BRASILIA, July 25 (Reuters) - Brazil's government issued an executive order on Tuesday to initiate taxation on sports betting, in line with a measure announced by President Luiz Inacio Lula da Silva's economic team to increase revenues.
The measure takes immediate effect but must be voted on by Congress within four months to remain valid.
Under the new regulation, companies will be subject to an 18% tax on so-called Gross Gaming Revenue (GGR).
According to the proposal, national or foreign legal entities established in the country and meeting the requirements set forth by the Finance Ministry may apply for authorization to operate fixed-odds betting lotteries.
In 2018, Brazil passed a law allowing online fixed-odds betting for the first time, permitting bookmakers to offer odds on the outcomes of sports events.
However, the necessary sector regulation was never implemented.
Finance Minister Fernando Haddad stated in March that the measure was necessary as online gambling companies were not paying any taxes while profiting immensely from their operations in the country.
Haddad recently estimated the government would raise about 2 billion reais ($423 million) with the measure in 2024, saying the estimate was conservative.
Internet sports betting firms, including bet365, Betano, and Betfair, have been expanding globally and strengthening their presence in Brazil by sponsoring major soccer clubs.
($1 = 4.7233 reais)
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