Brazil's Chamber of Deputies has officially withdrawn Bill PM 1,303, which required gambling operators to pay retrospective taxes for the period 2014-2024. This means that operators will continue to pay a 12% tax rate on total gambling revenue, rather than the permanently increased rate of 18% proposed in the bill. The bill was withdrawn after failing to gain the necessary support in the final vote on Wednesday, with 251 votes against 193. The retrospective tax plan was originally voluntary, requiring a 15% tax plus a 15% penalty on pre-regulation operations, effectively a 30% tax burden. The government had originally expected to raise 5 billion reais (about $950 million) from this plan, and experts believe the government may revisit similar proposals in the future, but the timing is uncertain.
Bill Withdrawal and Background
The Brazilian Chamber of Deputies officially withdrew Bill PM 1,303 on Wednesday, which aimed to address several economic policies, including the requirement for gambling operators to pay retrospective taxes. The bill required operators to pay retrospective taxes for operations from 2014 to 2024.
This withdrawal means that the proposal did not receive the support needed to pass through Congress, marking a temporary end to this controversial tax plan.
Tax Policy Changes
Bill PM 1,303 originally planned to permanently increase the gambling tax rate from 12% of total revenue to 18%, a measure initially proposed in June as a temporary measure. With the withdrawal of the bill, operators will continue to pay the original 12% tax rate.
The retrospective tax plan was included as an alternative in the revised bill, requiring pre-regulation business activities to be taxed.
Voting Process and Results
The bill was approved by the joint congressional committee on Tuesday, with members voting 13 to 12 in favor. However, in the final voting stage on Wednesday, the bill failed to gain the necessary support.
The House of Representatives decided to withdraw the bill with a vote of 251 against 193, indicating significant legislative division on this issue.
Content of the Retrospective Tax Plan
The retrospective tax plan, named RERCT Litígio Zero Bets, adopted a voluntary participation principle, requiring operators to pay a 15% tax on operations conducted before January 1, 2024. Operators participating in the plan also had to pay a 15% penalty, making the total tax burden 30%.
The plan targeted gambling operations from 2014 to 2024, aiming to recover taxes not paid in the gray market.
Fiscal Impact and Expectations
The government originally expected to raise about 5 billion reais (about $950 million) in revenue through the retrospective tax plan, equivalent to the tax revenue increase from raising the tax rate to 18% for three years.
Senate President Rehan Calheiros, chairman of the joint committee, stated that the failure of the bill to pass "will have a huge impact on Brazil" and said "this is very bad, it will ultimately affect public finances."
Industry Reaction and Expert Views
Udo Seckelmann, head of gambling and cryptocurrency at Brazilian law firm Bichara e Motta Advogados, stated that the retrospective tax plan could provide legal certainty for licensed operators, helping to avoid future tax disputes.
Industry expert Elvis Lourenço believes that the government will revisit the topic of retrospective taxes, but the timing is uncertain. He noted: "This shows that Congress has limited interest in linking gambling taxes to broader revenue measures as part of a quick fiscal plan."
Government Stance and Task Force Actions
The retrospective tax has been a focus of the GTI-Bets task force, formed in January by the Prize and Betting Secretariat and the Federal Revenue Service (RFB), aimed at ensuring that licensing departments meet tax requirements.
RFB Special Secretary Robinson Barreirinhas told the parliamentary committee in March that the government should seek to recover taxes not paid in the gray market, indicating ongoing official concern about this issue.
Future Outlook and Possible Developments
Although Bill PM 1,303 has been withdrawn, experts expect the government to revisit similar proposals in the near future. Given the significant potential revenue source, stakeholders believe the government may review such opportunities again.
Lourenço stated: "It is expected that the government will rebuild or resubmit new elements in the bill/congressmen, but the timing is uncertain." This indicates that related discussions may continue.
Market Impact and Operator Response
The withdrawal of the bill provides temporary certainty for gambling operators, avoiding an immediate increase in tax burdens. Operators can continue to operate at a 12% tax rate without worrying about retrospective taxes for historical operations.
This result also provides a period of stability for the market, allowing operators to plan business development in a relatively predictable tax environment.
