Politicians in Colombia have renewed efforts to slap the country’s online gambling market with a new tax.
Two bills have been received by Congress that propose the application of a 16% tax on online gambling operators. The first calls for the tax to be applied directly to the platforms, while the other would be levied at the point of customer deposit.
The proposals follow an effort by President Gustavo Petro to introduce a permanent 19% VAT on gambling as an emergency economic measure, which was struck down by the country’s Constitutional Court.
Petro and his Humane Government have long eyed gaming as an important economic lever as it seeks to close a budget shortfall of COP30trn (£6.1bn).
However, key stakeholders in Colombia have rallied against the changes, arguing that ratcheting up the financial burden on the gambling market only serves to reduce tax contribution and is ‘counterproductive’ to the growth of the market.
Speaking on the previously proposed VAT, Evert Montero Cárdenas, President of Coljuegos, Colombia’s Trade Association, said: “It’s an unsustainable burden from a financial standpoint. Operators have been forced to grant bonuses to absorb the VAT impact and avoid passing it on to users.”
In November, Spanish Gaming Group Codere also confirmed that it would no longer be investing in the Colombian market unless the government reversed its tax policy.
If successful, politicians hope that the new measures will expand the scope of gambling taxation to cover all payment methods used by consumers, including cryptocurrency.
Petro’s focus on the economic potential of the iGaming market comes as his party prepares for Colombia’s upcoming general election on 31 May.
The Humane Party faces an uphill battle to retain control of the country’s parliament against Colombia’s resurgent right wing – a fact that may provide some hope for the gaming industry.
“It’s unclear what direction those elections will go,” Codere’s outgoing Chief Financial Officer, Oscar Iglesias, told investors in November.
“Even if [the tax] gets legislated, somehow you have more centrist or right-leaning parties come into power and unwind what has been a tax that has not been helpful in terms of reaching that objective of actually generating additional tax revenues for the government coffers.”
