Colombia Considers Implementing 19% VAT on Digital Platforms
The Colombian government has submitted a proposal to President Gustavo Petro’s office to consider implementing a 19% VAT on digital platforms as part of the country’s pending national budget. This proposed tax would apply to a range of online services, including the home-sharing platform Airbnb, as well as online sports betting and iGaming platforms.
The Colombian trade body Asojuegos has expressed strong opposition to the proposed VAT, warning that it would be highly damaging to the regulated online gambling sector. According to Asojuegos president Juan Carlos Restrepo, the additional cost would likely be passed on to consumers, potentially reducing the return-to-player (RTP) rate of licensed operators from the current 83% to around 78%.
Restrepo cautioned that the VAT charge could lead players to migrate to international platforms that do not impose the tax and offer the same or better returns as those currently provided by companies operating in Colombia. This, in turn, could result in a significant loss of revenue for the government, as the funds currently collected for health purposes could end up with companies that neither pay taxes in Colombia nor operate within its legal framework.
The proposed budget reform, which includes the VAT on digital platforms, is part of the government’s broader efforts to upgrade Colombia’s healthcare and welfare systems. President Petro has defended the government’s $130 billion budget proposal, arguing that the funds are necessary to address these critical areas.
Asojuegos has urged the government to reject the VAT charge, warning that it would be a “seriously mistaken measure” that would ultimately “affect the income currently available to the health sector in Colombia.” The trade body argues that the operation of online games has been significantly increasing its resources and contributions to the health sector, and the proposed VAT could jeopardize this important revenue stream.
Currently, Colombia applies a tiered tax structure of 15-17% on Gross Gaming Revenue (GGR), dependent on licensed operators maintaining a return-to-player (RTP) rate above 83%. The proposed VAT would be an additional tax on top of the existing GGR-based taxation.
The budget reform proposals, including the VAT on digital platforms, will be reviewed by President Petro this week before being sent to Congress for debate and approval. The government’s $130 billion budget proposal has already faced scrutiny, with deputies raising questions about the expanded spending plans.
If the proposed VAT is implemented, the additional cost is likely to be passed on to consumers, potentially reducing the attractiveness of regulated online gambling platforms in Colombia. This could lead to a migration of players to international platforms that do not impose the VAT, potentially undermining the government’s efforts to regulate and tax the industry.
The Colombian trade body Asojuegos has been vocal in its opposition to the proposed VAT, arguing that it would be highly damaging to the regulated online gambling sector. The industry group has called on the government to reject the measure, warning of the potential consequences for both the industry and the healthcare system.
