BRAZIL Law and Practice Contributed by: Luiz Felipe Maia, Flavio Augusto Picchi and Débora Cunha Romanov, Maia Yoshiyasu Advogados – MYLAW
their administrators that fail to comply with the AML obligations described in Ordinance No 1,143/2024 may also be subject to the sanctions provided for in Article 12 of Law 9,613/1998, by means of an admin- istrative sanctioning process. Sanctions described in Article 12 of Law No 9,613/1998 include: • a warning; • a variable monetary fine not exceeding: (a) double the value of the transaction; (b) double the actual profit obtained, or that would presumably have been obtained, from the transaction; or (c) BRL20 million; • temporary disqualification, for up to ten years, from holding the position of administrator in operating legal entities and other entities described in Law No 9,613/1998; and • revocation or suspension of the authorisation to engage in activities, operations or functioning. 11.3 Financial Penalties See the second and third bulletpoints listed in 11.2 Sanctions for the financial penalties to be calculated and enforced by the SPA. All gambling companies in Brazil are subject to cor- porate income tax ( imposto de renda da pessoa jurídica IRPJ) and social contribution on net profit ( contribuição social sobre o lucro líquido CSLL) at a combined general rate of 34%. The IRPJ rate is 15%, and a 10% surcharge applies to taxable income exceeding BRL240,000 per year. CSLL is due at a rate of 9%. The effective tax rate may vary according to the sys- tem elected by the Brazilian legal entity for calculat- ing IRPJ and CSLL (actual or deemed profit system). Companies with total revenues greater than BRL78 million in the previous year are automatically subject to the actual profit system. 12. Tax 12.1 Tax Rate by Sector • Actual profit system ‒ the tax basis is determined based on the accounting net profit, adjusted in
accordance with the addition of non-deductible expenses and the exclusion of certain amounts. The Programme of Social Integration ( Programa de Integração Social PIS) and Contribution for the Financing of Social Security ( Contribuição para o Financiamento da Seguridade Social COFINS) are taxed under the non-cumulative method at rates of 1.65% and 7.6%, respectively, allowing for credits from acquisitions. • Deemed profit system ‒ the tax basis for services is 32% on the company’s gross revenues, on an accrual or cash basis. The PIS and COFINS are taxed under the cumulative method at rates of 0.65% and 3%, respectively, with no allowance for credits. Besides the ordinary corporate taxes, gambling com- panies’ activities are also subject to the following taxes. The LOTEX operator’s gross revenue is 18.3% of the total sales. This is the tax basis for PIS (1.65%), COFINS (7.6%) and service tax ( imposto sobre serviço s, or ISS; 2% to 5%). Taxation on players’ winnings Lottery cash prizes that exceed the value of the first tier of the individual income tax monthly rate table (BRL2,428.80) are subject to income tax withholding at a rate of 30%, as set forth in Article 732, I of Decree No 9,580 of 22 November 2018 and Article 56 of Law No 11,941 of 27 May 2009. Prizes in the form of goods and services are subject to income tax withholding at a rate of 20%, as set forth in Article 733 of Decree No 9,580 of 22 November 2018. Horse Race Betting Taxation on horsemen’s winnings Prizes paid to horsemen, breeders and jockeys are subject to income tax withholding at a rate of 15%, as set forth in Article 737 of Decree No 9,580 of 22 November 2018. Instant Lottery – LOTEX Taxation on the operator
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