The Joint Committee’s vote on Provisional Measure 1,303/2025 resulted in a close 13-12 decision that maintained the existing 12% GGR tax rate for licensed betting operators. The measure, which originally proposed a six percentage point increase, had drawn widespread criticism from industry stakeholders who warned it would create legal uncertainty and drive growth in the illegal betting market.
Rather than implementing the tax hike, lawmakers introduced the Special Regime for Regularization of Exchange and Tax Assets (RERCT Zero Litigation Bets). Under this regime, betting operators who are now licensed by the Secretariat of Prizes and Betting (SPA) will be required to pay a 15% income tax rate retroactively for their operations between 2014 and 2024, along with a 100% penalty. Operators will have a 90-day window to comply with the new regulation.
The retroactive tax measure is projected to generate approximately R$5 billion ($943 million) in revenue, equivalent to three years of collections under the proposed 18% tax rate that was rejected.
Deputy Carlos Zarattini, who served as the proposal’s rapporteur, removed the betting tax increase from the measure after several rounds of negotiations with the government’s political coalition. The decision came after intense lobbying from the gaming industry, which argued that raising the tax burden to 18% would push the sector’s total tax liability beyond 50% when combined with corporate income tax and social contributions.
Brazil’s online betting sector has operated under full legal regulation for less than a year, with licensed operations commencing on January 1, 2025. Operators paid R$30 million ($5.4 million) for five-year licenses based on the expectation of a 12% GGR tax rate. The legal betting market has already contributed over R$2.3 billion ($415.3 million) in licensing fees to the government.
The Brazilian Institute for Responsible Gaming (IBJR) had warned prior to the vote that a tax rate increase would “create legal uncertainty and undermine the confidence of companies that have invested in the country.” Industry associations estimated that raising the tax rate would cause the illegal betting market to grow from its current 50-60% share to at least 60%, resulting in a projected loss of more than R$2 billion per year in government revenue.
The retroactive taxation provision has emerged as a new point of contention. Lawfully operating betting companies under SPA oversight may face significant financial pressure as they work to clear outstanding tax obligations under the new regime. The measure aims to close potential tax disputes between betting operators and the federal government, with operators who join the program able to regularize their status and avoid future legal disputes.
Zarattini’s final report also includes provisions to strengthen oversight of Brazil’s illicit gaming market. A key measure obligates internet service providers to block unauthorized betting sites within 48 hours of notification, aiming to ensure only authorized platforms can legally operate in the country.
The provisional measure is part of Brazil’s broader tax reform package, which also includes changes to investment taxation and adjustments to the Corporate Social Contribution on Net Income (CSLL) for financial technology companies. The revised package is estimated to raise just over R$17 billion ($3.21 billion) in 2026, approximately R$3 billion ($566 million) less than initially planned after concessions on real estate and agricultural credit notes.
The approved text must now be voted on by the plenary sessions of the Senate and Chamber of Deputies. The provisional measure faces a deadline of 11:59 p.m. on Wednesday, October 8, 2025. If it fails to pass both houses of Congress by this deadline, the measure will expire and all proposed changes will be revoked.
The government views MP 1303 as critical to stabilizing public finances in 2025 and 2026, particularly ahead of Brazil’s presidential election next year. The measure serves as an alternative revenue source after the administration’s earlier attempt to raise the Financial Operations Tax (IOF) from 0.38% to 3.5% was shelved due to Congressional opposition and concerns about investor confidence.
Industry stakeholders continue to monitor the situation closely as the measure moves through the legislative process. The outcome will determine not only the sector’s future tax burden but also the broader compliance and enforcement landscape for Brazil’s legal betting market.
