New law raises taxes on bets and imposes limits on tax incentives

The legislation originated from PLP 128/2025, authored by Federal Deputy Mauro Benevides Filho (PDT-CE), and was approved by the Senate on December 17, under the rapporteurship of Senator Randolfe Rodrigues (PT-AP), government leader in Congress.

Reduction of tax incentives

One of the main provisions of the new law is a 10% reduction in federal tax incentives. In practice, companies that currently benefit from tax relief will face a higher tax burden.

The reduction affects taxes such as PIS/Pasep, Cofins, Corporate Income Tax, CSLL, IPI, Import Tax, and the employer’s social security contribution. The cut may occur through reduced tax credits, increased reduced rates, or an expanded tax base.

Under the presumed profit regime, for example, the higher taxation applies only to the portion of annual revenue exceeding R$ 5 million.

The law preserves relevant exceptions, including constitutional immunities, benefits granted to the Manaus Free Trade Zone, basic food products, the Simples Nacional regime, social programs such as Minha Casa, Minha Vida and Prouni, as well as incentives linked to strategic industrial policies and benefits with fixed terms already fulfilled.

Stricter rules for new incentives

The legislation also tightens the criteria for creating or extending tax incentives. From now on, proposals must identify beneficiaries, define the duration of the incentive, outline expected results, and establish monitoring and evaluation mechanisms.

The goal is to increase transparency and prevent the granting of benefits without proper control or proven outcomes.

Cap on tax exemptions

Another key point is the creation of a cap on total tax incentives. If tax exemptions exceed 2% of Gross Domestic Product (GDP), the government will be prohibited from creating, expanding, or extending new incentives.

This restriction may only be lifted through compensatory measures that offset the fiscal impact and preserve budgetary balance.

Bets, fintechs, and interest paid to partners

In the gaming and betting sector, the law establishes a gradual increase in taxation on online sports betting operators. Part of the revenue will be allocated to social security and public health initiatives. The text also provides penalties for promoting unauthorized betting or allowing transactions with irregular companies.

In the financial sector, the social contribution paid by fintechs and capitalization companies will be progressively increased until it reaches 20% in 2028.

Interest on equity (JCP), used by companies as a form of remuneration to partners, will now be subject to a 17.5% withholding income tax.

Presidential vetoes

Upon sanctioning the law, President Lula vetoed provisions that allowed the revalidation of canceled outstanding payments between 2019 and 2023, including parliamentary amendments. According to the message sent to Congress (VET 49/2025), the measure could generate legal uncertainty, as there is a Supreme Federal Court (STF) decision suspending similar effects.

The president also vetoed the provision that automatically extended the new requirements to financial and credit benefits, arguing that it could hinder the execution of public policies financed through these instruments.

The vetoes will still be reviewed in a joint session of the National Congress.

When the new rules take effect

Most changes will come into force on January 1, 2026. Measures related to the reduction of tax incentives and increases in taxes subject to legal adjustment periods will take effect a few months after the law’s publication.