The Colombian government, led by President Gustavo Petro, has taken another step towards making the controversial 19% value-added tax (VAT) on online gambling a permanent fixture. As Petro prepares to hand over the presidency to Abelardo de la Espriella on August 7, he has initiated a new tax reform bill ahead of the end of his administration. This bill aims to impose a permanent 19% VAT specifically targeting online gambling operators.
Officials estimate that if the VAT is successfully implemented, the online gambling sector could potentially yield tax revenues of around COP1.7 trillion ($530.8 million) by 2027.
The journey to enforce this VAT has been challenging. Initially introduced on an emergency basis in February 2025, the government justified this measure as necessary to raise additional funds in response to civil unrest in the Catatumbo region. The government attempted to solidify this VAT in December of last year, yet their Financing Law was dismissed by the Senate’s Fourth Committee.
Although the government shifted the tax framework from deposits to a Gross Gaming Revenue (GGR) model, it encountered further setbacks when the Constitutional Court suspended the tax shortly thereafter. In March, in response to major flooding affecting eight provinces, an emergency decree established a temporary 16% consumption tax on online gambling deposits.
Despite the Petro administration's difficulties in passing legislation, this latest proposal to secure the 19% VAT faces significant political hurdles. Law firm Baker McKenzie advises that the tax may revert to being applied on deposits, amplifying concerns within the gambling industry.
Meanwhile, the Colombian government's stance is that the 19% VAT has met revenue expectations while minimally affecting the market’s stability. They claim no significant deterioration in the sector justifies removing or reducing the tax. This assertion, however, appears at odds with claims from the Colombian Federation of Gambling Entrepreneurs, which reported a 30% drop in online GGR during the first two months following the VAT's introduction.
In response to this tax, several key gambling operators have started providing bonuses to customers to help alleviate the impact of the VAT. Additionally, the government argues that a permanent VAT would help eliminate an existing market distortion, since land-based casinos already operate under this tax rate.
The bill further states that without this change, from January 1, 2027, online services would unjustly benefit from preferential treatment compared to physical gambling venues. By applying the general VAT rate to online platforms, the government aims to ensure equitable treatment of all gambling-related services in line with constitutional principles such as progressivity and horizontal equity.
