Fecoljuegos issues stark warning over 19% VAT becoming permanent
The Colombian Federation of Entrepreneurs of Games of Chance and Luck (Fecoljuegos) has expressed serious concerns regarding the Colombian government’s proposal to impose a permanent 19% Value Added Tax (VAT) on deposits made on online betting platforms.
In a statement, Fecoljuegos outlined their position:
“The 19% VAT applied to deposits on online betting platforms is based on a fictitious foundation, not a real business variable. It is comparable to applying this tax on deposits made in the financial sector. The money enters the system, is reused several times, but does not constitute added value or patrimonial income for the financial intermediary,” Fecoljuegos said.
“In the case of online gaming, user deposits are converted into digital money wagered (turnover), which recycles on average about six times. Of that turnover, approximately 94% returns to players in the form of prizes. The true real income of the operator, which effectively increases their assets, is close to 6%, known as GGR (Gross Gaming Revenue). Any tax burden intended to be technically fair and sustainable should be calculated on this added value, rather than on deposits.”
Initial estimates suggested that the proposed VAT could generate 1.2 trillion pesos annually, or nearly 1 trillion over ten months. However, Fecoljuegos criticized this projection as “misleading,” arguing that it is based on a calculation that does not correspond to the sector’s actual added value.
“In practice, this tax design undermines operational margins, as a deposit of COP $100 leaves COP $84 to play with, recycles six times, and generates a mere COP $30.2 in income for the operator. In this context, the VAT paid by the user (COP $16) equates to 52.8% of the real income, and when combined with the 15% exploitation rights, the effective tax burden rises to 67.8%, not counting income tax, parafiscal charges, and other taxes.”
Fecoljuegos warned that such a financial strain could make it difficult for operators to remain competitive and would lead to a growth in the illegal market. In light of these challenges, Fecoljuegos is calling for a reassessment of the VAT framework affecting the online gaming sector.
The government of Gustavo Petro has presented a new tax reform to Congress aimed at raising COP 26.3 trillion (around USD 6.4 billion). The tax hike seeks to secure the financing of the government’s 2026 budget and is more than double the tax hike that was rejected by Congress last year. Crucially the reform would make the 19% Value Added Tax (VAT) on online gambling permanent. Gambling operators must pay the VAT, whether they operate inside or outside Colombia.
