Brazil Proposes Betting Tax Hike to Bolster Healthcare and Revise Investment Exemptions

Government Seeks Increased Revenue for Public Services

The Brazilian government has put forward a proposal to significantly increase the tax rate on fixed-odds betting, aiming to direct the additional revenue towards bolstering the nation's healthcare system. Under Provisional Measure (MP) 1,303/2025, the tax on Gross Gaming Revenue (GGR) for fixed-odds betting operators would rise from the current 12% to 18%. The additional 6% generated from this increase is specifically earmarked for healthcare programs within Brazil's social security system.

This legislative initiative also includes provisions to eliminate tax exemptions previously applied to Real Estate Credit Bills (LCIs) and Agribusiness Credit Bills (LCAs). The government's stated objective for these changes is to broaden the country's revenue base and rebalance public finances.

Financial Impact and Legislative Process

According to preliminary calculations by the Ministry of Finance, the proposed tax increase on betting is projected to generate an additional R$4.8 billion annually for Brazil's public health system. Other estimates suggest the increased tax could collect an additional R$284.94 million in 2025, potentially reaching R$1.7 billion in 2026. The broader set of economic measures within MP 1,303/2025 is calculated to generate approximately R$31.4 billion by 2026.

The Provisional Measure, which came into effect immediately upon its publication, requires approval by both houses of Brazil's National Congress within 60 to 120 days to become permanent. A Joint Committee has been installed to evaluate the MP, with public hearings scheduled to gather input. Federal Deputy Carlos Zarattini (PT–SP), the rapporteur for MP 1,303/2025, maintained the 18% tax rate in his draft report and the bill establishes a 7.5% Income Tax (IR) on earnings from LCAs and LCIs.

Industry Concerns and Government Rationale

The proposed tax hike has drawn significant criticism from the fixed-odds betting industry. Trade bodies such as the Brazilian Institute for Responsible Gaming (IBJR) and the National Association of Gaming and Lotteries (ANJL) have voiced strong opposition, arguing that a combined tax burden nearing 50-55% (when including other existing taxes) threatens the economic viability of licensed operators. Industry representatives contend that such an increase could discourage further investment, hinder job creation, and potentially drive bettors towards the illegal market. The IBJR has indicated it will pursue all avenues, including legal action, to defend the regulated market.

The government, including Minister of Finance Fernando Haddad and President Luiz Inácio Lula da Silva, has publicly defended the measure. The increase in betting tax is presented as a measure of 'fiscal and social justice' and aims to mitigate social risks associated with the growth of betting, including combating gambling addiction. This proposal also serves as an alternative revenue-raising strategy following the rollback of an earlier, unpopular decree that sought to increase taxes on international financial transactions (IOF).