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President Luiz Inácio Lula da Silva reasserted his administration’s intent to increase taxation of fintech companies and betting companies, instructing the Ministry of Finance to revive related fiscal measures taken out of a provisional measure (MP). The action was corroborated in a Monday, November 20, meeting with key government and congressional leaders.
Government Reaffirms Focus on Betting and Fintech Taxation
Following the words of PT–AP Congressional leader, President Lula, the government has plainly stated that the government will continue to insist on more taxation of betting companies as well as fintechs. “The government will demand bets and banks must be taxed“, Randolfe stated after the meeting.
The meeting, in which Finance Minister Fernando Haddad and Institutional Relations Minister Gleisi Hoffmann participated, along with various legislative leaders, took place just before President Lula’s scheduled foreign visit to Indonesia. During the meeting, the political course of the president to unite the fiscal policy through differential taxation while maintaining policies to limit public expenditures was reaffirmed.
Restoring Provisions from the Expired Provisional Bill
This comes after Provisional Measure 1.303 was removed from the Chamber of Deputies agenda and lost its legal validity, which sought to increase the Social Contribution on Net Profit (CSLL) on certain financial institutions.
That would have increased the rate of CSLL for payment institutions to 9% from 15% and for financial firms to 15% from 20%, the latter the same as that on regular banks. The rate for betting firms would have increased to 18% from 12%, a sharp hike indicating the government wishes to harmonize tax rates across businesses benefiting from Brazil’s growing digital economy.
Public Health and Responsible Regulation
In a surprising twist, the administration is framing the tax bill on betting websites not only as a fiscal policy issue, but as a public health issue. Randolfe Rodrigues explained that it is not all about raising revenue. “This has nothing to do with raising revenue; it’s about public health. It is necessary to tax bets and other unwanted things for people’s health. We will even discuss possible prohibitions“, he explained.
The declaration indicates growing concern within the federal government about the social impact of gambling and betting, most notably in the context of addiction and financial difficulty for vulnerable populations.
Path Forward for Legislative Approval
The government is yet to decide on the exact legislative process through which to return the taxation proposal. Randolfe said that it could be tabled as a new government bill or by reinstating one of the existing legislative proposals already under debate in Congress.
“We continue to align strategies. It might go through a government-initiated proposal or through bills pending in Congress. But as far as betting firms are concerned, the government is completely convinced and decided to file all measures that need to be presented“, he said.
Separation of Fiscal and Spending Measures
Besides going back to taxing, President Lula also instructed the Ministry of Finance to proceed with spending reduction initiatives, although these will possibly be dealt with in a separate way. “We are going to distinguish the measures related to expenditure from those related to tax. That makes it simpler to explain to the Brazilian people“, Randolfe declared.
The administration’s renewed interest in taxing gambling reflects both economic and social concerns, enhancing fiscal balance while addressing the emerging public health issues of Brazil’s rapidly expanding online gambling sector. As the issue returns to Congress, the government’s ruling will determine the pace at which these changes become effective and how they alter the nation’s national regulatory scheme for the financial and gambling sectors.
Source: iGaming Brasil
