The government of outgoing Colombian President Gustavo Petro has made another attempt to establish a permanent 19% value-added tax (VAT) on online gambling. As his term nears its end, with Abelardo de la Espriella set to take office on August 7 following the May/June general election, Petro's administration has submitted a new tax reform proposal to Congress that includes this VAT for online gambling operators.
This tax is anticipated to generate around COP1.7 trillion (approximately $530.8 million) in revenue by 2027 if implemented as planned.
The VAT was initially enacted on an emergency basis in February 2025, with the government citing the need for extra funds to address civil unrest in the Catatumbo region. Last December, the administration attempted to make the VAT a permanent fixture; however, the Senate’s Fourth Committee rejected the proposal as part of its Financing Law.
Following this rejection, the VAT was modified from being levied on deposits to being based on gross gaming revenue (GGR), but the Constitutional Court suspended this measure shortly thereafter. An emergency decree issued in March then established a 16% consumption tax on online gambling deposits, a response to severe flooding affecting eight Colombian provinces.
Given the challenges Petro’s government has faced in passing legislation in Congress, this latest bid to solidify the 19% VAT may encounter significant opposition. Law firm Baker McKenzie has pointed out that reinstating the VAT on deposits could intensify scrutiny from the gambling industry.
The government asserts that the 19% VAT has met its revenue expectations without diminishing the sector’s overall viability. The proposed legislation states that there is "no evidence of significant deterioration in the sector that would justify terminating or scaling back the measure." Nevertheless, this stance contradicts claims made by the Colombian Federation of Gambling Entrepreneurs in April 2025, which reported a 30% decline in online GGR in the two months following the VAT's introduction.
In response to the tax, several major operators provided bonuses to players to offset the financial impact. The government maintains that a permanent VAT on online gambling is necessary to remove market distortions since land-based casinos already adhere to the same 19% VAT.
According to the bill, failing to implement this tax by January 1, 2027, would allow digital services to enjoy preferential treatment compared to physical gambling venues subjected to the VAT. The government argues that applying the general VAT rate to online platforms aligns the treatment of goods and services consumption, complying with constitutional requirements for equity and simplicity in the tax system.
