The Colombian government, under President Gustavo Petro, is making another push to make a 19% value-added tax (VAT) on online gambling permanent. This move comes as Petro's administration prepares for a transition, with Abelardo de la Espriella set to succeed him on August 7 following the May/June general elections.
On Monday, before his term concludes, Petro’s government presented a new tax reform bill to Congress which includes the proposed permanent VAT for online gambling operators. The government projects that this measure could generate approximately COP1.7 trillion (roughly $530.8 million) in tax revenue by 2027 if enacted.
The VAT was first implemented on an emergency basis back in February 2025, with the intention of raising funds to address civil unrest in the Catatumbo region. Last December, an attempt to establish the VAT on a more permanent basis failed when the Senate’s Fourth Committee rejected the Financing Law. Following this, the government altered its approach, shifting the VAT application from deposits to a base on gross gaming revenue (GGR), but the Constitutional Court suspended the implementation of this adjustment shortly afterward.
In response to severe flooding affecting eight provinces earlier this year, an emergency decree introduced a 16% consumption tax on online gambling deposits. Given the challenges faced by Petro’s government in passing legislation through Congress, the new initiative to cement the 19% VAT could encounter significant resistance.
Baker McKenzie, a law firm, has indicated that reverting the VAT back to being applied on deposits could further complicate matters for the industry.
The Colombian government has argued that the 19% VAT has generated expected revenue with minimal impact on the online gambling sector’s sustainability. They asserted that there is “no evidence of significant deterioration” in the market that would necessitate a repeal or reduction of the measure. However, this contention stands in contrast to claims made in April 2025 by the Colombian Federation of Gambling Entrepreneurs, who reported a 30% drop in online GGR in the wake of the VAT's initial implementation.
In light of the VAT, several leading operators began offering bonuses to players to compensate for the new tax burden. The government maintains that establishing a permanent VAT on online gambling addresses market disparities, as land-based casinos are already subjected to this tax.
According to the bill, “Without this proposal, starting January 1, 2027, these digital services would receive preferential treatment compared to physical gambling establishments subject to this tax.” The legislation argues that applying the standard VAT rate to online platforms corrects unequal treatment of goods and services in the tax system, aligning with principles of equity and efficiency mandated by the constitution.
