The Colombian government has introduced a tax reform bill that would permanently apply a 19% Value Added Tax (VAT) to online gambling. This move is part of a broader plan to increase public revenue.
Submitted by the Ministry of Finance during the final months of President Gustavo Petro’s administration, the proposal aims to raise an additional COP 21.8 trillion in government revenue by 2027. Moreover, the gambling sector is expected to contribute approximately COP 1.7 trillion.
Online Gambling Remains Subject to 19% VAT
The proposed legislation would retain the 19% VAT on online games of chance. The government states that the measure would provide a stable source of public revenue. Additionally, it would align the tax treatment of online and land-based gambling.
According to the Ministry of Finance, applying the standard VAT rate to online gambling would reduce differences in tax treatment across sectors. In addition, it would support a more consistent and efficient tax system.
The reform would also extend the 19% VAT to concerts, sporting events, and various entertainment, cultural, and recreational services. Furthermore, it would increase the VAT rate on hybrid vehicles from 5% to 19%.
Higher Tax on Gambling Winnings Proposed
In addition to maintaining the VAT, the bill proposes increasing the tax on winnings from lotteries, raffles, sports betting, and similar games from 20% to 30%.
The draft legislation contains conflicting references to a possible 33% rate in one section. Although the government has not yet clarified the discrepancy, the issue is expected to be addressed during congressional debate.
If approved, the higher tax on gambling winnings would replace the current 20% rate.
Industry Awaits Congressional Decision
The tax reform must be reviewed and approved by Colombia’s Congress before it can take effect.
Industry representatives have acknowledged the financial pressure created by recent tax changes. While expressing support for a stable and predictable regulatory framework, they noted that sustainable growth will depend on maintaining clear regulations. Additionally, continued cooperation between the government and licensed operators will be important.
The proposed reform represents another significant fiscal measure for Colombia’s regulated online gambling sector. Policymakers seek to increase public revenue while maintaining oversight of the industry.
