In Brazil, the iGaming sector, encompassing sports betting and online gaming, is facing significant challenges due to the high tax burden and proposed reforms. Currently, operators are taxed at multiple levels, including a 12% levy on gross gaming revenue, contributions to social programs, service taxes, and income tax, resulting in a complex and costly tax structure. The ongoing tax reform aims to simplify the system but risks raising the overall tax burden, especially with the introduction of the Selective Tax (IS), which could further strain the sector.
This proposed reform may increase the tax burden from the current 11.25% to 26.5%, which could lead to several adverse consequences. These include pushing operators into the informal market, reducing the competitiveness of the Brazilian market, and raising costs for consumers, which could diminish user engagement.
Legal experts argue that the reform could exacerbate economic unviability and fuel illegal activities, undermining efforts to regulate the sector effectively. They suggest that rather than introducing new taxes, the existing 12% contribution, already designed to regulate the sector, should be adjusted.
We observe a need for a balanced tax approach to support the sustainable growth of Brazil’s gaming industry while preventing the rise of illegal markets and ensuring the sector remains attractive to investors.
