Brazil Congress installs joint committee to assess controversial gambling tax hike

The Brazil Congress has established the joint committee responsible for analysing the provisional measure that raises the tax rate on gambling operators’ GGR from 12% to 18%.

In June, the Brazil government rocked the licensed gambling sector by publishing a provisional measure (PM 1,303/2025) proposing a gambling tax rate hike of 50%.

When paid alongside other taxes such as corporate income tax and social contributions, the overall tax burden on licensed gambling companies stands at around 50%, with some in the industry warning this will make operations unviable.

From the PM’s publication on 11 June, Congress has up to 120 days to vote on whether to make the tax hike on gambling permanent or not.

The joint committee has scheduled four public hearings, with the first set for 7 August and the last set for later that month, to discuss the measure and consider contrasting views on the measure.

Senator Renan Calheiros will chair the committee, while deputy Carlos Zarattini will serve as the proposal’s rapporteur.

Congress’ leader, Senator Randolfe Rodrigues, believes taxing sectors such as gambling could be crucial in reducing social inequalities in Brazil.

“Today, we are one of the 10 economies in the world and, at the same time, one of the 10 most unequal countries,” Rodrigues said. “Something isn’t right about this combination. The government sought, with this provisional measure, to build mechanisms for tax justice.”

The Congress must vote on the provisional measure by 9 October, with the committee’s own vote on the matter expected on 26 August.

What’s included in PM 1,303/2025?

Of the new 18% GGR tax rate, which became effective on a provisional basis immediately after the measure’s publication, one-third will go toward social security and health contributions, while the remaining two-thirds will be distributed across other areas, including sports and education.

The tax was introduced after the government revised a controversial decree that would have increased the rate of financial transactions tax (IOF) from 0.38% to 3.5%.

The IOF was implemented in Brazil as a monetary policy tool to help regulate financial markets. It applies to all foreign transactions, including loans, currency exchange, insurance and investments, representing a significant source of government tax revenue.

To alleviate the backlash of increasing the IOF by so much, the government switched its focus to sectors such as gambling in order to fill the BRL20 billion ($3.6 billion) hole in its budget. There are still plans to increase the IOF but by much less than previously suggested.

The move has sparked a furious reaction from the nation’s licensed gambling industry, with the Brazilian Institute of Responsible Gaming warning the tax rise could spike the illegal market’s share to at least 60%.

“The measure is unacceptable and makes it impossible for many companies that trusted and invested in the regulated market to operate, generates legal uncertainty and threatens public revenue,” the IBJR stated in June.

Is gambling in Brazil being taxed enough?

Other sectors, such as fishing, real estate and agribusiness, have also been affected by PM 1,303/2025.

In a speech on Tuesday, Senator Izalci Lucas criticised the measure, saying it unfairly targeted sectors such as agribusiness and constructions funds, while not increasing the tax on gambling to a sufficiently high rate.

While industry leaders argue the rate is unsustainably high, some lawmakers such as Senator Izalci believe gambling is still undertaxed relative to its social costs.

Additionally, Izalci criticised the government’s failure to implement the ban on the use of social welfare proceeds, such as from the Bolsa Família programme, for gambling.

“This government only thinks about taxes and only thinks about raising taxes,” Izalci said. “You take the betting industry, which has destroyed Brazil, reduced supermarket consumption, reduced retail consumption.

“To this day, the government hasn’t had the authority to actually prohibit people receiving Bolsa Família from gambling on the betting industry. This government’s incompetence is incredible.”