losing up to twice by the following.

However, to offset the costs, the government has decided to tax online gambling companies. “I will regulate online gambling,” said Haddad. “They don’t pay any taxes and take a fortune of money from the country.”

Though Haddad has not given a figure to be realized from the taxation, an anonymous source from the ministry said the government could be looking at earning BRL 2 billion to 6 billion (US$386.2 million to $1.16 billion) annually.

Up till now, the sports betting industry in Brazil is a booming one but largely unregulated. The country is a Mecca for bookmakers who come into the country and make a fortune for themselves while remitting zero taxes to the government.

The administration of Former President Jair Bolsonaro attempted to regulate the sector in 2021 but failed to do so after missing the December 21 deadline given by the parliament. However, while the administration of President Lula da Silva is yet to conclude on regulations, all indications point to the fact that changes are coming soon to the industry.

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