Brazil Senate Commission approves tax on online gambling

The Brazil Senate Commission on Economic Affairs (CAE) has already approved a tax on online gambling.
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Despite the lack of regulation in Brazil, the Senate Commission on Economic Affairs (CAE) has already approved a tax on online gambling. While the President of the Chamber of Senators Rodrigo Pacheco has hinted that the debate won’t happen anytime soon, operators now have some kind of information in regards to what type of taxes they will have to pay if the bill gets the full approval.

The latest approval sets that the organization, administration, or exploitation of skill games and online games, such as poker or chess, will be subject to a tax if the full Senate gives the final nod.

Additionally, the document proposes a different method to collect the tax, where the final contributions will be sent to the municipalities where the players reside.

“The ordinary law would make the administrator identify the players and unify other obligations that the electronic platform must comply with at a national level,” Senator Jaques Wagner explained.

Furthermore, the author of the proposal, Senator Flávio Arns, said: “This informality around taxpayers is a public knowledge [issue], the result of technological advances and the lack of updates surrounding legal tax regulations that make auditing difficult and compromise potential tax collection.”

“Internet operations have been a thing for a long time, which has led to new service providers, especially in electronic entertainment activities. However, the legislation is not always able to keep up with new technologies,” he said.

The Chamber of Deputies took a big step in late February to approve Bill 442/91 to regulate gambling, but is now awaiting discussions in the Senate.

The lack of consensus between senators will slow down the process, as Pacheco said, and added that “the proposal will follow the normal processes, always including a broad discussion, as it happened with the Chamber of Deputies,” implying that there is no urgency to debate the bill.

Thus, the project will not receive special treatment, such as a direct vote of the plenary session of the House, and long delays are expected. Pacheco will be the one to define whether the bill is included on the agenda, but he needs the approval of the party leaders before doing so. This may take several months and the senators estimate that it will not happen in 2022.