The debate about the taxation of sports betting, known as “bets”, gained new momentum with the inclusion of these games in the Selective Tax, popularly called the “sin tax”.
The extraordinary secretary for tax reform, Bernard Appy, warned of the need for caution in this process, highlighting that the objective is not to make the sector unviable, but rather to regulate it appropriately.
In a recent interview with Estadão, Appy emphasized: “The taxation of sports betting needs to be carefully calculated. In other words, if taxation is excessive, there is a risk that instead of formalizing and taxing, the activity will migrate to the informal market”.
Pros and cons of the Sin Tax
Taxation for bookmakers came under the pretext of discouraging the consumption of products that are harmful to health and the environment.
Therefore, the decision to include “bets” in the Sin Tax was taken by the working group responsible for the first tax reform regulation report, approved by the Chamber of Deputies.
Thus, the justification took into account gaming addiction as a public health issue. Furthermore, the increase in revenue from online betting could offset other tax benefits, such as tax exemption for essential items in the basic food basket.
However, parliamentary discussions revealed a complex scenario, with adjustments that tend to increase the average rate of the new Value Added Tax (VAT), formed by CBS and IBS, of States and municipalities.
Appy highlighted that, although some adjustments can reduce the rate, others have the opposite effect, highlighting the need for new calculations to understand the full impact of the changes.
Challenges and perspectives for the future of sports betting
One of the highlights in the discussions was the imposition of a maximum limit of 26.5% for the VAT rate, a measure viewed with caution by the secretary, who believes in the possibility of adjustments during the transition process. The effectiveness of this limit will depend on reducing tax evasion and adapting companies to the new tax payment system.
Furthermore, the tax reform could incorporate changes in income taxation as a way to balance VAT rates, Appy suggested. The discussion about the “triggers” to comply with the 26.5% limit includes proposals such as taxation of dividends and revisions to specific tax regimes. But this is still under debate in Congress.
Therefore, Tax Reform faces significant challenges, especially in defining its structure. The inclusion of sports betting and online gaming in the Selective Tax raises discussions. This is because it requires a balance between fiscal objectives and economic and social impacts.
