Online Gambling Tax Proposal in Brazil Gains Traction

A new proposal calling to introduce taxes for online gaming and games of skill is gaining traction in Brazil.

A New Bill Proposes Taxation of Online Games in Brazil

Earlier this week, the Senate Economic Affairs Committee (CAE) in Brazil voted in favor of a bill that proposes the taxation of online games. Senator Flávio Arns is the author of the new bill called PLP 202/2019. The proposal seeks to allow taxation of online gambling activities even though Brazil is yet to establish the regulation for those activities.

The next stop of the bill is now the Senate Plenary. Before it comes into effect, the proposal would need to undergo analysis as well as approval of the Senate. However, considering that the country is yet to adopt regulations for online gambling, it is currently unclear when or if PLP 202/2019 will gain further traction soon.

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

Senator Flávio Arns

Addressing the topic, Senator Arns outlined that thanks to the internet, new service providers emerged that are focused on electronic entertainment. However, he acknowledged that legislation cannot always keep up with the rapid speed of new technologies.

Additionally, Senator Arns said that the use of online platforms generated “high amounts” that are yet to be captured by taxes. Last but not least, he explained that collecting taxes from the use of new technology undoubtedly represents a challenge.

Tax Rate Is Yet to Be Confirmed

It is up to the 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 gaming would be collected within the municipality where the player is located.

Besides online games, the new proposal calls for taxation of games of chance and games of skill. However, based on the existing regulations in Brazil, games of chance are forbidden. In other words, PLP 202/2019, if approved, would have to tax games of skill and exclude games of chance, unless those games are legalized.