Colombia proposes 19% VAT on online gambling again
The Colombian Executive, led by Gustavo Petro, presented a new tax reform bill this week that affects, among other sectors, the gaming industry. The initiative, drafted by the Ministry of Finance, was brought to Congress by Minister Germán Ávila on Monday, July 20. The text would be debated by the new Congress and would primarily take effect from 2027, already during the administration of President-elect Abelardo de la Espriella.
According to the statement of reasons, the Executive believes that Colombia faces a structural imbalance between public revenue and expenditure, a situation that limits the State's financial capacity because more than 90 percent of the budget corresponds to expenses established by constitutional and legal obligations. The document argues that the reform is a necessary measure to restore fiscal balance, advance towards compliance with the Fiscal Rule, and prevent further underfunding of public accounts. The goal is to collect 21.9 trillion pesos, about 6.7 billion dollars, in 2027, with projections of 32.8 trillion in 2028, 35 trillion in 2029, and 37 trillion in 2030.
Among the incorporated measures, the proposal maintains the 19 percent VAT on online gambling and games of chance, with the aim of generating tax revenues close to 1.7 trillion pesos, about 523 million dollars, starting next year. The Executive argued that the measure would be applicable because online gaming is not part of the basic consumer basket of Colombian families, so the effects of the tax on the economy would be minor, while its impact on tax administration and the financing of public investment would be very positive. The text states that equating the tax burden between physical establishments and those operated online will help finance the 2027 budget, contribute to permanently increasing revenue, and will not have major effects on the price level. For the Government, taxing the industry with VAT would eliminate distortions between land-based and digital gaming.
The initiative also extends the 19 percent VAT to concerts, sports events, and entertainment, cultural, and sports services, and raises the rate for hybrid vehicles from 5 to 19 percent. It also proposes eliminating preferential income tax rates for hotels, theme parks, ecotourism parks, nautical docks, and mega-investment projects. Another key point increases the portion of lottery, raffle, and betting prizes that would go to tax payments from 20 to 30 percent, under the occasional gains chapter. The bill also eliminates deductions for natural persons' income tax and includes a 30 percent dividend tax for foreign companies or entities without a main domicile in Colombia, for natural persons not residing in the country, and for illiquid successions of non-resident deceased persons.
When presenting the proposal to Congress, Ávila assured that the reform will make those with greater resources pay more taxes, with measures such as the wealth tax, and maintained that the text does not affect lower incomes or the family basket. During the filing, the minister stated that the fundamental part of the tax effort and new government revenues must come from the large fortunes and large incomes that exist among a very exclusive minority in the country. The bill arrived in Congress less than three weeks before the end of Petro's term and after the failure of the two previous financing laws.
The immediate precedent dates back to December 2025, when the tax reform presented by the Executive failed in Congress, which sought, among other things, to increase taxes on online sportsbooks and support the 2026 National General Budget with an estimated collection of 16.3 trillion pesos. The Fourth Committee of the Senate rejected the initiative with nine votes against and four in favor, after the Joint Economic Committees of the Senate and House had already approved the budget. In 2024, a previous reform attempt by the same government had also failed.
The collection of 19 percent VAT on gambling was strongly resisted by the sector, both in the previous bill and in the implementation by decree in February 2025, justified under the legal framework of internal commotion, which allowed the Executive to adopt exceptional measures to guarantee public order and the functioning of the State. The industry warned of a drop in tax revenues, with the risk of deepening and affecting resources allocated to health. According to data from the Colombian Federation of Gambling and Games of Chance Entrepreneurs, between March and June 2025, there was a 32 percent drop in real operating income.
Later, the Executive issued Decree 1474 of 2025, which established a new tax scheme on wealth, alcoholic beverages, and online gambling and games of chance. However, the Constitutional Court declared the emergency economic decree issued at the end of December 2025 unconstitutional, which, among other measures, included the 19 percent VAT on the gross income of online gaming. These decrees had come into effect on January 1, 2026, and under that scheme, online gaming operators would have been subject to the tax applied to the gross gaming revenue.
Tags: Colombia tax reform, Germán Ávila, VAT on games of chance, Fecoljuegos