The Brazilian Fantasy Sport Association (ABFS) is committed to correcting a potential flaw in the sector’s taxation in Brazil.
The problem began with Complementary Bill nº 68/2024 (PLP nº 68/2024) which established the IBS (Tax on Goods and Services) and the CBS (Social Contribution on Goods and Services) on so-called fantasy sports.
In other words, the PL wants to include Fantasy Sport disputes in the same regime as prediction contests and lottery modalities. According to the ABFS, this is a mistake.
Legal definition of fantasy sport
Bárbara Teles, director of Government Relations at ABFS, says that there has already been a law that differentiates fantasy sport from lottery since the end of 2023, which is Law nº 14,790/2023. For her, this law is clear in differentiating these two modalities and would not require a new definition.
“Article 49 expressly states that Fantasy Sport does not constitute the exploitation of a lottery modality, commercial promotion or fixed-odd bet, that is, differentiating this electronic sport from modalities related to prediction contests”.
Thus, it details that the same article of the law, in its sole paragraph, defines Fantasy Sport as an electronic sport.
“According to the letter of the law, Fantasy Sport is the electronic sport in which disputes take place in a virtual environment and the players’ performance depends eminently on knowledge, statistical analysis, strategy and skills.”
Unlike what the specific regulation of the sector deals with, PLP nº 68/2024 unduly included the modality in the specific regime of prognosis competitions.
These are activities whose outcome is directly related to luck. In this type of entertainment, the result depends predominantly on the strategy adopted and the skill of the athlete.
Mistake generates changes in taxation
Therefore, in the current tax scenario, Fantasy Sport companies contribute PIS/COFINS and ISS, totaling 11.25% of gross revenue. If the incorrect framing of the sector as a forecast modality is maintained, the tax rate on the activity could increase to 26% of revenue.
This would more than triple the amount paid today, seriously affecting an industry that does not buy or sell goods and whose contracted services come, to a large extent, from abroad.
This makes the final dual VAT rate (CBS + IBS) very close to 26%, without discounts. Therefore, the damage caused by an improper framework can harm growth and attracting investment.
ABFS suggested changes to PLP nº 68/2024 to parliamentarians, as these changes aim to correct the mistake in the initial text. The change will guarantee greater investments in the sector and a promising future for the market in Brazil.
