Efraim Filho's amendment proposes a 20% income tax on betting, risking a flight of bettors.

BNLData obtained and analyzed the full text of Amendment No. 14 to Provisional Measure 1357/2026, the so-called "Blouse MP". Two distinct amendments were presented to the MP proposing to raise the Income Tax on net prizes from fixed-odds betting as a way to compensate for tax benefits to the national retail sector. The first, authored by Senator Efraim Filho (PL-PB), sets the new rate at 20%. The second, by Senator Hermes Klann (PL-SC), proposes 25% — a number that has been attributed, by some news outlets, to Efraim Filho's proposal. Currently, the rate is 15% on the annual net prize above R$ 28 from sports betting, the so-called bets.

Both amendments are being processed in the same joint committee, deal with similar issues, and have been presented, in parts of the coverage, as a single initiative. Analysis of the original documents shows that they are distinct instruments, from different authors, with different tax rates.

Two amendments

Provisional Measure 1357/2026 temporarily eliminates import tax for international purchases of up to US$50 made by individuals. The Provisional Measure will expire on Monday (September 8th) if Congress does not vote on it by that date. Throughout its processing, the proposal accumulated 112 amendments, a large part of them proposing tax compensations for national retail, frequently linked to an increase in taxation on bets.

Two amendments are at the heart of this dispute. Klann's amendment creates tax benefits for "popular retail"—clothing, footwear, toys, cosmetics—and proposes raising the income tax on net annual winnings from bets above R$ 28.467,20 from 15% to 25%. Amendment No. 14, by Efraim Filho, establishes the "Popular Textile Retail Program," a presumed credit of 10% on sales of textiles, clothing, footwear, and accessories up to R$ 250 per item, and indicates, as tax compensation, an increase in income tax on net winnings from bets from 15% to 20%.

The 25% figure attributed to Efraim Filho's proposal comes from an anonymous source in the textile industry, according to reports that treated the two amendments as one. A comparison of the obtained text with other coverage that distinguishes the proposals separately confirms this: the rate for Amendment No. 14 is 20%.

What the text of Amendment 14 says, and what it doesn't say.

The normative body of Amendment No. 14 deals exclusively with presumed textile credit. It defines "retail legal entity" and "popular retail sales," establishes a limit of R$ 250 per item with adjustments every 90 days based on the dollar exchange rate, a 10% tax rate on eligible sales, the methods of compensation and reimbursement of the credit, and exempts the program from the requirements of the Fiscal Responsibility Law and Complementary Law 224/2025.

The increase in income tax on betting is not part of the regulatory framework. It only appears in the amendment's justification, as a suggestion for a source of budgetary compensation—a requirement of Article 14 of the Fiscal Responsibility Law. Efraim Filho himself wrote: “As a compensatory measure (tax increase or spending cut) to ensure the balance of public accounts, it is suggested that the rate applicable to betting (currently 15% on net earnings above R$ 28.467,20 per year) be increased to 20%, without adjusting the exemption bracket.”

This formal distinction has practical consequences. Because it is only in the Justification, the change in the betting tax rate needs to be formally incorporated into the opinion of the rapporteur, Senator Leila Barros (PDT-DF), to acquire normative force. As of the closing of this report, it was a suggestion for compensation attached to the amendment. The same applies, formally, to the 25% tax rate in Klann's amendment.

The justification also includes an estimate of the fiscal impact of the textile benefit: an annual revenue loss of approximately R$ 30 billion, calculated based on sales in the fashion sector of R$ 427 billion in 2025, of which 70% would be eligible for the presumed credit. To support the compensation, Efraim Filho projects that the total prizes paid by betting companies are around R$ 517 billion — a volume that, in his calculation, would accommodate the tax rate adjustment without needing to change the exemption bracket.

The risk of the opposite effect

Regardless of whether the final rate settles at 20% or 25%, the logic behind both amendments is the same: to use income tax revenue from sports betting as a bargaining chip to unlock an agenda in another sector. This fiscal engineering ignores a structural point in the regulation of legal gambling in Brazil.

The ability to channel bettors—the capacity to keep them within the authorized and regulated market—depends on a competitive attractiveness equation compared to the illegal market. This illegal market includes unlicensed foreign operators in Brazil, accessible via VPN and with payment in cryptocurrencies, beyond the reach of the Federal Revenue Service and the Central Bank. Increasing the tax burden on the net profit of bettors already operating in the regulated market, without equivalent measures to combat unauthorized betting sites, tends to produce three effects:

⇒ Reduction in the relative attractiveness of licensed operators, encouraging migration to illegal platforms that do not withhold taxes or report earnings to any Brazilian authority;

⇒ Flight of the highest-volume bettor — the most affected by the change, since the tax applies to annual net winnings above R$ 28.467,20 — to cryptocurrency exchanges and apps based abroad, without the need for a Brazilian banking network;

⇒ Boomerang effect on revenue itself; if the tax base shrinks due to investors fleeing the regulated market, the additional revenue projected as tax compensation for the textile benefit may not materialize, compromising the budgetary neutrality that the Fiscal Responsibility Law (LRF) requires of the amendment.

Timeline of the proceedings

The joint committee was only installed on Wednesday (August 28), chaired by Congressman Reginaldo Lopes (PT-MG) and with Leila Barros as rapporteur. On Tuesday (September 1) and Wednesday (September 2), the vote on the report was postponed amidst impasses regarding the role of the Post Office in transporting the shipments and the deadline for reviewing the exemption.

If Congress does not vote on the Provisional Measure by Monday (September 8th), the 20% Import Tax plus state ICMS will once again apply to international purchases of up to US$50. The open question is whether the compensation via an increase in the income tax on betting – in the 20% version proposed by Efraim Filho or the 25% version proposed by Klann – will be incorporated into Leila Barros' final report before that deadline. The risk, in the meantime, is that the urgency of the schedule will force a decision on the betting tax rate without the effect on the channeling of the regulated market having been adequately assessed.