While the federal government proposes an increase in the tax burden on betting houses, several Brazilian capitals are taking the opposite path by reducing the Tax on Services of Any Nature (ISS) applied to the sector.
In Belo Horizonte, Mayor Álvaro Damião (União Brasil) sent a bill to the City Council in July that proposes cutting the ISS rate from 5% to 2%.
The municipal administration justified the measure as a strategy to increase revenue and attract companies in the sector. Therefore, the project reports that six requests for authorization to operate betting shops have already been registered with the Federal Government, with interest in operating in the capital of Minas Gerais.
In the text, the city government also cited examples of municipalities that already apply the 2% tax rate, such as São Paulo, Barueri, and Porto Alegre. Recife passed a similar law in May. In Rio de Janeiro, a proposal was sent to the City Council in 2023 but was withdrawn months later without a vote.
Councilman criticizes proposal and demands action on gambling addiction
Para o vereador Wagner Ferreira (Partido Verde), a proposta indica apoio indireto da prefeitura ao setor de apostas. “O risco social é muito grande. A gente não quer que BH vire a capital do Tigrinho”, afirmou, em referência ao jogo que simula um cassino virtual.
Despite being an ally of the government’s base, Ferreira reported that he has already spoken with colleagues who oppose the proposal. The text is currently being analyzed by the Chamber’s Legislation and Justice Committee (CLJ).
The congressman also requested information on policies for preventing and treating gambling addiction. The Municipal Health Department stated in a statement that the Unified Health System (SUS) serves these patients through its mental health policy. However, the department reported not having specific data on this type of demand.
Capitals and the Union follow opposite directions in the taxation of bets
While some capital cities are reducing taxes, the Provisional Measure (MP) presented by the federal government proposes raising the rate on GGR (gross gaming revenue, betting revenue less prizes paid) from 12% to 18%. The proposal is still awaiting analysis by the National Congress.
The municipal ISS also applies to the GGR, while other taxes apply to profit or gross revenue.
According to Professor Onofre Alves Batista Júnior, from the Federal University of Minas Gerais (UFMG), the lack of national regulations encourages a new fiscal war between municipalities.
“Article 146 of the Constitution states that it is the Union’s role to eliminate conflicts of jurisdiction in tax matters. It had to react and establish a minimum ISS rate for sportsbook,” the expert explained.
He also stated that, with the implementation of tax reform, municipalities will lose the power to apply different rates for different types of services, as is currently the case.
The Brazilian Institute of Responsible Gaming (IBJR), which represents around 75% of the betting sector in the country, assessed in a note that the review of the ISS by the capitals is a natural measure to attract investments.
“What concerns the betting segment is the increase in the tax burden already established in a federal regulation implemented six months ago, which leads to regulatory instability and may inhibit the establishment of operations in the country,” the entity stated.
Finally, the IBJR also warned that the measure could reduce the attractiveness of the legal market. Furthermore, it could favor clandestine operations that prevent approximately R$10 billion in taxes from being collected annually in Brazil.
