Brazil's Chamber of Deputies has proposed a new bill (PL 5,076/2025) that plans to increase the tax rate for gambling operators from the current 12% to 24%, sparking strong opposition from the industry. Expert Elvis Lorenzo criticized the proposal as "crazy," warning that doubling the tax could lead to a market collapse, and suggested negotiating it down to 18%. This tax increase proposal stems from the government's tax strategy targeting the "three Bs" (billionaires, banks, and the gambling industry) and is considered politically motivated, aimed at appealing to conservative voters. In addition to the GGR tax, the Brazilian gambling industry is also subject to several other taxes, with the actual total burden possibly exceeding 50%, while the illegal market holds a large share, prompting operators to urge the government to prioritize cracking down on the black market rather than excessively pressuring the compliant market.
Tax Proposal and Industry Response
The leader of the Workers' Party in Brazil's Chamber of Deputies has proposed a new bill that aims to increase the tax rate for gambling operators from 12% to 24%, a significant rise from the initial 2023 proposal of 18% and the current rate. Expert Elvis Lorenzo called the doubling of the tax "crazy," stating it would destroy the market, and suggested negotiating it to around 18%. A previous government initiative to raise the tax rate to 18% was not passed by the parliament, and this proposal has now been granted emergency status, pending a vote.
Political Background and Taxation Motives
The government is using the tax increase as part of a new tax strategy targeting the "three Bs" (billionaires, banks, and the gambling industry). Lorenzo noted that with the upcoming elections, the government is trying to gain the support of conservative voters by raising gambling taxes, making the emerging and weakly lobbying gambling industry an easy target for increased taxes. The failure of the previous proposal embarrassed the government, accelerating this counterattack, with a clear trend of politically exploiting the gambling industry as "bargaining currency."
Tax Burden Structure and Market Reality
In addition to the GGR tax, Brazilian gambling operators must also pay a 9.25% PIS/Cofins tax, up to 5% municipal tax, and about 34% profit tax. The government plans to implement a new tax regime, replacing PIS/Cofins with a dual tax system, and if the GGR tax is increased further, the total tax burden could exceed 50%. Industry insiders point out that the government is ignoring the problem of the black market accounting for more than half of the market, focusing on pressuring the compliant market, which in turn fosters illegal operations. They call on the government to prioritize cracking down on the black market and allocate taxes reasonably for healthcare, education, and law enforcement.
