On Thursday last week, it was sanctioned Law 14,183, as a result of Provisional Measure (PM) No. 1,034. Due to additions made during the process, the text changed the rules for taxation of fixed-odds betting. The law that allows this type of game in the country dates back to 2018 and had not yet been regulated. Since approval, the text is considered “average” by the government. In the assessment of the secretary of Evaluation, Planning, Energy and Lottery, Gustavo Guimarães, the change made now aligns Brazilian law with international one and makes this market more attractive to investors.
“It is an alteration of the Congress, but it is in line with what the secretariat had been discussing. The 2018 law was very important, but in the matter of taxation it was very different from the best international practices,” said the secretary to Valor. “We had been discussing with the market, with other international regulators, with potential investors,” he commented, and the majority opinion indicated that the law, as it was, was damaging the attractiveness of the business.
The government estimates that the modality can move from R$2 billion to R$8 billion (US$385m to US$1.55b) per year and generate up to R$700 million (US$ 135m) annually for the Treasury. In 2020, Caixa's lotteries collected R$17.1 billion (US$ 3.3b) - a record amount. A total of R$8 billion (US$ 1.55b) were transferred to areas such as health, education, security and sports, in addition to income tax.
The amendment changes the tax base for these sports betting. Now, the value of the prize, the contribution to social security and the income tax on the prize will be taken from the total collected. From this balance, the “legal transfers” to education, public safety and sports entities will be calculated, in addition to the resources to cover the operator's costing and maintenance expenses.
Before these modifications, all the calculation was made on the amount collected, as is already practiced in the most known modalities of lotteries. Due to the new format, there are situations in which the “legal transfers” can go to zero. In addition, the share for security was smaller: it went from 0.5% to 0.1% for physical media, and from 0.25% to 0.05% for virtual media.
For Guimarães, the way these bets work justifies the different model of taxation. In fixed-odds betting, there is the possibility that the operator has a result - when many bettors hit a "zebra", for example. The secretariat says that, as the new format is more attractive, a substantial revenue gain is expected.
In 2020, sports betting became part of the PPI (Investment Partnership Program) and the PND (National Privatization Program). The National Bank for Economic and Social Development (BNDES) is carrying out studies related to the privatization of the service. According to the secretary, great interest has been generated by operators to work in the country.
Source: Valor
