The sports betting market in Brazil has grown significantly in recent years, driven by technological advances and the popularization of online platforms. However, with this growth came an urgent need for effective regulation and taxation.
Law No. 14,790/2023 introduced several changes aimed at regulating the fixed-odds sports betting market in Brazil. In addition to allowing these companies to operate legally in the country, the new legislation imposes a series of requirements for betting platforms to establish themselves as Brazilian tax residents.
Here are the key taxes applicable to betting operations in Brazil:
1. Gross Gaming Revenue (GGR): A 12% tax on the gross revenue from bets, which is the total amount collected by betting companies after deducting prizes paid and income tax on winnings.
2. Corporate Income Tax (IRPJ) and Social Contribution on Net Profit (CSLL): Betting companies that are tax residents in Brazil are subject to a combined rate of 34% on profits (25% for IRPJ and 9% for CSLL).
3. PIS and COFINS: Betting companies are also required to pay PIS and COFINS, with a combined rate of 9.25% on gross revenue. The calculation basis for these taxes could be a subject of debate, particularly concerning what should be considered taxable.
4. Service Tax (ISS): Some cities have indicated they intend to apply ISS to betting activities.
The future of the betting market in Brazil is still developing but holds great potential for companies in the sector. Although there are regulatory and tax challenges to overcome, such as aligning with international practices and establishing clearer rules, the market also presents significant opportunities for growth.
