Brazil plans selective tax on betting operators, but election timing is slowing the bill

Brazil’s government has already settled one important point in its still-unpublished Selective Tax proposal: betting companies, or bets, are in scope. For PSPs and acquirers serving high-risk verticals, the real issue is not the label on the tax, but when the bill moves and how the final rates feed into the wider 2027 tax reform.

1. The Selective Tax is part of Brazil’s tax reform, which starts taking effect in 2027, and it is meant to be levied across different sectors. In the government’s internal reading, betting deserves a treatment similar to cigarettes because of concerns about addiction in online gambling.
2. The government has already defined a rate, but the number is being kept confidential and could still change before the bill is sent to Congress. The stated aim is to set it high enough to matter, but not so high that it becomes easy for the sector’s lobby in Congress to push back or for platforms to drift into illegality, as can happen when taxes on cigarettes and alcohol are miscalibrated.
3. There is also a technical dependency that matters beyond betting: the final version of the Selective Tax is essential for calculating the CBS (Contribution on Goods and Services), which will replace PIS and Cofins. Together, the Selective Tax and CBS will replace PIS, Cofins and IPI, and the government must make sure the amount collected matches what those three taxes currently bring in.
4. On the political side, one reason the proposal has not yet been sent to the National Congress is fear of the election-year debate over tax rates. For the CBS, specialists could more easily work out a figure from what is published, which could create problems for a government already under attack for its recent tax increases. For the Selective Tax, secrecy is easier to maintain because rates will differ by sector.
5. By law, the government was supposed to formally send the CBS rate to the TCU for validation by September 15, but there is no penalty for missing that deadline. The bigger issue is revenue, especially because the Selective Tax is subject to a 90-day waiting period (noventena). If the bill is only sent after the elections, the most likely timing is November; if it is approved quickly by year-end, the tax on the relevant products would only start to apply in the second quarter.

The important operational point for high-risk payment businesses is simple: Brazil is not just talking about another gambling tax. It is tying betting into a wider tax redesign whose final numbers still determine the CBS base, the revenue target, and the timing of implementation. That is the sort of detail that eventually finds its way into pricing, merchant risk models, and whether some routes stay commercial or become awkward overnight.