Colombia's Outgoing Government Makes Final Push to Permanently Tax Online Gambling

Colombia's outgoing Petro administration has introduced a new tax reform bill seeking to make a 19% Value Added Tax on online gambling permanent under ordinary legislation, reviving a policy that Colombia's Constitutional Court struck down after it was imposed by emergency executive decree in 2025. The proposal faces a narrow parliamentary window, with President Gustavo Petro's term approaching its end and no possibility of re-election under the Colombian constitution.

• Proposed tax: Permanent 19% VAT on online gambling gross gaming revenue (GGR)
• Previous attempt: Emergency Decree 1474 (2025), ruled unconstitutional by Colombia's Constitutional Court
• Revenue target: Approximately COP 1.7 trillion in gambling-linked tax income for 2027
• Broader package: COP 21.9 trillion in new revenue sought for the 2027 national budget
• Market growth: Colombia's online gambling GGR rose approximately 20% through June 2025 despite the previous tax
• Political context: Fifth reform attempt; Petro cannot seek re-election and his term ends in 2026

Updated July 2026

What is Colombia proposing for online gambling taxation?

President Gustavo Petro's government has tabled a tax reform bill that would make a 19% Value Added Tax on online gambling a permanent feature of Colombia's fiscal code. Applied to gross gaming revenue, the tax would treat online platforms, digital casinos, and betting products at the same VAT rate applied to most goods and services in the country.

The proposal forms part of a broader tax reform package that the government estimates would raise COP 21.9 trillion, roughly equivalent to approximately USD 5.4 billion, in additional revenue to fund the 2027 national budget. Online gambling VAT is one element of that package, with gambling revenue expected to contribute approximately COP 1.7 trillion in annual tax income if the measure is approved.

What is the history of Colombia's online gambling VAT?

Colombia has been attempting to tax online gambling at the 19% VAT rate since at least 2025, when the Petro government imposed the levy through Decree 1474, an emergency executive measure tied to a state of internal disturbance declared over the Catatumbo security crisis. The decree allowed the government to bypass the normal congressional approval process and implement fiscal measures rapidly.

The emergency VAT was actually collected for a period before Colombia's Constitutional Court ruled the decree unconstitutional and ordered the government to refund taxes already paid by operators and players. The court's objection was not to the rate or concept of the tax, but to the mechanism: emergency powers cannot be used to make permanent changes to the ordinary tax code.

Why did the Constitutional Court strike down the previous decree?

The Constitutional Court's ruling turned on procedural grounds rather than the substantive merits of taxing online gambling. Colombia's constitution permits the executive to use emergency decrees to address security crises, but the powers carry strict limits on the type of measures that can be enacted and their duration. A permanent change to the VAT code, the court determined, exceeded what could be validly achieved through emergency powers.

The ruling created both a legal and a financial complication. Operators and platforms that collected and remitted the VAT during the period the decree was active are owed refunds. The exact sums involved have not been publicly disclosed by the government, but given the scale of Colombia's online gambling market, the refund liability is material.

How many times has Colombia attempted to tax online gambling?

This new reform bill is the Petro government's fifth attempt to impose a permanent tax on online gambling. Previous bills either failed to secure sufficient support in the Senate and House of Representatives or were set aside in favor of the emergency decree approach that was subsequently invalidated. The pattern reflects a genuine and consistent fiscal ambition, but also the political difficulty of passing targeted gambling taxes in a market where licensed operators maintain established stakeholder relationships with legislators.

What is the difference between applying VAT to online versus physical gambling?

The government has argued that applying 19% VAT to online gambling GGR removes a "differential treatment" between physical and digital gambling that it considers inequitable. Physical gambling establishments in Colombia already operate under a complex mix of taxes, levies, and operating fees collected by Coljuegos, the state-owned gambling regulator. Digital platforms, which do not carry the same physical infrastructure costs, have historically operated under a comparatively lighter tax burden relative to their revenue.

Critics of the proposal counter that online gambling VAT ultimately hits players as much as operators, effectively raising the cost of participation for consumers, and that high tax rates push demand toward unlicensed platforms that can offer better effective odds by operating outside the tax and compliance system entirely.

How has Colombia's online gambling market performed despite taxation attempts?

Despite operating through a period of significant regulatory and tax uncertainty, Colombia's online gambling sector demonstrated resilience. Data cited by government officials showed that the industry's gross betting revenue grew by approximately 20% in the year to June 2025, even during the period when the emergency VAT was being collected. Officials have used this figure to argue that the market can absorb a 19% levy without contracting materially.

Colombia's regulated online gambling market, overseen by Coljuegos, is one of Latin America's oldest formal digital betting markets, having been established under a licensing framework introduced in 2016. Its relative maturity and market depth make it an attractive tax target for successive governments facing fiscal gaps.

What are the chances this reform will pass before Petro leaves office?

The political window is narrow. Under Colombia's constitution, presidents serve a single four-year term and cannot seek immediate re-election. Petro took office in August 2022, meaning his term ends in August 2026, with a new administration expected to take office after elections held later in 2026. The current reform bill must be introduced, debated, and approved by Congress before Petro's term concludes.

The government's track record in Congress on gambling taxation is poor: four previous attempts failed to reach a final vote. However, the broader fiscal pressure of the 2027 budget, which requires COP 21.9 trillion in new revenues, may provide additional leverage to move the full package through a Congress that needs to fund public spending commitments regardless of the gambling element.

What should online gambling operators in Colombia watch for?

Licensed operators in Colombia, authorized through Coljuegos, should monitor the progress of the tax reform bill through Congress closely. If passed, the permanent 19% VAT would apply from a date specified in the legislation, most likely with effect from 1 January 2027 if the bill clears Congress on its current timetable. Operators that are still owed refunds from the unconstitutional 2025 emergency decree should also pursue those claims proactively while the legal pathway remains open.

Unlicensed platforms operating in Colombia, which sit outside Coljuegos oversight, would not be captured by the VAT and may gain a short-term competitive pricing advantage if licensed operators are required to pass on the levy to players. This is one of the structural risks of a high-rate gambling tax that regulators and legislators rarely address directly in impact assessments.

How does Colombia's approach compare to other Latin American gambling tax regimes?

Colombia's proposed 19% VAT on online gambling GGR is at the higher end of Latin American gambling tax frameworks. Brazil, which only recently launched its regulated market, applies a 12% goods and services contribution (excluding state gambling taxes) to licensed operators, while Argentina's rates vary by province. The European benchmark for comparison is typically a GGR tax rather than a VAT structure, with rates ranging from 15% in the UK to over 50% in Germany's online slots market.

A VAT applied at 19% on GGR, rather than on player stakes or net profit, creates a particularly heavy effective burden, since operators must remit the tax regardless of their profitability. For markets with thin margins and high promotional costs, this structure can quickly make compliance financially unattractive relative to unlicensed alternatives.

Frequently Asked Questions

What is the current VAT rate on online gambling in Colombia?

Following the Constitutional Court's ruling that emergency Decree 1474 was unconstitutional, there is currently no valid VAT on online gambling in Colombia. The Petro government's new bill seeks to establish a permanent 19% rate through ordinary legislation.

When does Petro's presidential term end?

Under the Colombian constitution, presidents serve a single four-year term without the possibility of immediate re-election. Petro took office in August 2022, and his term ends in August 2026, with a new president expected to take office following elections held in 2026.

Is Colombia's online gambling market legal?

Yes. Colombia has operated a licensed online gambling market since 2016, regulated and supervised by Coljuegos. Licensed operators must comply with responsible gambling standards, anti-money laundering requirements, and applicable taxation obligations. The market is one of the most established regulated online gambling jurisdictions in Latin America.

Would the 19% VAT apply to all forms of online gambling?

The proposal targets online games of chance operated through digital platforms, including sports betting and casino-style games. The government describes the measure as applying to platforms offering internet-based games of chance, broadly capturing the major segments of the digital gambling market.