Brazil’s CAE Approves Gradual Increase in Gambling Taxes
Brazil’s CAE Approves Gradual Increase in Gambling Taxes
On December 2, the Senate Economic Affairs Committee (CAE) in Brazil passed an important bill, PL 5,473/2025, aimed at gradually increasing taxes on gambling operators. The highest tax rate proposed will be 18% of Gross Gaming Revenue (GGR).
New Gambling Tax Plan Gains Strong Support
The committee approved the measure with a decisive 23 to 1 vote, settling on a tax rate well below the initially suggested 24% and significantly lower than a previously considered 50% rate. The bill is now ready to move forward to the Chamber of Deputies for further evaluation, unless an appeal is raised to delay it in the Senate. According to the plan, the current tax of 12% will rise to 15% in 2026 and 2027, before reaching 18% in 2028.
With national elections approaching, President Lula’s administration appears determined to increase gambling taxes as part of its fiscal strategy. The government suffered a setback when its earlier attempt to raise taxes by 50% was rejected. Industry analyst Elvis Lourenço points out that this defeat has pushed the government to pursue tax increases with renewed urgency and persistence.
The tax proposal has also become a political talking point during the election campaign, appealing to conservative voters by framing it as a measure to tax the wealthier segments of the gambling industry.
Concerns Raised Over Earlier Proposals
Initially, the bill proposed a 24% tax rate, which faced opposition. Senator Eduardo Braga warned that such a sharp increase could drive players to illegal gambling markets. He emphasized that while legal operators would struggle with higher taxation, illegal operators would continue to operate without repercussions and would not contribute tax revenue.
These concerns were supported by the Brazilian Institute of Responsible Gaming (IBJR), which cautioned that too high a tax hike might push some legal operators out of the regulated market. They stressed that this could damage the legal gambling sector.
Expected Revenue and Allocation
The updated bill anticipates that the federal government will generate approximately BRL 18 billion (around $3.4 billion) from gambling taxes over the next three years. This includes an estimated BRL 5 billion (about $942 million) in 2026 and an additional BRL 13 billion (approximately $2.45 billion) in 2027 and 2028 combined.
Part of this revenue is intended to compensate states and municipalities for the anticipated loss of income tax revenue resulting from an exemption given to Brazilian citizens earning up to BRL 5,000 (about $941).
