Brazil Committee Approves Retroactive Gambling Tax Bill

A joint congressional committee in Brazil has approved a bill that would retroactively tax licensed betting operators on activities dating back to 2014, while dropping a controversial proposal to increase the gambling tax rate to 50%.

The measure, known as Provisional Measure (PM) 1,303, passed by a narrow 13–12 vote on Tuesday. The amended text now heads to both chambers of Congress for final approval, expected on Wednesday. If not approved by then, the bill will expire and operators would revert to the current 12% gross gaming revenue (GGR) tax rate.

 

Retroactive Tax Replaces Major Hike

Before the vote, lawmakers removed an earlier provision that would have raised the gambling tax to 18% of GGR—a proposal that drew criticism from both the industry and some members of Congress. Instead, the bill introduces a new scheme called the Special Regime for the Regularisation of Exchange and Tax Assets (RERCT Litígio Zero Bets), designed to collect taxes on unregulated operations between 2014 and 2024. Under the plan, operators would face a 15% tax on historical gambling activity plus a 15% fine, creating an effective total charge of 30%. Participation, however, is voluntary. Licensed operators would have 90 days from the law’s publication to declare and pay the taxes voluntarily.

The government estimates the measure could raise BRL5 billion (about $560 million), roughly equivalent to three years of expected revenue had the 18% rate been implemented. A previous working group projected the retrospective programme could yield as much as $2.3 billion. Supporters of the measure argue the retroactive tax programme will allow the government to recover unpaid funds and provide regulatory clarity for the newly licensed market.

Carlos Zarattini, the bill’s rapporteur, said the goal was to ensure that “funds from bets, which weren’t paid under the previous administration, now reach the public coffers.” However, legal experts warn the proposal could trigger disputes over constitutionality and investor confidence.

“Applying retrospective taxation could undermine legal certainty and discourage future investment,” said Udo Seckelmann, head of gambling and crypto at law firm Bichara e Motta Advogados. “A fair and forward-looking approach would be far more beneficial for Brazil’s regulated betting market.”

Seckelmann added that voluntary participation could still help operators demonstrate good faith to regulators and limit future liabilities. iGaming consultant Elvis Lourenço described the measure as a “pathway to legitimising past undeclared assets,” though he cautioned that some companies may challenge the tax as unconstitutional.

Tuesday’s approval followed intense negotiations, including meetings with Finance Minister Fernando Haddad. The slim margin of victory underscores the divided political landscape over how to regulate and tax Brazil’s fast-growing betting sector. The amendments also introduce enforcement measures against illegal operators. Internet service providers would be required to remove flagged gambling content within 48 business hours.

 

We’ve done everything we can to ensure that the funds from bets, which weren’t paid under the previous administration, now reach the public coffers,

 

Outlook for Brazil’s Regulated Betting Market

If PM 1,303 is approved by both chambers, Brazil will move closer to stabilising its regulatory framework after years of uncertainty. The removal of the 50% tax proposal has been viewed as a relief by industry stakeholders, while the retroactive tax scheme presents both risks and opportunities. “For operators that generated profits in the pre-regulation period, it provides a clear voluntary route to settle potential liabilities,” Lourenço said. “For those that operated at a loss, the impact will be minimal.”

Still, the prospect of backdated taxation may deter some investors. As Seckelmann noted, “Operators should analyse the fiscal impact, engage with industry associations, and prepare for regulatory or judicial developments.” Whether the bill becomes law—or lapses in Congress—will determine whether Brazil’s betting market begins its next chapter under clarity or continued uncertainty.