the Chamber of Deputies has decided to exclude a proposed 15% deposit tax from the Antifaction Bill, which was approved on Tuesday. Initially, the bill had garnered approval from the Brazil Senate in December with the deposit tax included as part of its measures to mitigate criminal activities. The tax, known as CIDE-Bets, was intended to apply to player deposits on licensed betting platforms. However, an amendment introduced by Dr. Luizinho led to the removal of Article 14, which contained the tax provision, ultimately allowing the bill to proceed without the contentious clause. Additionally, the bill also discarded a retrospective tax on pre-regulation gambling earnings from 2018 to 2024, known as the Special Regime for the Regularisation of Exchange and Tax Assets (RERCT Litígio Zero Bets). These changes cleared the way for the bill to advance to President Luiz Inácio Lula da Silva for his final approval.
The removal of the CIDE-Bets tax provision is noteworthy given the ongoing debates over the regulation and taxation of Brazil’s betting sector. The proposed tax had attracted criticism from various political figures, including Federal Deputy Reimont, who accused right-wing politicians of capitulating to the interests of the betting industry. Another critic, Otoni de Paula, claimed that the betting sector was responsible for financial issues in Brazil, citing its substantial economic impact, with annual figures reaching BRL360 billion. Jandira Feghali added that not taxing the betting industry equates to supporting organized crime.
Despite the current elimination of the CIDE-Bets tax, discussions suggest it may re-emerge in a different legislative form. Congressman Lindbergh Farias estimated that implementing such a tax could generate an additional BRL30 billion ($5.5 billion) annually, funds that could support the National Security Public Fund.
The initial inclusion of the CIDE-Bets tax raised concerns about its potential impact on channelization—the shift of players towards regulated markets. Udo Seckelmann, Head of Gambling & Crypto at Bichara e Motta Advogados, previously expressed worries that the tax could lead to a significant decline in channelization, potentially dropping below 20%. This view was echoed by Plínio Lemos Jorge, president of the National Association of Games and Lotteries, who argued that excessive taxation could inadvertently bolster unregulated operations rather than combat criminal organizations.
The licensed betting sector in Brazil is already navigating increased tax burdens. President Lula’s administration has sanctioned a gradual increase in the gross gaming revenue (GGR) tax, currently set to rise to 13% this year and by another percentage point each subsequent year until it stabilizes at 15% in 2028. This is in addition to other existing taxes such as PIS/Cofins and municipal contributions, posing notable compliance challenges for operators.
In the broader context, Brazil’s legislative adjustments reflect ongoing negotiations between regulatory frameworks and market realities. The government aims to balance generating revenue and maintaining a viable and competitive betting market. As Brazilian authorities weigh future tax proposals, the industry remains vigilant about potential changes that could affect market dynamics and regulatory compliance.
Looking ahead, the bill’s progression to the President marks a crucial step, but its eventual implementation will require continued monitoring and potential adjustments. The possibility of reintroducing the CIDE-Bets tax in future legislation remains, with stakeholders preparing for further developments in Brazil’s evolving betting landscape. Industry participants are closely watching for any signals from lawmakers on the anticipated timeline for these regulatory changes and the impact they may have on the market’s stability and growth.