Colombia shifts online gambling VAT from deposits to gross gaming revenue

• The Colombian government moves 19% VAT from player deposits to gross gaming revenue through an emergency decree effective 1 January 2026.
• Trade body Fecoljuegos welcomes change as tax burden drops from over 70% of real income to approximately 34% of GGR.
• Deposit-based VAT introduced in February 2025 caused online GGR to fall 30% and prompted operators to halt investment plans.

Colombia’s government has restructured how it taxes online gambling, shifting the 19% value-added tax from player deposits to gross gaming revenue. The change took effect on 1 January 2026 through an emergency decree, following months of industry pressure.

Colombia has one of the more robust gambling regulatory frameworks in Latin America, having become the first country in the region to regulate online gaming in 2016 through its Egaming Act. The market has attracted international operators, including RushBet and Betano.

The Colombian Federation of Gambling Entrepreneurs (Fecoljuegos) described the move as “a significant step forward”, noting the previous deposit-based tax “did not reflect the sector’s economic reality”.

Emergency decree addresses budget shortfall

The deposit-based tax was set to expire on 31 December after the Senate’s Fourth Committee voted against the Financing Bill in December. The rejected legislation would have made the tax permanent after it was introduced in February 2025 to fund responses to civil unrest in the Catatumbo region.

The defeated bill would have also increased capital gains tax on gambling and lotteries from 20% to 30%, adding further pressure on the sector.

Article 2 of the government’s emergency decree confirmed the reallocation of the 19% VAT for 2026. Finance Minister Germán Ávila authorised the decision as “a measure to restore fiscal balance without suffocating productive sectors”.

Ávila stated:

“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 government enacted the legislation after the Financing Bill’s collapse left a COP16.3 trillion ($4.2 billion) gap in the 2026 budget. Some opposition politicians and business leaders have questioned the decree’s legality, with possible court challenges ahead.

Tax burden drops but remains above global averages

Fecoljuegos warned in April that VAT on deposits had caused online gambling GGR to nosedive by 30%. The federation said the latest change “acknowledges, for the first time, the true math of the business”.

“The sector is transitioning from a profoundly disproportionate system, where the tax burden could exceed 70% of real income, to a scenario with a tax burden of approximately 34% on gross revenue,” Fecoljuegos stated.

The 34% figure combines the 19% VAT with a 15% concession fee, excluding other domestic taxes. Under the deposit-based system, operators were taxed even when deposits were withdrawn before bets were placed.

However, Fecoljuegos stressed the latest move “is only a first step”, with the overall tax burden still “well above international averages”.

Industry welcomes correction but seeks long-term reform

The deposit-based VAT drew sharp criticism from operators throughout 2025. Under the calculation process for the tax, the deposit amount was divided by 1.19, meaning a $100 deposit would leave players with approximately $84 left to wager.

“This reduction immediately affected users’ gaming capacity, generating a significant drop in deposits,” Fecoljuegos president Evert Montero Cárdenas said in earlier statements.

The body reported some platforms experienced declines of almost 50% across key metrics in the first days of the tax’s introduction.

Spanish gambling company Codere Online confirmed in November 2025 that the tax made “further investment in Colombia impossible under current conditions”, leading the firm to halt expansion plans. The company’s stance reflected broader industry concerns about operational viability.

Coljuegos, the national gambling regulator, reported that monthly tax contributions from operators fell 46.6% year-on-year, from COP43.3 billion (£9.1 million) in July 2024 to COP23.1 billion in July 2025. The steep decline showed how the tax diverted activity towards unlicensed platforms.

The federation added:

“This adjustment allows us to move beyond a clearly unviable situation and opens a minimal, but necessary, margin for the operation of the legal industry. Nevertheless, this change is still not enough for Colombia to have a highly competitive market aligned with global business models.”

Montero Cárdenas commented:

“We recognise the government’s willingness to correct an error that placed the sector on the brink of collapse. This adjustment restores operational viability, but Colombia still needs a broader reform that encourages investment, innovation and formalisation.”

The federation emphasised it remains “ready to continue working hand in hand with the authorities to design a model that rewards compliance and innovation”.

The gambling sector provides substantial funding to Colombia’s healthcare system, with Coljuegos previously stating the system would receive around COP419.5 billion in contributions from gambling licence fees across 2024. Fecoljuegos highlighted concerns that the deposit-based VAT threatened these healthcare contributions.