Brazil Regulates CBS Tax for Betting and Lotteries
Brazil has taken another step in its tax reform process with the regulation of the Social Contribution on Goods and Services (CBS), introduced under Decree No. 12,955/2025 by Luiz Inácio Lula da Silva. The measure applies broadly to taxable entities operating within the national market.
The CBS framework stems from Complementary Law No. 214/2025, which established the tax alongside the Tax on Goods and Services (IBS). Together, these levies are intended to replace existing consumption taxes such as PIS and Cofins, forming a combined standard rate of approximately 26.5%.
Under the decree, betting and lottery activities fall within a specific regime tied to “prediction contests” , a category covering various forms of wagering. Both CBS and IBS will be applied to gross gaming revenue (GGR), defined as total revenue after prize payouts.
Current projections indicate that the tax rate on GGR will gradually rise from 12% to 15% by 2028. When combined with other applicable taxes, the overall burden on betting operators could approach 42% by 2033.
The definition of prediction contests includes fixed-odds betting, horse racing wagers, sweepstakes and fantasy sports. The latter refers to online games where users assemble teams of real-world players based on statistical performance.
The decree also outlines how the taxable base is calculated. Operators must deduct prize payouts and mandatory allocations to public or designated beneficiaries from gross revenue. Municipal services tax (ISS) is then subtracted, followed by an adjustment formula that accounts for the combined CBS and IBS rates. The resulting figure represents the taxable income from gambling activities.
For reporting purposes, the assessment period corresponds to the month in which the betting event occurs. Player winnings are excluded from the tax base but can be deducted at the time of payment. In cases where the tax base is negative, losses may be carried forward for up to five years.
In addition to CBS and IBS, operators remain subject to corporate income taxes, including IRPJ and CSLL, which together account for 34% of profits. The new system replaces the previous PIS and Cofins structure.
The framework also introduces a selective tax, often described as a “sin tax” which may further increase the effective rate applied to betting activities.
Operators are required to maintain detailed electronic records covering player activity, wager amounts, geolocation data, prize payments and statutory allocations. Separate documentation must be kept for export-related operations.
While betting companies can claim credits for eligible business inputs, individual players are not entitled to CBS credits.
Cross-border activity is addressed within the same framework. Foreign service providers offering betting-related services in Brazil are subject to CBS under similar conditions as domestic entities. Conversely, services provided to users located outside Brazil are treated as exports and are not subject to the tax, provided certain criteria such as geolocation verification are met.
