Online gambling

Brazil’s online gambling tax proposal gains traction

A new proposal calling for the introduction of taxes on online gambling and games of skill is gaining traction in Brazil.

A new bill proposes the taxation of online games in Brazil

At the start of the week, the Senate Committee on Economic Affairs (CAE) in Brazil voted in favor of a bill that proposes taxation of online games. Senator Flavio Arns is the author of the new bill called PLP 202/2019. The proposal aims to allow taxation of online gambling activities even though Brazil has not yet established regulations for such activities.

The next stage of the bill is now the Senate Plenary. Before coming into force, the proposal should undergo an analysis as well as the approval of the Senate. However, since the country has yet to enact regulations for online gambling, it is currently unclear when or if PLP 202/2019 will gain traction soon.

Internet operations have long been routine, which has led to the emergence of new service providers, especially in the electronic entertainment business. However, legislation cannot always keep up with new technologies.

Senator Flavio Arns

Addressing the subject, Senator Arns pointed out that thanks to the Internet, new service providers have emerged that focus on electronic entertainment. However, he acknowledged that the legislation cannot always keep up with the rapid speed of new technologies.

Additionally, Senator Arns said the use of online platforms generates “heavy amounts” that have yet to be captured by taxes. Last but not least, he explained that the collection of taxes on the use of new technologies represents a challenge.

The tax rate has not yet been confirmed

It belongs to Federal District or each city to determine the tax rate for taxable activities. However, the rate has limits between 2% and 5%. According to the new proposal, taxation of competitions and events related to esports, as well as online games would be collected within the municipality where the player is located.

In addition to online games, the new proposal foresees a taxation of games of chance and games of skill. However, based on current regulations in Brazil, gambling is prohibited. In other words, PLP 202/2019, if approved, should impose skill games and exclude games of chance, unless such games are legalized.