Colombia Moves Online Gambling VAT From Deposits to GGR

Colombia’s government has confirmed a change to how value-added tax is calculated for licensed online gambling operators, ending months of uncertainty for the sector. From 1 January 2026, VAT will apply to gross gaming revenue rather than player deposits, marking a reversal of a policy that industry stakeholders said undermined the licensed market.

The adjustment was announced on 31 December by the Colombian Federation of Gambling Entrepreneurs and enacted through an emergency fiscal decree that took effect at the start of the new year. Under the revised approach, the existing 19% VAT rate remains in place, but the taxable base now reflects actual gaming income instead of total deposits.

Government revises emergency tax framework

The original deposit-based VAT was introduced in February 2025 as a temporary measure under President Gustavo Petro’s administration. The tax aimed to raise funds to address civil unrest in the Catatumbo region. Although initially presented as time-limited, the government later signaled its intention to make the measure permanent as part of the National Budget for 2026, triggering strong objections from licensed operators.

Finance Minister Germán Ávila authorized the shift to a GGR-based model as part of a broader fiscal correction. He said: “We believe that in terms of VAT there is room to maintain the 19% rate while adjusting the taxable base to reflect real gaming income. This approach respects the mathematical structure of the industry, ensures fairness in taxation, and secures the revenues needed to meet our social commitments.”

The emergency decree followed the failure of the Financing Bill in the Senate’s Fourth Committee. That bill would have extended the deposit-based VAT beyond 2025 and increased capital gains tax on gambling and lottery activities from 20% to 30%. Its rejection left a COP16.3 trillion gap in the government’s 2026 budget, prompting the administration to act through exceptional legislative powers.

Market impact and regulatory data

Data published by Coljuegos illustrated the effects of the deposit-based tax on licensed operators. Monthly tax contributions from the sector fell sharply year-on-year, declining by 46.6% from COP43.3bn in July 2024 to COP23.1bn in July 2025. Regulators and operators attributed the drop to reduced activity within the legal market and a shift by players toward offshore platforms.

Several operators publicly warned that the tax structure made continued participation in Colombia unsustainable. Codere Online stated that the framework made “further investment in Colombia impossible under current conditions,” leading the company to halt expansion plans in the country.

Fecoljuegos said the earlier VAT model “did not reflect the sector’s economic reality” and argued that it placed excessive pressure on licensed businesses. The federation previously estimated that the deposit-based system caused online gambling GGR to fall by around 30%.

Industry reaction and long-term concerns

The trade body welcomed the move to GGR as a correction of what it described as a structural flaw in the tax system. It said the new framework “acknowledges, for the first time, the true math of the business.” According to Fecoljuegos, the change reduces the overall tax burden from levels that could exceed 70% of real income to approximately 34% of GGR, combining a 15% concession fee with the 19% VAT.

Fecoljuegos President Evert Montero Cárdenas described the reform as progress but warned that broader changes remain necessary. He said: “This change enables the industry to abandon a state of manifest inefficiency and allows for a small but essential margin in the legal system. But it is a starting point, not an endpoint, in building a sustainable long-term model.”

Montero Cárdenas also acknowledged the government’s decision to reverse course, stating: “We recognise the government’s willingness to correct an error that placed the sector on the brink of collapse.” He added that while operational viability has improved, Colombia’s overall tax burden remains higher than that of other South American jurisdictions, limiting competitiveness and discouraging foreign investment.

Fecoljuegos emphasized its intention to continue discussions with policymakers. “This cannot be the end point, but rather a starting point for continued dialogue with the authorities toward a sustainable long-term model,” the federation said. It also noted its commitment to cooperation “for the benefit of … the national economy and the healthcare system”.

Despite the industry’s support, questions remain around the emergency decree itself. Some opposition figures and business groups have raised concerns about its legality, suggesting potential legal challenges could follow.

Source:

Colombia accepts ‘gambling maths’ as VAT shifts to a GGR base, sbcnews.co.uk, January 2, 2026