Colombia Online Gambling VAT Shifts to Gross Gaming Revenue

Colombia has overhauled its online gambling tax framework, implementing a value-added tax on gross gaming revenue rather than player deposits, marking a critical adjustment to regulations that threatened the viability of the country’s licensed online gaming sector.

From Emergency Measure to Revenue-Based Taxation

The previous tax regime, introduced in February 2025 as an emergency temporary measure, applied a 19 percent VAT directly to player deposits. The system was implemented by President Gustavo Petro through presidential decree after declaring a state of emergency in response to escalating violence near the Colombia-Venezuela border.

The deposit-based tax structure created unsustainable financial conditions for licensed operators, as the tax base bore no relationship to actual gaming revenue. Under the revised framework, the 19 percent VAT now applies to gross gaming revenue, aligning Colombia’s tax methodology with international gambling taxation standards.

Industry Response: Progress With Reservations

Fecoljuegos, Colombia’s gambling industry association, acknowledged the change as a significant improvement while highlighting ongoing competitiveness concerns.

“This is a significant step forward. 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. “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.”

The association emphasized that the reform represents a starting point rather than a final solution, noting the need for continued dialogue with authorities to establish a sustainable long-term regulatory model.

Tax Burden in Global Context

Despite the shift to revenue-based taxation, Colombia’s combined gaming tax burden remains among the highest worldwide. Licensed operators face a total tax load of approximately 34 percent on gross gaming revenue before accounting for corporate income tax and other fiscal obligations.

The association stated:

“This cannot be the end point, but rather a starting point for continued dialogue with the authorities toward a sustainable long-term model. 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.”

The taxation reform addresses immediate operational concerns for Colombia’s regulated online gambling market while maintaining substantial government revenue from the sector. The change is expected to improve the competitive position of licensed operators relative to unregulated alternatives operating outside Colombia’s legal framework.

Source: Fecoljuegos