The Colombian government has decided to maintain a 19% VAT rate on online gambling and set it as a permanent policy. This measure, included in the latest tax reform bill, has sparked strong opposition from domestic gambling operators.
Industry Association Criticism: Fundamental Error in Tax Base Selection
The Colombian Gambling Entrepreneurs Association (Fecoljuegos) pointed out in a statement that the policy is based on a misunderstanding of how the industry operates:
"Imposing a 19% VAT on deposits to online gambling platforms is not based on actual business variables, but rather an erroneous analogy to financial deposits. In fact, players' deposits are merely circulated for use within the system and do not constitute value-added."
According to their data, deposits in players' accounts are on average recycled six times, with about 94% returned to players as winnings, while the total gambling revenue for operators accounts for only 6%. Therefore, Fecoljuegos emphasizes that a reasonable tax burden should be based on the actual income of operators, not on the amount of player deposits.
Financial Pressure May Boost Illegal Platforms
The association warns that this high tax burden will have two consequences:
If passed on to users, local platforms will lose competitiveness, as foreign platforms are not subject to such taxes and can offer more favorable odds, payment methods, and even cryptocurrency settlements;
If absorbed by operators themselves, the sustainability of legal platforms will be severely threatened, thereby creating space for the growth of illegal gambling.
Impact on Healthcare Funds
Another industry organization, the Colombian Gambling Operators Association (Asojuegos), also expressed concerns, noting that the policy could weaken the contribution of gambling to the public healthcare system.
Its chairman, Juan Carlos Restrepo, in an interview with Mañanas Blu, stated:
"In recent months, we have seen a decline in transfer payments directly used for healthcare, and even the existing VAT revenue is weakening."
Restrepo added that Asojuegos is willing to engage in dialogue with the government to explore more sustainable solutions, such as adjusting the tax base to no longer directly target player deposits, to ensure the long-term health of the industry and public finances.
