On October 8, 2025, Brazil’s Chamber of Deputies decided to withdraw the controversial bill PM 1,303, which included a provision that would have subjected gambling operators to retroactive taxes dating back 10 years before regulation. This withdrawal marks a significant shift in the government’s approach to gambling taxation. Initially, the bill proposed replacing a provisional increase in gambling tax from 12% to 18% of Gross Gaming Revenue (GGR) with this retroactive tax.
The provisional 18% tax, introduced in June, was set to be a permanent fixture. With its scrapping, operators are now reverting to the original 12% tax rate. The bill had narrowly passed through a congressional joint committee with a vote of 13-12, underscoring the contentious nature of the proposed measures. However, it failed to pass through Congress when it reached the Chamber of Deputies. The final vote resulted in 251 members supporting the withdrawal of the bill against 193 who were in favor of its passage.
Senator Rehan Calheiros, who chaired the joint committee that analyzed the bill, expressed concerns about the potential consequences for Brazil’s economy. He lamented the decision, hinting at missed opportunities for boosting public finances. The amended bill had been expected to generate BRL17 billion ($3.2 billion) in additional revenue for the year 2026 through various economic measures, including the contentious tax scheme.
The retroactive tax initiative, known as RERCT Litígio Zero Bets, was introduced as a voluntary program, inviting operators to pay a 15% tax on their gambling operations conducted between 2014 and 2024, before the regulation came into effect on January 1 of this year. Participants of the program would also incur a 15% fine, resulting in a total effective tax burden of 30%.
Udo Seckelmann, a legal expert specializing in gambling and crypto at the Brazilian law firm Bichara e Motta Advogados, remarked that the program could have provided legal stability for licensed betting operators, potentially preempting future tax disputes. The abandonment of PM 1,303 means that, for now, operators will not face this retrospective tax burden. However, there is a widespread belief that the issue will resurface as the government explores ways to recover missed revenues.
The government had anticipated raising approximately BRL5 billion through the retroactive tax initiative. Such a sum would have equaled three years’ worth of increased gambling tax revenue, a significant potential boost for government coffers. This expectation suggests that similar measures might be revisited in the future as government officials continue to seek new avenues for fiscal growth.
The notion of retroactive taxation has been a focal point for the GTI-Bets, a working group established in January by the Secretariat of Prizes and Bets and the Federal Revenue Service (RFB). This group is tasked with ensuring that the regulated sector adheres to its tax obligations. Robinson Barreirinhas, the special secretary of the RFB, had earlier emphasized the importance of recovering unpaid taxes from the grey market, further highlighting the financial stakes involved.
Elvis Lourenço, an expert in the Brazilian iGaming landscape, anticipates that the conversation about retroactive tax will reemerge. He suggests that the failure of PM 1,303 reflects a limited appetite in Congress for quick fiscal solutions that tie gambling taxation to broader revenue schemes. Lourenço predicts the government will likely reintroduce or modify elements of the proposal in future legislative efforts, although the timing of such initiatives remains uncertain.
On the opposing side, critics argue that retroactive taxes could have stifled the burgeoning iGaming industry in Brazil, potentially deterring future investments. They assert that a stable and predictable tax environment is crucial for the sector’s growth, which could, in turn, yield substantial long-term benefits for the economy. They propose alternative strategies for increasing tax revenue, such as refining current tax practices and improving compliance within the existing framework.
Despite the setback, the conversation about how best to regulate and tax Brazil’s gambling industry is far from over. As stakeholders continue to deliberate over fiscal policies, the government faces the challenge of balancing immediate revenue needs with the long-term goal of fostering a robust and competitive iGaming market. The decision to withdraw the retroactive tax plan may have been a temporary retreat, but the issue remains a critical point of discussion as Brazil navigates the complexities of regulating its gambling sector.