Congress halts VAT on online gaming: tax relief and greater stability for operators in Colombia
Colombia’s joint congressional committees have rejected the government’s proposed tax reform, which sought to raise COP 16.3 trillion for the 2026 budget. The Senate’s Fourth Committee voted nine to four to sink the initiative. Although the government shared the bill’s text on social media, it failed to reach a consensus in Congress. Consequently, the fiscal impact now falls on budgetary adjustments. According to El País, the gaming sector, directly affected by the proposal, welcomed the clarity brought by the outcome of the vote.
Operators and suppliers gain room to reinvest as online gaming VAT is shelved
The joint economic committees struck down the financing bill, meaning the government will forgo the COP 16.3 trillion anticipated for 2026. El País reported that the vote in the Senate’s Fourth Committee was decisive: nine votes to kill the bill, four in favour of approval.
Despite the executive branch’s efforts and the Ministry of Finance’s public defence, the project failed to advance. “It does not affect food, household services, public transport, or medicines, and protects middle-class income. It promotes a progressive system and closes privileges,” the Ministry stated on social media, according to El País.
This defeat leaves the government short of the expected revenue, forcing it to seek alternatives. Meanwhile, the business community celebrates the initial result, particularly as it avoids new taxes.
Congressman Christian Garcés hailed the legislative outcome enthusiastically: “Colombia, rather than more taxes, needs a structural reform that reduces operating expenses, strengthens investment, streamlines public finances, and boosts citizens’ income and employment. President Gustavo Petro’s government only thinks about spending instead of solving the country’s problems,” Garcés said, as quoted by El País. His stance resonates amid growing concerns that additional taxation seemed unavoidable.
Progressive VAT posed a threat to online gambling in Colombia
The reform proposal sought to levy tax directly on online games of chance, targeting the core of digital platforms. In other words, it would have changed the business model of online lotteries, digital betting, and similar items by applying VAT. This meant that there was an immediate and significant financial impact on the digital gaming industry.
The bill also raised the wealth tax to a progressive 5% on assets above COP 2.1 billion (net of debts), while excluding the first COP 628 million of family home equity. However, the measure would have burdened large gaming operators reliant on heavy investment in technology and licensing. Online lotteries and sports betting operators were among those directly exposed, as the proposed structure aimed to close what the government saw as unfair fiscal privileges.
However, Congress flatly rejected these proposals, bringing palpable relief to the industry. The progressive taxation approach had generated ongoing tension between the executive and legislative branches. As a result, the gambling sector can now breathe a temporary sigh of relief, avoiding immediate tax burdens for operators competing in a regulated market.
Luis Fernando Mejía, director of Fedesarrollo, analysed the figures precisely. “To put them in context, those COP 16.3 billion represent less than 3% of the National General Budget, which totals COP 547 billion. Therefore, it’s unsustainable to claim that a shortfall of this size would jeopardise fiscal stability or public spending sustainability,” Mejía stated, according to El País. Initially, the government counted on these funds to “cover budget shortfalls”. Now it faces cuts similar to those imposed in 2024. Consequently, the gambling sector completely avoids the proposed VAT, consolidating its position within the tax framework.
Budget cuts safeguard Colombia’s betting sector
With the financing bill rejected, the COP 16.3 trillion shortfall will be managed through direct budget cuts – just as happened in 2024 after a similar legislative defeat. El País reported that the 2026 budget will inevitably face reductions. Fedesarrollo’s Mejía foresees a modest “Plan B”, with less than 3% of the total COP 547 trillion budget directly affected. Nevertheless, the government had threatened to declare a state of economic emergency to enforce the reforms.
For constitutional reasons, Senator Angélica Lozano was vehemently against such a move: “The Constitutional Court has been categorical in reiterating that states of exception cannot be used to replace or correct the natural functioning of the branches of public power, nor to evade the political consequences of a democratic legislative procedure (rulings C-122 of 1997 and C-383 of 2023),” Lozano warned at the session’s close. Meanwhile, the gambling sector gains mid-term regulatory stability.
While the government continues to insist on a progressive tax policy, Congress focuses on fiscal control and spending restraint. In short, VAT on online or digital betting is shelved for now, allowing lottery and sports betting companies to prepare for 2026 without unforeseen additional costs.
The financial impact on Colombia’s online gambling industry lessens after Congress rejects it, enabling the executive branch to review its fiscal plan for 2026 and temporarily stimulate the gaming industry.
This article was first published in Spanish on 12 December 2025.
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