Barreirinhas made the comments in a Wednesday (4 September) meeting of the parliamentary inquiry commission (CPI) on match-fixing in Brazil, after senator Carlos Portinho requested his presence.
He said taxing internet-based transnational activities like gambling and online shopping was difficult.
“The entire world is debating how to deal, in the virtual environment, with an increasingly intense provision of services and exchange of goods,” Barreirinhas said.
Foreign operators are allowed to enter the licensed betting market, which will launch on 1 January 2025. The first wave of applications (114 in total) included at least 40 submissions from foreign operators, a survey carried out by Rio de Janeiro-based law firm Veirano Advogados claims.
Normative Ordinance No 827 stipulates these international companies must be supported by a local entity which has an at least 20% Brazilian share ownership. This entity must be headquartered and registered in Brazil.
Barreirinhas told the committee the rule would ensure a local entity is held accountable for its international partner and can maintain an open discussion with the RBF.
“That is why the model approved by the National Congress provided the obligation for the company to have a legal representative here, so that this dialogue can take place.
“We are following a global movement of coordination between tax authorities so that there is cooperation in exchanging information related to financial transactions so that […] we are able to implement the law.”
Licensed operators will be taxed at 12% of gross gaming revenue (GGR) and required to pay an initial licence fee of R$ 30 million (£4m/€4.8m/$5.5m). A joint certificate from the RFB’s special secretariat and the attorney-general’s office will ensure a company is registered to pay tax locally.
“Our focus is on taxing the company [over the player]”
Normative Ordinance No 2,191, published in May, introduced a 15% tax on player winnings above BRL2,824.
Players will be taxed at source before receiving their winnings and the betting operator will be responsible for calculating and collecting the tax contributions.
The Brazilian Institute of Responsible Gaming (IBJR) previously labelled the tax framework as “harmful” and “legally questionable”, but Barreirinhas expects the RFB to receive “practically nothing” from the tax on player winnings. He said few players will win enough to meet the threshold necessary to pay the tax.
“Our focus has to be on the company,” Barreirinhas explained. “The company is the one that wins, it is the one that makes a profit.”
Tax evasion is a major concern for the Senate
Senator Portinho raised concerns over tax evasion, particularly relating to payments companies avoiding exchange fees by keeping funds in Brazil.
Barreirinhas said the issue is not exclusive to online gambling, and the RFB and Central Bank of Brazil are already working to mitigate these activities.
“Not that it is necessarily illegal, but if there is a company in Brazil receiving and paying out [funds], it has to pay taxes,” Barreirinhas added. “There is often [also] a violation of exchange legislation.”
Original article: https://igamingbusiness.com/legal-compliance/regulation/brazil-betting-tax/
