Operators in Brazil are going to be spared the previously discussed 15% deposit tax, as the Brazil Chamber of Deputies removed the clause from its Antifaction Bill before approving it on Tuesday.
In December, the Brazil Senate plenary had approved the Antifaction Bill in its original form. In addition to increasing penalties on criminal organisations, the bill also introduced the CIDE-Bets, a 15% tax on player deposits applicable to licensed platforms.
However, an amendment presented by Dr Luizinho was approved on Tuesday which removed Article 14, the clause that called for a tax on wagering deposits.
Alongside this tax, the discussed retrospective tax on pre-regulation earnings was also scrapped. Dubbed the Special Regime for the Regularisation of Exchange and Tax Assets (RERCT Litígio Zero Bets), this rule would have required operators to pay a 15% retrospective tax on any pre-regulation gambling activities between 2018 and 2024.
According to quotes obtained by Valor Economico, House of Representatives Speaker Hugo Motta said the article’s removal was necessary so “the text can be voted on without the wider disagreements of the previous vote”.
The Antifaction Bill was subsequently approved and will now go to Brazil’s President Luiz Inácio Lula da Silva for final approval.
Is this the end of CIDE-Bets?
Despite the removal of Article 14, it likely won’t be too long before a similar proposal to CIDE-Bets is approached in Parliament, causing further unease among the licensed betting sector in Brazil.
The removal of CIDE-Bets faced intense backlash from politicians, with Federal Deputy Reimont accusing those on the right of being “in the hands of betting companies”.
Otoni de Paula also accused the betting sector of being behind the lack of money circulating in Brazil, stating: “Betting, in this past year alone, moved BRL30 billion monthly, BRL360 billion annually.
“Ladies and gentlemen, do you know the estimated GDP of São Paulo? BRL388 billion. Betting drives São Paulo’s GDP. And now this House wants to give a gift to betting. Anyone who votes in favour of this is voting for the betting lobby.”
Jandira Feghali added: “We need to tax betting. Anyone who doesn’t want to tax it is in favour of organised crime.”
It is expected the CIDE-Bets tax could return in the form of a separate bill. Congressman Lindbergh Farias estimated the tax would bring in an additional BRL30 billion ($5.5 billion) to Brazil, which would then be diverted towards the National Security Public Fund.
A positive move for channelisation in Brazil?
Following the Senate’s approval of the CIDE-Bets last year, Bichara e Motta Advogados’ Head of Gambling & Crypto Udo Seckelmann told iGB he feared its introduction could result in channelisation to licensed offerings dropping below 20%.
Seckelmann described the potential impacts as “disastrous”, an opinion shared by Plínio Lemos Jorge, president of the National Association of Games and Lotteries.
“Although the project’s stated objective is to combat criminal organisations, the over-taxation of the regulated market tends to produce the opposite effect,” Lemos Jorge said.
The licensed betting sector in Brazil is already facing higher taxes this year after President Lula approved a gradual tax rise that will see the tax on GGR rise to 13% this year. It will rise by one percentage point a year until 2028 onwards, when it will be 15%.
This is on top of the other taxes that licensed operators face, which include PIS/Cofins and municipal contributions.
Original article: https://igamingbusiness.com/finance/tax/cide-bets-rejected-brazil-betting-sector-avoids-deposit-tax/
