The proposal has been announced as a new “medium-term fiscal framework”, to support the coalition government to stabilize inflation and maintain funding for key social programmes.
Finance Minister Germán Ávila outlined the reform as critical to closing fiscal gaps in Colombia’s public spending and boosting state revenue amid a year of difficult macroeconomic conditions. The tax proposal aims to raise between $19.6bn and $25.4bn, equivalent to approximately €18.3bn to €23.7bn, depending on parliamentary support and economic performance.
Divisions on VAT status
The reform package will include a sweeping review of Colombia’s tax policy, with particular emphasis on the Value Added Tax (VAT) structure, as well as duties related to carbon emissions, online gambling, and consumption of fuel. The proposal is part of President Gustavo Petro’s wider economic strategy to reduce the deficit while financing regional stability and welfare initiatives.
The Finance Ministry has reaffirmed its position on the 19% VAT levy applied to online gambling deposits, introduced earlier this year under Decree 175 of 2025. Initially framed as an emergency economic measure, the gambling VAT was enacted to support humanitarian relief and public security operations in Catatumbo, a region destabilised by renewed guerrilla conflict.
The tax was applied as a “temporary measure” due to expire on 31 December 2025, applied abruptly across all customer deposits made to licensed online gambling and sports betting platforms. The tax was implemented alongside a 1% levy on coal and gas sales, and a 1% stamp duty on large securities transactions, forming a three-pronged effort to reinforce Petro’s COL$523trn (circa €120bn) social-focused budget.
Despite the tax’s temporary status, the General Attorney of Colombia has called for the 19% VAT on gambling to be maintained. In a public address, Attorney General Gregorio Eljach defended the legality of the measure, stating that the decree is “proportional to the emergency” and consistent with constitutional principles. Eljach further urged the Constitutional Court to uphold the tax, arguing that it represents a vital revenue stream in regions under threat from armed groups.
“The measures adopted in Decree 175 do not discriminate and are proportional to the emergency,” Eljach said. “They are vital to safeguarding fundamental rights and supporting public order efforts.”
Colombia Gambling losing consumers
Nevertheless, the policy has met growing resistance from the industry. According to Fecoljuegos, the national trade body for licensed gambling operators, the introduction of the deposit VAT resulted in a 30% drop in gross gaming revenue (GGR) in the first month following its implementation. Stakeholders have voiced concern that the tax has driven players toward offshore and unlicensed platforms that evade the levy altogether.
Evert Montero Cárdenas, President of Fecoljuegos, warned that the continued application of the deposit-based VAT risks damaging one of Latin America’s most successful regulated gambling markets. “Players are actively avoiding the tax by shifting to unlicensed platforms. Operators have tried to absorb costs and offer bonuses, but the downturn is stark,” he said.
Fecoljuegos has stated that its members are willing to present alternative measures to support the government, which would not require predatory tax charges on customer deposits.
Colombian incumbents have expressed significant concern about the structure of the tax itself. Stockholm-listed betting technology firm Kambi, which holds a significant presence in Colombia, noted that taxing deposits — rather than net revenue — has created “significant headwinds” and has had an immediate impact on operating volume.
Tax on Polluting Industries
From a broader fiscal standpoint, the Ministry of Finance is expected to prioritise energy and fuel consumption taxes in the upcoming proposal. Deputy Minister Carlos Emilio Betancourt has indicated that duties on polluting activities, such as pesticide use, vaping products, and industrial emissions, are under review.
These environmental taxes are viewed as both revenue-generating tools and incentives for behavioural change in line with Colombia’s long-term sustainability goals.
Betancourt also reaffirmed that up to COL$135trn in annual tax expenditure is under scrutiny, with VAT exemptions accounting for approximately 65% of that amount.
As such, the Ministry is considering restructuring the VAT system to broaden the tax base without disproportionately affecting low-income households. Potential adjustments include revising the 5% reduced VAT rate on essential goods and reassessing exemptions on education and health-related services.
Petro has final say
While the government insists that its proposals will not erode fundamental rights or market stability, the VAT on gambling deposits has emerged as a symbol of the broader political tensions within the coalition. Critics within President Petro’s own governing bloc have questioned the long-term viability of the tax, warning that it could undermine digital entrepreneurship and drive formal operators into financial distress.
Ultimately, the future of the gambling VAT is likely to be settled by President Petro himself, as he attempts to govern an increasingly divided coalition. Internal disputes over fiscal priorities, cabinet appointments, and the balance between social spending and economic competitiveness have raised questions about the administration’s ability to maintain a coherent legislative strategy through 2025.
The Ministry of Finance maintains that the full text of the Tax Budget Proposal will be published before the end of July, with congressional debate expected to begin in the second half of the year. For Colombia’s regulated industries, including gambling, the next few months will prove pivotal in determining the long-term tax environment under Petro’s presidency.
