Brazil’s Senate approves sin tax on gambling
The Federal Senate approved the main bill regulating the tax reform the Complementary Law Project PL 68/2024. The text addresses the rules for the incidence of the Value Added Tax (VAT Dual), which is divided into two basic consumption taxes: the Contribution on Goods and Services (CBS) at the federal level, and the Tax on Goods and Services (IBS) at the state/municipal level.
In addition, there will be the Selective Tax (IS), or “sin tax,” which is a surcharge applied to certain products and services considered harmful to health and the environment. The list of the selective tax, at a higher rate, includes items such as cigarettes, alcoholic beverages, and betting in physical and online modalities as well as on fantasy sports. According to newspaper O Globo, the rapporteur of the regulatory project, Senator Eduardo Braga accepted an amendment by Senator Alessandro Vieira so that sports betting was covered specifically.
Previously, the text made a generic reference to the taxation of forecasting contests, which, in Vieira’s view, could generate divergent interpretations. By including the amendment, the senator intended to eliminate this gap and make the interpretation clearer.
With the conclusion of the processing in the Senate, which lasted about five months, the approved project—a substitute for the text from the Chamber of Deputies—returns to the previous House. It will be up to the deputies to maintain or remove the points approved by the Senate, giving the final word on the regulation.
These new taxes are a unification of five existing taxes. The new taxes were approved in a constitutional amendment promulgated at the end of last year, marking the first phase of the tax reform. Throughout 2024, the National Congress has focused on the regulation, which deals with tax rates and how each sector of the economy will be impacted. The transition to the new tax model will be gradual, occurring between 2026 and 2033. The base text was approved with 49 votes in favour and 19 against. Following that, a set of individual highlights was analyzed.
In July the working group on the regulation of tax reform in the Chamber of Deputies made changes to the selective tax, including two new categories of products and services. According to the opinion of the deputies, electric cars and sports betting, fantasy games and lotteries would be subject to the tax charged on items that harm health or the environment.
“It’s harmful to health, that’s the understanding of the working group,” Deputy Moses Rodrigues, a member of the working group said at the time.
