The Colombian government, led by President Gustavo Petro, is making renewed efforts to solidify a 19% value-added tax (VAT) on online gambling. As Petro prepares to step down and Abelardo de la Espriella takes office on August 7 following the upcoming general election, the current administration has submitted a new tax reform bill to Congress aiming to make this VAT a permanent fixture.
If approved, the government anticipates that the online gambling sector could potentially generate around COP1.7 trillion ($530.8 million) in tax revenue by 2027 due to this measure.
The push for the VAT isn't a new development; it was initially introduced as a temporary measure in February 2025 to aid funding for efforts aimed at addressing civil unrest in Colombia's Catatumbo region. Last December, attempts to solidify the VAT faced hurdles when the Senate’s Fourth Committee rejected the related Financing Law. Although the tax's application transitioned from deposits to gross gaming revenue (GGR), it was subsequently suspended by the Constitutional Court.
In response to flooding affecting eight provinces, an emergency decree was enacted in March, instituting a 16% consumption tax on online gambling deposits. Given the Petro administration's challenging history in passing legislation through Congress, the latest proposal to make the VAT permanent may encounter significant resistance.
Legal experts from Baker McKenzie note that returning the 19% VAT to be applied on deposits could intensify pressures within the industry.
The government asserts that the initial implementation of the VAT was successful in generating expected revenues without heavily impacting the gambling sector’s viability. Their bill claims there is "no evidence of significant deterioration in the sector that would justify terminating or scaling back the measure". This stance, however, stands in contrast to assertions made by the Colombian Federation of Gambling Entrepreneurs, which reported a staggering 30% drop in online GGR within two months of the VAT's introduction.
To mitigate the financial strain from the VAT, several key operators began issuing bonuses to players. The government claims the enactment of the VAT on online gambling also rectifies market disparities, pointing out that physical casinos already bear a 19% VAT burden.
According to the proposal, the absence of this new VAT would treat digital gambling operations preferentially compared to their land-based counterparts starting January 1, 2027. This discrepancy, they argue, fails to align with established tax principles such as equity and efficiency, which are required under the constitution.
