Senate approves bill that taxes bets and fintechs; text goes to the Chamber

The bill increases the tax charged on several companies in the financial sector. It raises the CSLL (Social Contribution on Net Income) for fintechs and payment institutions from the current 9% to 12% by 2027, reaching 15% in 2028. For capitalization societies and credit, financing, and investment institutions, the rate increases from the current 15% to 17.5% by 2027 and 20% in 2028. Traditional banks and cooperatives are not affected. Taxation on bets has also been raised. The total tax on the income of sports betting companies has increased from 12% to 18%. An initial idea was to raise this burden to 24%, but the rapporteur backed down. The text also creates a tax regularization program. The bill establishes the Low-Income Pert, with rules for those earning up to R$ 7,350 per month to pay off debts with proportional benefits to their salary. The project also includes changes to the income tax exemption proposal for those earning up to R$ 5,000 per month, which was signed by President Lula (PT) last week. Some measures were added to compensate for changes in the text that exempted people earning up to R$ 5,000 per month. Renan couldn’t make changes to various parts of the bill because that would require the text to return to the Chamber for analysis. The government expects to raise R$ 18 billion over three years with these measures. It’s estimated that this new set of taxes will yield R$ 5 billion in 2026 and another R$ 13 billion in 2027 and 2028. Part of the tax increase will be used to compensate states and municipalities for the loss of income tax caused by the exemption. The amount is still modest to balance the books in 2026. The government is facing a dilemma to balance next year’s budget. It needs to cover a billion-dollar deficit and reach an agreement on parliamentary amendments. Approval was negotiated with the Treasury. Minister Fernando Haddad had already indicated that, without new revenue, it would be inevitable to reduce or freeze part of the R$ 50 billion earmarked for amendments. But the minister downplayed the importance. ‘It’s a very small impact on the Budget,’ Haddad told reporters. ‘I will have to make a small adjustment to the Budget [if the bill is not approved], but it is small.’ Alcolumbre also gave his approval. In recent weeks, Braga met with Senate President Davi Alcolumbre (União Brasil-AP) and Haddad to iron out the details in the text and move the bill forward. A sector of Congress wants the government to cut spending instead of increasing tax revenue. This was the discourse adopted by centrist and opposition lawmakers to overturn a provisional measure that estimated raising R$ 35 billion next year through an increase in the IOF (Financial Operations Tax). The government talks about tax justice. This is what Haddad said after the approval of the Income Tax exemption for those earning up to R$ 5,000 per month. The Executive Branch seeks to correct what it considers unfair taxes and insists on increasing taxes on the revenue of bets and fintechs.