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Brazil: Provisional Measure no. 1.182/2023 regulates sports betting

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In brief

On 25 July 2023, Provisional Measure No. 1,182/2023 was issued, amending Law No. 13,756/2018, to discipline the operation of the fixed-odds lottery by the Union, that is, mainly to regulate the performance of sports betting sites in Brazil, among other minor points.

More details

The text of the Provisional Measure No. 1,182/2023 has as main points:

  • It allows the operation through national and foreign Legal Entities, provided that they meet the requirements contained in the regulations of the Ministry of Finance.
  • Stipulation of penalties and fines in case of non-compliance with the rules.
  • Definition of concepts of real sports events; bettor; virtual bet; physical bet; fixed quota and operator agent (the betting sites).
  • Income Tax and Social Contributions will be levied on the proceeds of the lottery.
  • The monthly Social Contribution of 18% (composed of Social Security + Education + FNSP + National Sports System + Ministry of Sport) will be levied on the so-called “Gross Gaming Revenue” (= Bet – prize paid). That is, the operating agent (site) will keep 82%.
  • The operating agent (site) will have to withhold Income Tax due by the bettor at he rate of 30% on the prize money that exceeds the value of the first band of the monthly income tax table of the Individual Income Tax – IRPF, currently BRL 2,112.00.
  • The Ministry of Finance will regulate the form and process by which authorizations will be granted to all lottery operators.
  • Creation of an authorization fee, to be updated annually by the Ministry of Finance.
  • Creation of the Inspection Fee.
  • Prohibition of betting operators from acquiring rights to broadcast sporting events and the like.
  • Prohibition of advertising of websites or betting companies not authorized by the Ministry of Finance.
  • Prohibition of a partner or manager of SAF (Sociedade Anônima de Futebol) to be a partner (direct or indirect) of an operating agent.
  • Prohibition of participation of under 18 years old, public regulatory agent, owner or influential and operating agent, person who has influence on the outcome of the event, person registered in national credit protection register, among others.
  • Deadline: the main rules will be valid upon publication of the Regulation by the Ministry of Finance, which will also determine the applicable measures and transition periods.

In addition, the Provisional Measure also deals with:

  • Updating the wording of the Law to adapt to more corporate forms of sports entities, such as SAFs.
  • How public bodies should allocate the amounts received for social contributions.
  • Determinations on marketing rules for betting.
  • Central Bank will discipline payment arrangements, to avoid operation of unauthorized companies.
  • Obligation of the operating agent to report suspicious activities to the Ministry of Finance.

The Provisional Measure will proceed to a vote by the National Congress, within up to 120 days, so the text may undergo changes.

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*Trench Rossi Watanabe and Baker McKenzie have executed a strategic cooperation agreement for consulting on foreign law

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Clarissa Giannetti Machado Miras joined the Firm in 1999 and became partner in 2007 .
She is the Head of the tax practice group in Brazil and the Head of the Pro-Bono Committee, being a member of the Social Responsibility team of the firm. Her focus is tax consulting on corporate income and other federal taxes. Clarissa has extensive experience in the elaboration and analysis of global transfer pricing analysis and its effects vis-à- vis the local legislation. Clarissa has a wide breadth of experience in the assistance of clients for the development of efficient structures in M&A transactions, local and international restructurings, real estate and financing transactions. She also advises individuals on wealth management matters.
*Trench Rossi Watanabe and Baker McKenzie have executed a strategic cooperation agreement for consulting on foreign law.

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Adriana Stamato leads the group of indirect taxes, working with in consulting and litigation matters. She has extensive experience in assisting clients in corporate reorganizations, tax planning, risk assessment, tax inspections, modeling of new businesses, obtaining special regimes, among others. Adriana also has extensive experience in analyzing the different tax regimes applicable to each sector, having assisted clients in selecting the best business model for implementing structures in Brazil. She represents customers in the automotive, technology, energy, food, pharmaceutical, chemical, hygiene and cosmetics, retail, agribusiness and services, etc.
*Trench Rossi Watanabe and Baker McKenzie have executed a strategic cooperation agreement for consulting on foreign law.

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Mariana Neves de Vito joined the Firm in 1998 and became partner in 2012. She integrates the tax practice group, with focus on social security matters and other taxes related to labor relations. Mariana has a wide breadth of experience in advisory and tax litigation (judicial and administrative). She represents clients in the automotive sector, pharmaceutical, chemical, hygiene products and cosmetics, retailing, agribusiness and services, among others.
*Trench Rossi Watanabe and Baker McKenzie have executed a strategic cooperation agreement for consulting on foreign law.

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Thales M. Stucky joined the Firm in 2004 and became partner in 2015. He integrates the Tax Planning & Controversies practice group, with focus on tax litigation (judicial and administrative), as well as tax planning in general for Brazilian and foreign companies. Thales has a wide experience in tax issues related to the automotive and IT industries.
*Trench Rossi Watanabe and Baker McKenzie have executed a strategic cooperation agreement for consulting on foreign law

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Paulo Roberto Gomes de Carvalho joined the Firm in 2010. He integrates the tax practice group, with focus on taxation upon compensation. Mr. Paulo Carvalho has a wide breadth of experience in the social security contributions income tax, strategic compensation, stock plans, expatriations and private pension.
*Trench Rossi Watanabe and Baker McKenzie have executed a strategic cooperation agreement for consulting on foreign law.

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