Brazilian Senator Angelo Coronel also mentioned that he might allocate a portion of the revenue generated from the taxation of sports betting to municipalities. According to him, this matter will be discussed with the economic team and the president of the Chamber of Deputies, Arthur Lira (PP-AL), next week.
If the change is effectively made and approved by the senators, the issue will need to be reevaluated by the deputies. When asked about the reason for the alteration, the rapporteur explained that the intention is to achieve "tax fairness." He argued: "Today, we estimate that approximately 60% of the companies in the country are involved in online gaming, and 40% are related to sports betting. With these two tax rates, we achieve tax fairness."
"(In the bill approved in the Chamber of Deputies, the rate) is set at 18% overall. I am trying to propose that we can maintain the 18% for online gaming and lower the rate for sports betting to around 12%. It's a calculation I'm trying to make to meet the expectations of both the government and the deputies who voted and also the Senate's expectations. It should also meet the expectations of the betting houses," said the senator.
Another alternative, according to the rapporteur, would be to reduce the overall tax rate, both for sports betting and electronic gaming, from 18% to something around 15%.
Another change advocated by the rapporteur is that a percentage of this tax rate should be allocated directly to municipalities, which would mean that one of the other beneficiaries would see their share of participation in the new tax decrease. This transfer would follow the criteria of the Fund for Municipalities' Participation (FPM).
"We will analyze where there is more to take from those who have more. Sports betting must be treated differently because it's about sports betting. A small portion can be taken from Tourism, a small slice from Sports, a portion from other entities, as long as it benefits everyone," he argued.
The rapporteur also advocated that the department responsible for managing the revenue collected from this new tax be linked to the Ministry of Finance. With the Ministry of Sports now in the hands of the PP party after the appointment of Minister André Fufuca, there is pressure for the department to fall under the jurisdiction of the Ministry of Finance.
"I believe that the Ministry of Finance is the most appropriate place because they handle revenue, collection, and expenses. So, if it depends on my vote and opinion, it will remain under the Ministry of Finance," he stated.
Before finalizing his decision, the rapporteur will meet with Finance Minister Fernando Haddad on Wednesday and with the President of the Chamber, Arthur Lira (PP-AL), on the following day, to assess the feasibility of the adjustments. "The goal is to create a text that won't have approval issues. I'll smooth things out. I'll talk to everyone," Coronel said.
When asked if this reduction in the tax rate could frustrate the federal government's revenue estimates, the senator said he will discuss the matter with Haddad. "It's not a matter of annoyance. I will present the argument that there are betting houses that don't have online games, so it would tax a house that isn't offering this game to society. We have to have something in line with our Brazilian reality," he stated.
Income tax
Senator Angelo Coronel will also propose that taxation on profits earned by bettors be collected once a month, similar to the 'day trade' on the Stock Exchange (B3).
The aim is to alleviate one of the concerns regarding the project. During discussions, criticism arose about taxing each bet because there are frequent bettors who place multiple bets in a month, accumulating winnings and losses. According to the preliminary proposal, still being formulated by the senator's office, bettors will calculate their results throughout the month and pay taxes on their monthly profits.
In 'day trade,' investors calculate their profits or losses and pay 20% of the profit through a DARF (Federal Revenue Collection Document) on the last day of the following month, and then report the payments on their Income Tax return. For sports betting, the proposed tax rate under consideration is 30% on winnings exceeding R$ 2,112 per month (there is an exemption for amounts below this threshold).
A public hearing on the subject was held on Thursday (19) in the Senate Committee on Economic Affairs (CAE). One of the participants was José Francisco Manssur, a special advisor to the Ministry of Finance, who advocated for the approval of the bill, which was sent by the federal government.
According to Manssur, it is necessary to regulate the sector to prevent these services from operating without paying taxes, which he considers a "serious tax distortion."
"The segment has been operating in Brazil from 2018 until today without paying taxes. There is nothing more unfair than essential services, such as those producing food and clothing, and workers paying their taxes, while this segment pays nothing. People are gambling: out of ten Brazilians with access to a mobile phone, seven have made some bet," he stated.
Source: GMB / Valor
