In a significant decision on Thursday, the National Congress of Brazil voted to overturn President Lula’s vetoes concerning the Income Tax (IR) on prizes from sports betting and online gambling. This move reinstates the original provisions of Law 14,790/2023, establishing annual tax collection and ensuring no tax is levied on amounts below the first exemption threshold of R$ 2,259.20.
Returning to the Original Law
With the Congress’s decision, Law 14,790/2023 returns to its initial form, promising a fairer taxation system that aligns with the sports betting and online gaming industry’s expectations. The law stipulates that the Income Tax will be collected annually, based on the net results of bets, rather than per transaction. This change is seen as a critical step in maintaining the integrity of the market and ensuring players are not pushed towards illegal gambling platforms due to overburdening taxes.
First Repercussions in the Gaming Sector are Positive
The National Association of Games and Lotteries (ANJL) congratulates the National Congress for the correct decision, this Thursday (09), to overturn the presidential vetoes on the sections on Income Tax on prizes from sports betting and online games of Law 14,790/2023.
The parliamentarians decided, as ANJL and other entities in the sector had been defending, to collect the tax annually and not to levy taxation on prizes below the first IRPF exemption range.
“In recent weeks, we have worked intensely with deputies and senators, and also with the Executive, bringing understanding about the negative impacts of maintaining vetoes on the betting market in Brazil. The result now brings relief to the sector, which will continue to work towards a fair, transparent, and honest environment for both bettors and bets,” said Plínio Lemos Jorge, president of ANJL.
Preventing Illegal Market Migration
A primary argument for overturning the vetoes was the risk of gamblers migrating to illegal markets if the taxation was perceived as unfair or overly burdensome. By aligning with international best practices, Brazil aims to keep its gambling sector regulated and within legal boundaries, ensuring that tax revenues are collected and player protections are enforced.
Looking Ahead
Following this decision, the gaming industry is also looking towards the Federal Revenue’s Normative Instruction 2,191/2024, which was published recently. The expectation is that this instruction will now be adjusted to reflect the annual collection period stipulated by Law 14,790.
Conclusion
The National Congress’s decision to overturn President Lula’s vetoes marks a victory for the sports betting and online gambling industry in Brazil. By ensuring fair taxation and preventing undue financial burdens on smaller winnings, Congress has taken a significant step towards a more regulated and transparent market. This move not only aligns Brazil’s practices with international standards but also protects the interests of both the state and its citizens, fostering a healthy and sustainable gaming environment.
