A recent amendment presented by senator Alessandro Vieira (MDB-SE), vice-president of the Bets CPI, had a significant impact on the sports betting sector. The proposal, which was accepted by rapporteur Eduardo Braga, clearly includes sports betting in the incidence of the selective tax, which became known as the “sin tax”, provided for in the tax reform.
The initiative aims to combat tax evasion and increase revenue, in line with the new demands of the digital betting market. Thus, activities such as “bets” will contribute directly to public coffers, generating more resources for the government.
The “sin tax” includes the following products:
- Combustion and electric vehicles
- Vessels and aircraft
- Smoking products (Cigarettes, Cigars, Cigarillos, Pipes and Hookahs)
- Alcoholic beverages
- Sugary drinks
- Extracted mineral goods
And now, bets are added to this list too.
What the amendment changes in taxation
The rapporteur proposed that the IBS (tax on goods and services) and the CBS (contribution on goods and services) be applied to prediction contests, encompassing lotteries, fixed-odd bets and sweepstakes, physical and virtual.
However, in the case of the selective tax, the wording only made a generic mention of forecasting competitions. This detail could open room for divergent interpretations and future questions. Vieira’s amendment eliminates this gap, ensuring more clarity and legal certainty in the application of the selective tax.
A market in constant regulation
The inclusion of sports betting in the tax reform reflects the exponential growth of this market in Brazil. The iGaming and betting sector generates billions and has attracted national and international investors.
Regulating and properly taxing these activities is essential to creating a more transparent and competitive business environment. So, with this measure, the government also seeks to protect consumers and reduce the impacts of informality in the segment.
Expected benefits of the “sin tax”
Taxing sports betting can bring several advantages, including:
- Increase in tax revenue. Additional resources for priority areas such as health and education.
- Combating tax evasion. Reduction of tax evasion in the sector.
- Strengthening the market. Encouragement for regular and licensed operations in the country.
In other words, this proposal also dialogues with global regulatory and tax initiatives in the gaming and betting sector.
Although there has been progress, there are still challenges. Therefore, implementing this taxation requires efficient monitoring to prevent fraud and ensure that new rules are complied with.
Thus, another crucial point is to ensure that the selective tax does not excessively burden platforms and, consequently, consumers. Therefore, the balance between revenue and competitiveness will be fundamental.
