Brazil’s betting companies are pushing back against a government plan that would double their tax burden. They’ve taken their case to Congress with a counterproposal. The operators want to avoid jumping from a 12% rate to 24%.
Finance Minister Fernando Haddad is leading the government’s push for higher tax revenues. His ministry recently expanded income tax exemptions for workers earning up to BR5,000 ($930) monthly. Now he needs to find that money elsewhere.
The betting sector became an obvious target.
Why Operators Prefer Paying for the Past
The proposed tax doubling would permanently reshape Brazil’s betting economics. Operators calculated that a one-time retroactive payment might cost less long-term than accepting the 24% rate.
Their alternative caps future taxes at 15%. That’s still a 3-percentage-point increase from today, but it’s far better than doubling. The trade-off means paying taxes on the past five years of operations.
Industry sources believe this approach could generate BR12.5bn immediately. That’s roughly $2.4bn in quick revenue for Haddad’s budget needs. Private analytics firms tracking legally operating companies compiled these estimates.
What the Retroactive Deal Includes
The proposal now circulates through government offices and congressional committees. It covers five years of past betting operations in Brazil. Companies would pay taxes on revenue they earned before current regulations took effect.
Some operators worked from offshore jurisdictions during those years. Federal Revenue Secretary Robinson Barreirinhas previously argued these companies still owe Brazil taxes. “If they had income in Brazil, had turnover, and were in fact operating here, they owe taxes to Brazil,” he said earlier this year.
The Finance Ministry hasn’t officially responded yet. But the idea isn’t new to government discussions.
How This Changes Industry Economics
Long-established operators would take the biggest hit under retroactive taxation. Companies that entered Brazil early would pay more than recent arrivals. Industry representatives admit this creates an unfair penalty structure.
But they still prefer it to permanent rate doubling.
The proposal puts pressure on Congress to choose between immediate cash and sustained revenue growth. Haddad needs budget solutions quickly. Operators are betting he’ll take BR12.5bn now rather than wait for gradual tax increases to accumulate.
The discussion reflects broader tensions in Brazil’s newly regulated betting market. Companies want stability. The government wants revenue. This deal might give both sides something they need.
