BRAZILIAN UPDATE
iii.Social assistance contribution (COFINS), which is a monthly federal social assistance contribution calculated as a percentage of revenue, is levied at the rate of 7.6 percent. iv. Contribution to the Social Integration Program (PIS), which is also a federal social contribution calculated monthly as a percentage of revenue, is levied at the rate of 1.65 percent. v. Municipal Service Tax (ISS - once in force 7 ), monthly. The rates for this tax vary from one municipality to another and range between 2 percent and 5 percent. Law No. 14,790/2023 maintains the Inspection Fee instituted by Law No. 13,756/2018. Therefore, operators will be subject to the monthly payment of the Inspection Fee ranging from BRL54,419.56 to BRL1,944,000.00, depending on monthly payout of winnings. It is also important to note that a tax reform has begun following the enactment of Constitutional Amendment No. 132, of 20th December 2023 (starting with changes to taxes levied in relation to the provision of goods and services), to be implemented as from 2026 with supplementary legislation being required. 5. Other points of interest Law No. 14,790/2023 also addresses many other topics, which could each be the subject of an article. These can be summarized as follows: i. The Ministry of Finance will grant six months for companies to adapt to the new legal framework; ii. Advertising in sporting events involving minors will be prohibited; iii. Payment service providers (PSPs) must be duly licensed by the Brazilian Central Bank and will be prohibited from conducting financial transactions for non-licensed operators;
iv. Bets placed under match fixing schemes will be annulled; v. Operators will have to adopt facial recognition technology for player identification verification purposes; vi. Corporate groups with operators holding a federal license can only hold one state license; vii. Bonuses and other benefits extended to players are prohibited; viii. The law provides a list of infractions and applicable penalties. What to expect in 2024 2024 will certainly be a busy year for all stakeholders in the newly regulated market. The Ministry of Finance will start the year progressing the testing phase of the systems it has already developed with the group of 134 operators. It will also issue the portarias required to further regulate Law No. 14,790/2023 so that the market can become operational in the second half of 2024. At Congress, in addition to the review of President Lula’s vetoes, there is a good chance that Bill of Law No. 2,234/2022 will be approved thereby legalizing land-based casinos and bingo parlors, as well as jogo do bicho, thereby completing the regulatory cycle for Brazil. The landing of foreign operators in Brazil should provide corporate lawyers with a lot of work, not only in the form of incorporating local entities to apply for the federal licenses, but also more complex transactions such as joint ventures and M&A. The local presence established by foreign operators will likely encourage disgruntled customers to take legal action against them in Brazilian courts, creating a first wave of consumer litigation. This is the moment everyone has been waiting for. It is now time to kick-off a strong, regulated market and, hopefully, score some goals.
NEIL MONTGOMERY Founding and Managing Partner at Montgomery For information contact +55 11 4096-4008 neil.montgomery@ montgomery.adv.br
7 Although municipalities have already instituted ISS in their territories, a change in Supplementary Law No. 116/03 will still be necessary for this tax to be effectively payable by operators
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IMGL MAGAZINE | JANUARY 2024
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