The city of São Paulo is the third largest budget in Brazil, second only to the Union and the State of São Paulo. One of the main cities in Latin America, it once again came out ahead by proposing the reduction of ISS for the sports betting sector, lotteries, bingos and fantasy games, among other entertainment activities, through Bill 613/2022.
To talk about the initiative, the GMB spoke exclusively with the municipal Secretary of Finance, Guilherme Bueno de Camargo, for whom "São Paulo comes out ahead because it understands the benefits of the activity and for being sure that it has all the conditions to receive the companies in this sector, in full growth."
GMB – Once again São Paulo comes out ahead when presenting Bill 613/2022 for tax reduction to attract companies of the entertainment sector, especially in the areas of sports betting, something that has grown a lot in Brazil, and fantasy game. What is such a pioneering project?
Guilherme Bueno de Camargo - The city of São Paulo obviously always wants to attract new investments and, with this, new jobs, more revenue and more business. This is a very important sector, which has been growing a lot in recent years and with enormous potential. With the regulation of the 2018 law coming and imagining that the federal government will do this as soon as possible, São Paulo wanted to put itself ahead as a possible location for these global companies to establish themselves in Brazil. We are sure that the city has all the conditions to host these new business, infrastructure and labor. We are in continuous work, with Mayor Ricardo Nunes, to simplify ancillary obligations and procedures, in a continuous improvement in our business environment. We know that it will be a very disputed market and because of this we have already sent a bill to the City Council establishing the rate at 2%, which is the minimum rate of ISS for Brazil. It is a city tax and can vary between 2% and 5%. Therefore, we have established the minimum percentage for this new industry that must reach Brazil with great force.
A few days ago you presented São Paulo at the SBC Summit Latinoamérica in Miami. What impressions did you leave about the city and this opening of doors, to the participants of the event?
We made a presentation of the city showing the numbers of São Paulo and that the city is in a very favorable financial situation. We have a rating evaluation, made by Fitch agency, in which, in the last analysis, point our rating as Investment Grade, which we already presented last year, but which evolved in four levels, reaching in A-. Today, our debt sustainability rating is AAA; that is, the best debt sustainability index possible. We show this at the event, as well as the investments we have made and all the infrastructure we have, as well as logistics available to those who want to settle in São Paulo, the largest airports in the country with direct flights to the main cities of the world, a very advanced telecommunications network, with 5G already working, fiber optic cabling in much of the territory, as well as excellent cell phone coverage. We went to bring this information to companies interested in settling in Brazil that come to know São Paulo. In addition, we made several contacts with companies and with the organizers of the event, resulting in a very productive trip.
Were everyone impressed with São Paulo?
I believe so. We are very sure that São Paulo is the right place for these companies to settle. In addition, São Paulo has a very specialized workforce and available. I pointed out that each year we create 33,000 new vacancies in higher education courses in the area of technology. I showed that São Paulo has all the conditions to receive global companies. Today, 63% of the global firms that have a branch in Brazil are in São Paulo. We have skilled labor, service providers and a very strong consumer market, so we are sure that this is the right place for these companies to settle in from regulation.
And were you also impressed by the possibilities that this type of company offers in the places where they settle?
Yes. It is a very dynamic and vigorous market. It is not a market that I knew in detail, coming to know better recently, but I know that it works with innovation, technology and that brings a lot of investment, benefits, collection and jobs. I was very impressed with the players who were there and very pleased with the issue of concern for the integrity of their activities.
Brazil emerges as one of the world's leading players in the sector and at a recent meeting of Mayor Ricardo Nunes with Entain, in which you also participated, he theoretically welcomed a company that is interested in settling in São Paulo.
Undoubtedly. We have held meetings with companies that show interest in installing themselves here, detailing the conditions, including analyzing the possibility of granting special invoice issuance regimes, because this is a difficulty that companies have since the volume of transactions is very large and the issuance of an invoice for each transaction can even derail the business. So we have full conditions and interest in offering a special banknote issuance scheme. The Mayor was also very interested in having these companies installed in São Paulo and so we hope that they choose the city.
It was very interesting the conversation of the Mayor with Entain, when he showed interest in reducing the tax for the activity. São Paulo was very agile in this sense, seeking support from the City Council to adapt the tax issue to attract these companies…
The service sector is very volatile and moves with great ease, unlike a factory, which involves large physical facilities. São Paulo suffers a lot from the fiscal war. Therefore, São Paulo decided that it will be competitive and selected strategic sectors for the city and for which we are dedicated to receive investments. But all this has been done according to our possibilities, since each change in tax rate results in a modification in the city's revenue. Therefore, we have selected some activities in which we can have a more competitive rate. And we've identified this [sports betting] industry as an important sector where we need to be competitive. We decided to go ahead and establish the minimum ISS rate. In addition to the revenue it brings, it is the investments and jobs that the chain of this business that a company like this brings.
And a clean activity!
Yes, it is a clean activity of great vocation of São Paulo, which is the service. The highest municipal GDP concerns the provision of services, which represent 75% of the activities. We want global, innovative companies that generate good jobs and good incomes. That's what the city needs. The Mayor is very sensitive to this and wants the city to have a good business environment and, for this reason, wanted to give the first steps. We drafted the bill and it is already being processed in the City Council. We expect our councilmen to approve as soon as possible.
The rapporteur was made by councilor Edir Salles. How are the negotiations and explanations necessary for her and her peers in the City Council to understand the sector?
She is an excellent councilor and partner of the Secretary of Finance. We sent to the Chamber not only the bill, but also instructions that show the importance of the sector and the justifications for establishing the 2% rate. We are available, with public hearings, to provide all the information that will be given so that councilors can make the best assessment of the project. We have no doubt that it is beneficial for the city and that it will be approved quickly.
The project takes the lead in citing the bingo sector, which still does not have specific legislation. Are you anticipating that soon we will also have bingos installed in São Paulo?
This regulation is not municipal. But obviously we know that it is also a competitive and important sector. If there is regulation and authorization, São Paulo wants to have the best companies and the best players in the sector. That's why we anticipated each other.
The casinos come to mind too. Is São Paulo ready to receive the casino as well?
It's also the same question. It depends on new, federal legislation, but obviously that depending on the conditions under which the activity is approved, São Paulo will want to host a casino.
Sports betting may be the first step, since São Paulo has come out ahead, and it remains to be expected that other verticals will also be legalized in Brazil…
Yes. Bets have already been legally authorized through Law 13.756/2018 and we await only regulation. Once regulated, we will have companies installed in São Paulo. The other ones, let's wait for the will of our legislators.
Can you estimate how many companies would be interested in São Paulo and how many of them are already ready to settle?
We have some companies that have already come to us, like Entain, that you quoted. Other meetings and contacts are scheduled, but we don't have an estimate of how many. It is a very large market and the possibility of free licenses, we imagine that there is a significant amount of global companies that will settle in Brazil, in addition to numerous national players. And we expect most of us to come to São Paulo. To all who seek us, we have offered all the information.
Knowing all the legislative procedures, what is your expectation regarding the deadline for the City Council to approve the project and reaches the hands of Mayor Ricardo Nunes for sanction?
The City Council has autonomy for discussions and voting in the time it deems necessary, but we imagine that by the end of the month we have the law passed. It will depend on the dynamics of the discussions and agenda, so that it enters the Committees and goes to the vote.
It is a good sign for companies that want to settle in Brazil and a encouragement for those who still fear that regulation will take too long to happen.
We also hope that regulation will arrive soon. Brazil is losing out with the absence of regulation. We could already be raising important funds. And not only the cities, but also the federal government, which will receive a significant portion of the values circulating in this industry. So it's important to regulate this growing activity, especially since we're failing to raise important funds for public administration.
Source: Exclusive GMB
