The Colombian government has concluded debates on online gaming taxes, implementing a temporary increase to regulate and strengthen the sector.
After thorough discussions, Colombia has officially introduced a temporary tax hike on online gaming, finalizing the long-debated policy change.
President Gustavo Petro, the administration of President, has enacted three new taxes on gambling, the oil sector, and stamp duty, aiming to raise over 1 trillion pesos (US$237.8m).
Juanita Villaveces, the Deputy Finance Minister, announced the measures in the House of Representatives, stressing the need for immediate financial resources to address a worsening security crisis. A 19% VAT on online gambling has been implemented for 90 days, as lawmakers previously blocked a permanent increase. The current tax rate ranges between 15-17%. This temporary measure is expected to generate approximately 519 billion pesos, primarily affecting digital betting platforms, including those focused on sports betting, football, and online casinos.
With significant growth in the online gambling sector, the government has targeted it for increased taxation. Data from the National Administrative Department of Statistics (DANE) indicates that Colombia’s entertainment industry GDP has surged by 133% in the past decade, with gambling contributing 53% of this growth. Additionally, the government has introduced a 1% special tax on oil and coal exports, further expanding its revenue-raising efforts.
The government justifies the new tax by citing the rapid growth of the gambling sector, viewing it as a significant revenue source. However, industry experts warn of potential unintended consequences. The new VAT could drive some players toward unregulated betting platforms to avoid the tax, undermining the legal market.
Licensed operators may also pass the additional costs onto users, potentially reducing participation and overall revenue. While the Petro administration insists the temporary tax hikes are necessary, concerns are growing about their broader economic impact.
Critics argue that increased taxation on gambling and the oil industry could lead to higher prices for goods and services, further straining household budgets in an already challenging economy. Industry representatives also warn that higher taxes could slow investment and innovation in the gambling sector, threatening its long-term sustainability. Many believe a more balanced regulatory approach could generate revenue without incentivizing consumers to turn to illegal markets.
