Brazilian Federal Revenue Service announces taxation of influencers who promote illegal betting.
The Brazilian Federal Revenue Service will start collecting Income Tax, PIS (Social Integration Program) and Cofins (Contribution to Social Security Financing) from digital influencers who promote betting sites not authorized to operate in Brazil. This accountability was announced by Secretary Robinson Barreirinhas this Friday (June 19th). A decree published on Thursday (June 18th) formalizes the transfer of tax obligations from illegal betting sites to those who promote them on social media.
This measure is part of a series of actions by the Luiz Inácio Lula da Silva government against the illegal fixed-odds betting market. In addition to influencers, fintechs and other financial institutions that continue to move funds to irregular betting operators, even after notification from the Secretariat of Prizes and Betting (SPA), are subject to the same tax liability.
Logic of accountability
Barreirinhas argued that influencers and financial intermediaries are essential cogs in the machine for illegal platforms, based abroad, to raise funds in Brazil. “Illegal betting wouldn't exist if there wasn't this financial movement. The betting is abroad, but this money needs some way to reach the hands of these criminals,” said the secretary.
According to him, the charge is fair. "If the influencer is making money from illegal betting, then they should pay the income tax on that illegal bet that's being placed abroad," he stated. Barreirinhas reinforced that, in addition to the administrative sanctions already foreseen by the SPA (Brazilian Tax Authority), the Revenue Service will collect income tax and PIS/Cofins (social security contributions) from anyone who engages in this type of advertising.
The Secretary of Prizes and Betting, Daniele Cardoso, reported that the National Council for Advertising Self-Regulation (Conar) helps the government identify influencers who promote betting without authorization. "With this ministerial decree, in conjunction with the tax authorities, we will strengthen ties and consider other more effective mechanisms," she said.
Blocking resources and taking down websites.
The government also announced a decree to freeze the financial assets of illegal gambling companies. The frozen funds will be allocated to the National Public Security Fund. Financial institutions with accounts linked to operators of irregular websites will receive notification and will have 48 hours to implement the freeze; the Central Bank will be informed of each notification.
Brazil's National Telecommunications Agency (Anatel) will be responsible for taking down websites that offer fixed-odds gambling illegally. Finance Minister Dario Durigan stated that the arguments presented in defense are usually "weak" and that, in most cases, the blocking will likely be upheld.
The Ministry of Justice will provide an opportunity for those interested in the blocked funds to present their arguments. The National Monetary Council (CMN) will publish a resolution detailing the procedures for administrative proceedings against financial institutions that fail to comply with the regulations.
***
Identifying the irregularity: The Prizes and Betting Secretariat (SPA) identifies betting operators that operate without authorization;
Accounts blocked: The SPA notifies the financial institution to block the company's accounts; the bank has up to 24 hours to comply with the measure.
Communication to the authorities: The Central Bank monitors compliance with the freeze, and financial institutions report account balances and data to the SPA (Secretariat of Public Administration).
Right to defense: The case is forwarded to the National Secretariat of Public Security (Senasp), which opens an administrative process and gives the company a deadline to present its defense and appeal.
Use of resources: The blocked funds can be used to reimburse bettors and settle outstanding taxes and fines;
Legal action: The Attorney General's Office (AGU) is asking the courts for the definitive forfeiture of the funds.
Final destination of the money: Following a court decision, the remaining balance is transferred to the National Public Security Fund.
