Colombia redesigns VAT framework for licensed online betting operators

Colombia has revised how value-added tax is applied to licensed online gambling, maintaining the 19% rate but shifting its basis from player deposits to gross gaming revenue, according to an emergency decree issued last week.

The decision follows the collapse of the government’s Financing Bill in the Senate’s Fourth Committee last month, which created a COP16.3 trillion ($4.2 billion) gap in the 2026 budget. 

With the proposed legislation rejected, the government moved to reallocate the existing VAT through emergency powers, confirming in Article 2 of the decree that the revised tax structure will apply throughout 2026.

The 19% VAT had been imposed on deposits as a temporary emergency measure introduced in February 2025. The tax was enacted by decree after President Gustavo Petro declared a state of emergency in response to violence near the border between Colombia and Venezuela. It was intended to help fund the government’s response to unrest in the Catatumbo region and was due to expire at the end of December.

Industry representatives had strongly opposed the deposit-based structure, arguing that it made licensed online gambling economically unviable. The Colombian Federation of Gambling Entrepreneurs (Fecoljuegos) said the previous approach failed to reflect how the sector generates income and warned last April that it had contributed to a 30% drop in online gambling gross gaming revenue.

Reacting to the revised framework, the federation said the change “acknowledges, for the first time, the true math of the business.” It described the shift as “a significant step forward,” noting that operators are moving away from a system in which the tax burden could exceed 70% of real income.

“The sector is transitioning from a deeply disproportionate system, where the tax burden could exceed 70 per cent of actual revenue, to a scenario with a tax burden of approximately 34 per cent on gross revenue, comprised of 15 per cent in exploitation rights and 19 per cent VAT, not including other taxes such as income tax,” said Fecoljuegos.

At the same time, the federation cautioned that the revised burden remains high compared with other jurisdictions. “However, this figure still represents one of the highest burdens globally for this industry, well above international averages, which poses new challenges to the competitiveness of the legal sector,” it said.

Fecoljuegos said the adjustment should be viewed as the beginning of discussions rather than a final resolution. “This cannot be the endpoint, but rather a starting point for continued dialogue with the authorities toward a sustainable long-term model,” the association added. “This adjustment allows Colombia to move beyond a clearly unviable situation and opens a minimal, but necessary, margin for the operation of the legal industry.”