Colombia's outgoing President Gustavo Petro has renewed efforts to cement a 19% value-added tax (VAT) on online gambling. With Petro set to be succeeded by Abelardo de la Espriella on August 7 following the recent general elections, his administration submitted a fresh tax reform bill to Congress on Monday, aiming to make the gambling tax permanent.
The government projects that the online gambling industry could contribute around COP1.7 trillion (approximately $530.8 million) in tax revenue by 2027 if the VAT is successfully implemented.
Colombia's tax pressure has been a persistent issue. The 19% VAT was originally established on an emergency basis in February 2025 to finance initiatives addressing unrest in the Catatumbo region. Petro's administration attempted to institutionalize this tax in December 2022, but the Senate’s Fourth Committee rejected the proposed Financing Law. Initially, the tax was applied to deposits, but it was then based on gross gaming revenue (GGR) until the Constitutional Court suspended it a month later.
In March, an emergency decree instituted a 16% consumption tax on online gambling deposits as part of a response to widespread flooding that affected eight provinces.
Given Petro's administration's difficulties in advancing legislation through Congress, the new proposal to secure the 19% VAT may encounter considerable pushback. Legal firm Baker McKenzie noted the tax might revert to being applied on deposits, which could exacerbate tensions within the industry.
The Colombian government contends that the 19% VAT has met revenue expectations while reportedly having minimal adverse effects on the gambling sector’s viability. The bill argues there is "no evidence of significant deterioration in the sector that would justify terminating or scaling back the measure." However, this claim contradicts earlier assertions from the Colombian Federation of Gambling Entrepreneurs, which reported a 30% decline in online GGR within two months of the initial VAT introduction.
In light of the tax, several leading operators began offering player bonuses to mitigate its impacts. The government has emphasized that implementing a permanent VAT on online gambling would correct market imbalances, as land-based casinos already adhere to the same tax rate. According to the bill, failing to proceed with this VAT would result in digital services being favored over physical gambling venues, which are subject to the tax. The introduction of a uniform VAT rate for online platforms aims to ensure equitable treatment in tax matters, adhering to principles of progressivity and horizontal equity, as mandated by Colombia's constitution.
