Betting companies are one of the main targets of Finance Minister Fernando Haddad, who is seeking to increase government revenue and balance public accounts without having to cut spending in the midst of a pre-election year.
The retroactive collection of taxes from betting companies that operated legally in Brazil over the past five years, but through companies based in tax havens, had already been discussed in Congress as part of compensation for increased government spending.
This is an issue that the Ministry of Finance has been advocating since the beginning of the year. In March, the Secretary of the Federal Revenue, Robinson Barreirinhas, argued that betting companies that operated in Brazil before the sector's regulation were already subject to national tax authorities and, therefore, should pay taxes retroactively.
"Because, in the past, if they had income here in Brazil, if they had revenue, and if they were in fact in Brazil, they owe taxes to Brazil," Barreirinhas stated at the time.
But the issue ended up being dropped from the agenda in the new bill proposed by Calheiros. Now, many betting companies are organizing to resume the discussion, using the measure as a bargaining chip for a lower increase in the betting tax rate, to as low as 15%.
According to a businessman in the sector who preferred not to be identified, the retroactive collection has the potential to raise R$ 12.5 billion (US$2.35bn) at once, which would help in meeting the budget in the short term. The number was obtained through a private data platform on companies that are operating legally in Brazil.
The assessment of some betting companies is that, although this penalizes large betting companies that have been operating in Brazil for a long time before the regulation of their activities, for long-term investments, paying the tax retroactively is a bitter pill that could be endured in exchange for a lower tax. This is because the value of the past is a fixed number, while the wagering requirement will be paid indefinitely into the future.
The Ministry of Finance was asked by the reporter if it is considering the idea, but did not respond by the time of publication.
Source: Painel S.A.
