Colombia government makes another attempt to implement online gambling VAT

The outgoing government of Colombia’s President Gustavo Petro has made further attempts to make the long-debated 19% value-added tax (VAT) on gambling permanent.

Following the May/June general election, Petro will be replaced by Abelardo de la Espriella as Colombia’s president, with the inauguration set for 7 August.

However, on Monday, prior to the end of his four-year tenure, Petro’s government submitted a new tax reform bill to Colombia’s Congress, including a permanent 19% VAT for online gambling operators.

The government estimated the online gambling sector could generate tax revenue of approximately COP1.7 trillion ($530.8 million) in 2027, provided the VAT is pushed through.

Colombia tax pressure continues to rumble on

The 19% VAT was first introduced on an emergency basis in February 2025, with the government claiming it needed additional funds to combat civil disturbances in the Catatumbo region.

The government tried to make the VAT permanent in December last year, although its Financing Law was rejected by the Senate’s Fourth Committee.

The VAT was shifted from being levied on deposits to being based on GGR, but the Constitutional Court then suspended it the following month.

However, a fresh emergency decree in March established a 16% consumption tax on online gambling deposits as the government responded to severe flooding in eight of Colombia’s provinces.

Considering the Petro government’s struggles trying to get bills through Congress, this new attempt to make the 19% VAT permanent could face plenty of opposition.

According to law firm Baker McKenzie, the permanent 19% VAT would revert to being on deposits, likely adding fuel to the industry’s fire.

How will this affect the Colombian gambling sector?

Notably, the Colombian government claimed the 19% VAT generated the revenue expected while having little impact on the sector’s sustainability.

According to the bill there is “no evidence of significant deterioration in the sector that would justify terminating or scaling back the measure”.

However, this contradicts statements from April 2025 by the Colombian Federation of Gambling Entrepreneurs, which claimed that in the two months following the first introduction of the VAT, online GGR had plummeted 30%.

In response to the VAT, a number of key operators credited players with bonuses to offset the new tax.

The Colombian government has also stated the permanent implementation of VAT on online gambling “eliminates a market distortion”, with land-based casinos already facing a 19% VAT.

“Without this proposal, starting 1 January 2027, these digital services would receive preferential treatment compared to physical gambling establishments subject to this tax,” the bill said.

“Applying the general VAT rate to online platforms reduces the differential treatment afforded to the consumption of goods and services – treatment that, in many cases, lacks justification based on the principles of progressivity, horizontal equity, efficiency and simplicity that the tax system is constitutionally required to uphold.”