Colombia has revised its approach to taxing online gambling, shifting the 19% value-added tax (VAT) from player deposits to gross gaming revenue (GGR). The change was confirmed this week through an emergency decree and has been broadly welcomed by industry stakeholders as a necessary correction to a system widely viewed as unsustainable.
The Colombian Federation of Gambling Entrepreneurs (Fecoljuegos) described the decision as “a significant step forward”, arguing that the previous deposit-based model failed to reflect the economic reality of regulated online betting.
Emergency decree fills post-budget gap
The VAT on deposits was originally expected to lapse on 31 December after Colombia’s Senate Fourth Committee rejected the government’s Financing Bill. That bill sought to make the tax permanent after its temporary introduction in February, when it was framed as a funding measure to address civil unrest in the Catatumbo region. It also proposed increasing capital gains tax on gambling and lottery activities from 20% to 30%.
Following the bill’s collapse, the government moved to enact an emergency decree to address a COP 16.3 trillion (around US$4.2 billion) shortfall in the 2026 budget. Article 2 of the decree confirms that the 19% VAT will apply to online gambling GGR for the duration of 2026, rather than to player deposits.
The use of emergency powers has drawn criticism from opposition politicians and some business groups, who have questioned the legality of the move and suggested the decree could face constitutional challenges in court.
Industry relief after sharp revenue impact
Fecoljuegos has been one of the most vocal critics of the deposit-based VAT. The federation warned earlier this year that the tax had driven a 30% drop in online gambling GGR, creating conditions in which the effective tax burden could exceed 70% of actual operator income.
In welcoming the shift to GGR, the trade body said the new framework “acknowledges, for the first time, the true math of the business”. Under the revised structure, Fecoljuegos estimates the overall tax burden on gross revenue will sit at approximately 34%.
However, the organisation stressed that the adjustment should be seen as an interim fix rather than a final solution. It argued that Colombia’s effective tax levels remain well above international norms and continue to limit the market’s competitiveness.
What it means for the market
For licensed operators, the move immediately improves economic viability by aligning taxation with actual gaming revenue rather than turnover. While the overall tax burden remains high, the shift reduces distortion, stabilises cash flow, and lowers the risk of further contraction in the regulated market.
For regulators and policymakers, the decision reflects a pragmatic response to both budgetary pressure and industry feedback. By moving away from a deposit-based model, the government reduces incentives for players and operators to migrate toward unregulated alternatives.
At a strategic level, the decree reopens the door to dialogue on a longer-term tax framework. Fecoljuegos has said it will continue to engage with authorities to push for a sustainable model that supports public finances while keeping Colombia’s online gambling market aligned with global standards. Whether that dialogue leads to permanent reform beyond 2026 will likely depend on the outcome of any legal challenges and the sector’s performance under the revised VAT structure.