The government of Colombia, led by President Gustavo Petro, has made yet another attempt to establish a permanent 19% value-added tax (VAT) on online gambling. As Petro's term draws to a close, with his successor, Abelardo de la Espriella, set to take office on August 7, the current administration has submitted a new tax reform proposal to Congress. This proposal seeks to solidify the VAT for online gambling operators.
The Colombian government projects that the online gambling sector could yield around COP1.7 trillion ($530.8 million) in tax revenue by 2027 if the VAT is successfully implemented.
The push for a permanent VAT on gambling is part of an ongoing effort by the government to address the financial needs resulting from civil unrest in the Catatumbo region, where the VAT was first introduced as a temporary measure in February 2025. Last December, a bid to formalize the tax was thwarted by the Senate’s Fourth Committee, leading to a shift in how the tax was applied—from deposits to gross gaming revenue (GGR). However, this new structure faced further setbacks when the Constitutional Court suspended the VAT shortly thereafter.
In response to severe flooding affecting eight provinces, the government issued an emergency decree in March introducing a 16% consumption tax on online gambling deposits. Given the Petro administration's challenges in passing legislation, this current attempt to establish a permanent 19% VAT could encounter significant opposition. Legal experts from Baker McKenzie have suggested that reverting to a VAT based on deposits could exacerbate issues within the gambling industry.
The government has asserted that the 19% VAT has generated the anticipated revenue without notably harming the sustainability of the gambling sector. According to the tax bill, there is “no evidence of significant deterioration in the sector that would justify terminating or scaling back the measure.” However, this claim contradicts a statement from the Colombian Federation of Gambling Entrepreneurs, which reported a 30% decline in online GGR within two months of the VAT's initial introduction. In response to the tax, several prominent operators provided player bonuses to mitigate the impact.
The government further argued that enforcing the permanent VAT on online gambling would eliminate market discrepancies, as land-based casinos already face the same 19% tax. The bill noted that without this measure, digital services would benefit from preferential treatment over physical establishments following the implementation of the VAT on January 1, 2027. Enacting a uniform VAT rate across both online and physical gambling entities aligns with the constitutional principles of efficiency, equality, and simplicity that the tax system is designed to uphold.
