Brazil's Government expects its new Selective Tax to generate BR$41.9bn ($8.08bn) during 2027, with betting set to become one of the activities subject to the levy when it takes effect next year.
The forecast appears in the 2027 Annual Budget Bill submitted to Congress and covers all sectors within the tax rather than betting alone. Tobacco, alcoholic and sugary drinks, certain vehicles and mineral extraction are also included.
The Selective Tax was established through Brazil's wider consumption tax reform and is designed to apply to products and activities considered harmful to health or the environment.
The Government has yet to submit the legislation establishing the specific rates and operating rules, meaning the additional burden on licensed betting operators remains uncertain.
Finance Minister Dario Durigan said the Government intends to avoid setting the betting rate at a level that is either insignificant or high enough to encourage migration towards illegal operators.
That consideration comes as the tax burden on Brazil's regulated betting sector is already increasing. Complementary Law 224 changed the distribution of fixed-odds betting revenue so operators retain 87% in 2026 and 86% in 2027, while the allocation to social security increases from 1% to 2%. A further 12% continues to be distributed to statutory beneficiaries.
Brazil's broader consumption tax reform will also place fixed-odds betting, other lotteries and fantasy sports under a specific IBS and CBS regime. The taxable base is calculated from operator revenue after deducting prizes and legally mandated distributions.
The new levy arrives as federal receipts from gambling continue to rise. Tax collections from betting and gambling, including Caixa lotteries, reached BR$8.747bn between January and July 2026, up 76.86% year-on-year.
Brazil's regulated fixed-odds market has operated nationally since January 2025. The Secretariat of Prizes and Bets (SPA) said in August that 85 operators had passed its authorization process, while its 2026-2027 agenda includes revisions covering licensing, payments involving illegal operators and player protection.
Brazil also tightened oversight of betting marketing in August, with Conar introducing an accreditation framework for influencers promoting betting platforms and additional requirements intended to limit minors' exposure to gambling advertising.
The Selective Tax is scheduled to begin in 2027 alongside the CBS as Brazil continues its transition to a new consumption tax system through 2033
