Bets: Lula vetoes income tax exemption for winnings up to R$ 2,112 – 12/30/2023 – Market

President Luiz Inácio Lula da Silva (PT) sanctioned this Saturday (30), with vetoes, the law that regulates fixed-rate betting, such as so-called bets, and also the authorization for online casinos.

The project provides for a 12% tax rate on the betting houses’ revenue, minus the payment of prizes.

Bettors must pay 15% of the value obtained from the prize in this type of bet —Lula vetoed the section that exempted winnings below R$2,112 from taxation.

The law classifies “real sports-themed” events and “virtual online gaming” events as fixed rate bets — a device that includes games, or eSports, and opens up opportunities for gambling in a virtual environment.

Bets were authorized through a bill at the end of 2018, still under the Michel Temer (MDB) government. After this stage, the topic would need to have been regulated by the Executive, which did not happen during the four years of Jair Bolsonaro’s (PL) government.

Currently, sports betting companies that operate with the national public operate in a gray area of ​​legislation: based abroad, but with Brazilian users and without paying taxes in the country.

President Lula vetoed three sections of the law, following guidance from the Ministry of Finance. The law and the reasons for the vetoes were published in an extra edition of the DOU (Official Gazette of the Union) this Saturday.

The most relevant veto deals with procedures for taxing prizes obtained by bettors. Lula vetoed the section that allowed not to tax earnings below R$2,112, the amount referring to the Income Tax exemption range.

Maintaining this section “would result in Income Tax taxation being different from that seen in other lottery modalities, thus creating a distinction in tax conduct without a motivating reason for this”, states the president’s order.

The other vetoes were on proposals for rules for authorization of commercial promotion and filing of complaints, investigations and accountability related to the distribution of prizes and draws of up to R$10,000.

The legal limbo allowed the proliferation of companies in the country, even without specific legislation or supervision, and contributed to the emergence of corruption scandals — such as the one that culminated in the arrest of a criminal organization for manipulating the results of the Brazilian Championship.

In fixed odds betting, the bettor on a football game, for example, wins if he guesses the final result or some condition of the match, such as penalties.

The regulation of sports betting was one of the items in the package sent by the Ministry of Finance to Congress to increase revenues in 2024 and reduce the deficit in public accounts.