“The Federal Revenue Service putting in the effort to inspect individuals may be an effort, a demand for human resources with practically no revenue, because in principle, bettors lose more than they win,” said the special secretary of the Federal Revenue Service, Robinson Barreirinhas.
The secretary explained to the CPI that it is a challenge to collect taxes on betting companies based abroad but with a strong presence in Brazil. He said he expects effective inspections to begin on January 1, 2025, when so-called betting companies will be required to set up companies in the country, and that cases of fraud are already being investigated.
“There are cases in which the inspection itself, the investigation by the Revenue Service and other security agencies shows that there is a simulation: in fact, the company is controlled by a Brazilian, someone domiciled in Brazil. In this case, there is no doubt that we will collect taxes.”
He praised the taxation model established by Law 14,790 of 2023 and opined that the legal presence of companies in the country will lead to a “quality leap” in inspection and collection. However, to Senator Romário, rapporteur of the CPI, Barreirinhas admitted that there is a lack of legal instruments for the IRS to tax bets that are not subject to Brazilian legislation.
“That is why the model approved by the National Congress provided for this obligation for the company to have a legal representative here so that this dialogue can take place (…) and the collection of taxes. (…) The entire world is debating how to deal, in the virtual environment, with an increasingly intense provision of services and exchange of goods.”
The Secretary of the Federal Revenue Service also assured that the betting accreditation data submitted to the Prizes and Betting Secretariat (SPA) are being investigated for inspection purposes.
Taxation of bettors
Barreirinhas also admitted that the IRS expects to tax “practically nothing” on bettors. He recalled that the agency requested the veto of a provision of Law 14,790 of 2023 that allowed the offsetting of bet amounts and prizes during a year, arguing that “very few people” will win more than they bet. The veto imposed by the President of the Republic, however, ended up being overturned by Congress.
“This is not a criticism. The Federal Revenue Service necessarily works with what is approved by Congress, and it is sovereign in this regard, but the fact is that the way this law was made, with the overturning of the veto, basically makes any tax collection in relation to bettors unfeasible.”
Barreirinhas added that, even if the bettor makes a profit, it is difficult to monitor a large number of taxpayers, many with a “very low” income and probably within the income tax exemption bracket.
According to him, widespread collection will only be effective when betting companies start providing transaction data linked to bettors’ CPFs, but he questioned the cost of monitoring individuals for a very small amount of revenue.
“Our focus has to be on the company. The company is the one that wins, it is the one that makes a profit, it is the one that has to pay Income Tax, Social Contribution, PIS-Cofins,” he stated.
“With our technological expertise, we are able to collect information from various sources, process this information and be effective. We are absolutely effective in relation to betting, not for lack of information. As of January 1st, we will have a series of other data that will allow for a different world in relation to this monitoring.”
Source: GMB
