The decision of the Colombian Government to eliminate the VAT exemption for online gambling has caused alarm in the gaming industry. Fecoljuegos, a leading body representing the Colombian gambling industry, whose primary interest is promoting the development, regulation, and defence of the legal gaming industry in Colombia, warns that this measure, established in Decree No. 0175, could trigger economic and regulatory consequences that will affect companies in the sector and resources allocated to public health.
The rising tax burden on online gambling in Colombia
Exploitation Rights – 15%
This is the percentage operators must pay Colombian authorities for the right to operate games of chance.
Occasional Profit Tax – 10%
It applies to the operator’s extraordinary or non-recurring income in a fiscal year. This percentage may vary depending on the profits generated in specific periods.
Income Tax – 33%
Operators must pay a percentage of their annual net profits. In Colombia, the general corporate income tax rate is 33%.
New Consumption Tax (VAT) – 19%
This indirect tax applies to transactions for goods and services, including online gambling. Although it is already mentioned as an additional tax, it should be considered part of the total burden.
Currently, online gambling operators in Colombia face a tax burden that could reach 70.5%, depending on how these taxes are calculated and accumulated. With only 29.5% of their revenue available to operate, business profitability is drastically reduced. The introduction of VAT in this scenario could make the continuity of many companies unfeasible, creating a domino effect on investment and job creation within the industry.
Evert Cárdenas, president of Fecoljuegos, pointed out that “this tax burden puts us in a critical situation, where companies could be forced to reduce operations or even shut down, which would negatively impact the economy and the resources allocated to health.”
Express implementation and impracticality
One of the most critical points of the decree is the implementation deadline: five business days to adjust billing and VAT collection systems. The deadline represents a significant technical challenge, as gaming platforms may require complex technological integrations to be tested and certified. The lack of an adequate transition period could lead to operational blocks and even sanctions for companies that, due to technical issues, fail to meet the established deadlines.
“The time given for implementation is simply unfeasible,” emphasised Cárdenas. “It is not possible to make all the necessary technological adjustments in five days, which exposes us to sanctions and severe operational problems,” he added.
Bottlenecks in certification
Another key obstacle lies in the certification of technological changes. Currently, Coljuegos only has five accredited laboratories worldwide to validate these modifications. Since these laboratories serve multiple countries, waiting times could further delay the adaptation of platforms, affecting the operability of operators relying on these certifications.
Impact on public health and growth of the illegal market
The gambling sector is a key pillar in the financing of subsidised health in Colombia. If the tax burden leads to the reduction of operations or the closure of any of the 15 authorised operators in the country, resources allocated to medical programs could significantly decrease. Additionally, a rise in costs could encourage players to migrate to illegal platforms outside the Colombian regulatory framework. This would affect fiscal collection and put users at risk, exposing them to operators without payment guarantees or responsible gambling mechanisms.
“If this measure is not reviewed, not only will the legally established industry be lost, but also public health, which largely depends on our contributions,” warned Cárdenas. “In addition, we could see growth in the illegal market, which would be a setback to everything we have advanced in regulation.“
Urgent call to reconsider the measure
Fecoljuegos urges the Government to assess the effects of this measure carefully and to engage in dialogue with the sector to find solutions that do not compromise the stability of the industry or the resources it contributes to the country. Gambling regulation in Colombia has been a model at the regional level, but hasty decisions could reverse the progress made so far.
The challenge is not minor: it is about finding a balance between fiscal collection and the sustainability of a sector that, in addition to generating jobs, plays a key role in the national economy. Time is running out, and answers cannot wait.
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