Brazil Backs Tax Hike for Betting, Banks, and Fintechs

The Brazilian government has announced backing for a bill introduced by Senator Renan Calheiros (MDB–AL) that proposes increased taxes for sports betting operators, banks and fintechs. The legislation is expected to be reviewed in mid-November by the Senate’s Committee on Economic Affairs (CAE) and aligns with President Lula da Silva’s broader fiscal policy, which seeks to balance targeted tax relief with enhanced revenue collection.

Coordinating Government and Legislative Efforts
The bill emerged from political discussions intended to prevent delays in approving the income tax exemption reform, which provides relief for Brazilians earning up to R$5,000 per month. Senator Calheiros initially proposed several amendments, but these risked returning the bill to the Chamber of Deputies and delaying its January 2026 implementation.

Senator Eduardo Braga, who will report on the proposal, held consultations with Finance Minister Fernando Haddad and Senate President Davi Alcolumbre to finalize the text. Braga has also engaged opposition figures, particularly from the Liberal Party (PL), to secure a smoother path for approval.

Minister Gleisi Hoffmann, head of the Secretariat for Institutional Relations, confirmed the government’s decision to back Calheiros’ initiative rather than presenting a separate proposal after the provisional measure aimed at replacing IOF was withdrawn. Hoffmann noted the administration could later integrate its own ideas with the Senate bill if necessary, but priority remains supporting Senator Calheiros’ draft.

Proposed Tax Increases
Under the new legislation, sports betting operators would see gross revenue taxes rise from 12% to 24%. Banks, investment firms, and other financial institutions would face a CSLL increase from 15% to 20%, while fintechs, brokers and payment providers would see their rate climb from 9% to 15%.

Senator Carlos Portinho (PL) expressed support for taxing betting companies but questioned similar treatment for fintechs, emphasizing the sector’s role as a driver of innovation rather than a source of revenue concern.

Dividend Distribution Amendments
The bill also proposes extending the tax-exempt window for dividend approvals. Currently, dividends approved by December 31, 2025, are exempt from a 10% withholding tax. Senator Izalci Lucas (PL–DF) suggested moving the deadline to April 30, 2026, reflecting that many companies finalize financial statements in the first quarter of the following year. Further discussion continues on applying the 10% dividend tax to non-resident shareholders.

Economic and Political Implications
The Lula administration sees the Calheiros bill as a pragmatic tool to increase revenue without pursuing a full-scale tax reform. If passed, the measure would reshape taxation across major sectors, strengthen fiscal capacity and spark broader debate on competitiveness, innovation and equity in Brazil’s fast-evolving digital and financial markets.