Following months of negotiations, the government of Colombia will apply a new formula to calculate VAT charges on gambling licences.
Announced on 31 December by Fecoljuegos, Colombia’s online gambling trade body, the government has undertaken a fiscal correction, confirming that Value Added Tax (VAT) on online betting will now be calculated on Gross Gaming Revenue (GGR) rather than player deposits.
The reform, enacted under an emergency fiscal decree effective 1 January 2026, marks the first time the Colombian state has formally recognised the “mathematical reality” of gambling operations.
Finance Minister Germán Ávila, authorised the decision as “a measure to restore fiscal balance without suffocating productive sectors”.
“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,” Ávila stated. “This approach respects the mathematical structure of the industry, ensures fairness in taxation, and secures the revenues needed to meet our social commitments.”
The 19% VAT rate will now apply to GGR as “total bets minus prizes paid to players” replacing the deposit-based VAT model that has hindered growth and investment in Colombian gambling.
The deposit-based VAT was first introduced by President Gustavo Petro’s administration in February 2025 as an emergency measure to raise revenues for Catatumbo, a province destabilised by guerrilla conflict.
Yet in September, Petro announced that the measure would become a permanent provision of the National Budget 2026 – immediately contested by Colombia licences.
A breath of fresh air for Colombian betting?
The impact of VAT changes on deposits on the licensed market has been extreme.
The regulatory body of Coljuegos, published data revealing that monthly operator tax generation had dropped by 46.6% year-on-year, sliding from COP 43.3bn (£9m) in July 2024 to COP 23.1bn (£4.8m) this year. The steep decline underscored how the tax had made legal operations unviable, diverting activity towards unlicensed platforms.
Operators repeatedly warned of the imbalance. Codere Online stated that the tax made “further investment in Colombia impossible under current conditions,” announcing a freeze in local market expansion plans.
The industry federation Fecoljuegos welcomed the government’s reversal, describing the new GGR-based model as a “first step towards restoring rationality” in Colombia’s fiscal framework.
“This change enables the industry to abandon a state of manifest inefficiency and allows for a small but essential margin in the legal system,” said Fecoljuegos President Evert Montero Cárdenas. “But it is a starting point, not an endpoint, in building a sustainable long-term model.”
Under the revised structure, the total tax demand on Colombian licences averages circa 34% of GGR, comprising 15% concession tax and 19% VAT, a base which excludes other domiciled taxes.
Yet the shift is viewed as marked improvement by the Petro government. Fecoljuegos remains cautious that Colombia’s tax burden had increased above all South American nations in 2025, a factor that limits competition and deters foreign investment.
“We recognise the government’s willingness to correct an error that placed the sector on the brink of collapse,” Montero Cárdenas added. “This adjustment restores operational viability, but Colombia still needs a broader reform that encourages investment, innovation and formalisation.”
“We are ready to continue working hand in hand with the authorities to design a model that rewards compliance and innovation,” said concluded Cárdenas
“Colombia must aim for a framework that encourages private investment, supports technological progress, and strengthens formalisation — because a strong, competitive legal industry is the state’s best defence against illegality.”