Brazil's Chamber of Deputies rejects tax increase on betting revenue

Brazil's Chamber of Deputies has chosen to reject legislation which would have increased the current tax rate on betting operators' gross gaming revenue (GGR) from 12% to 18%, as the proposal received just 251 votes in favor compared to 193 against.

The decision to maintain Brazil's current tax rate was said to "consolidate the protagonism and economic relevance of betting platforms" throughout the country, with operators having paid R$30m to obtain authorization from regulators.

An increase in GGR tax rate would also have a "considerable impact" on the tax burden of companies licensed to operate in Brazil, as the rejection "reflects a broader effort to calibrate regulation of rising sectors."

In lieu of the GGR tax increase, the Brazilian government and Chamber of Deputies have chosen to initiate a more sustainable growth model, where the tax base will naturally expand as the betting market matures in the years ahead.

The sustainable growth model should help form a balance between the taxation of operators and Brazil's natural expansion in gaming, as well as ensure consistent increases in revenue for the medium term.

The tax rate increase proposal was formed amid high pressure to find additional revenues for financing social programs and compensate for tax exemptions.

The Chamber's rejection was also said to represent a "political commitment" between the country's Executive and Legislative branches, helping to preserve the competitiveness of emerging markets.

Maintaining the current tax rate will also provide expansion opportunities for betting operators without being stifled with excessive tax burdens. The increase was also feared to possibly drive future operators away from Brazil and break the trust of brands which fit current terms.