In response to the escalating security crisis in the Catatumbo region, the Colombian government has introduced temporary tax measures. These measures, effective from February 22, 2025, until December 31, 2025, aim to bolster public finances during this period of unrest. The new taxes include a 19% VAT on online gambling deposits, a 1% tax on hydrocarbon and coal sales, and a 1% stamp tax on certain public and private documents.
Value-Added Tax (VAT) on Online Gambling
Overview
Online gambling, previously exempt from VAT, will now be subject to a 19% VAT. This tax applies to deposits made into a gambler’s account held by an online gambling operator, enabling the gambler to place bets. Deposits can be made via money transfers or cryptocurrency.
Applicability
The VAT applies to residents of Colombia or those with a permanent establishment or economic activity in the country. To calculate the taxable base, the deposit amount will be divided by 1.19. The amount available for betting will be the deposit minus the applicable VAT.
Foreign Operators are also impacted
Foreign online gambling operators are also required to collect this VAT, adhering to the VAT regulations for foreign service providers. This measure ensures a level playing field for all operators in the market.
A new tax on Gambling but also on energies and stamps.
The first sale or export of hydrocarbons or coal, classified under tariff headings 27.01 and 27.09, will incur a 1% tax. If the extractor is also the exporter, the tax will be applied only once at the time of export
Hydrocarbons under heading 27.09 used for in-kind royalty payments to the Colombian Hydrocarbons Agency (ANH) will be taxed only upon export. The taxable base will be the transaction value, with the free-on-board (FOB) value applicable for exports. The exchange rate on the day of the export authorization request will be used for calculation.
Stamp Tax
A 1% stamp tax will apply to the value of public and private documents, including contracts, exceeding 6,000 tax units (approximately US$72,000). This tax applies to documents that are subscribed, modified, or extended and are either granted or accepted in Colombia or granted abroad but executed in Colombia.
Historical Context
This tax had been in effect until 2009 but was reduced to 0% in 2010. The current provision effectively reinstates the prior provisions and several exceptions, including an exception for the acceptance of commercial offers via purchase orders.
Implications for the Online gambling Industry
The new 19% VAT on online gambling deposits will require foreign operators to comply with VAT regulations for foreign service providers. Adding VAT on deposits will also impact the profitability of the legal gambling sector, rising concern of the potential risk to strengthen illegal operators.
The Colombian government’s introduction of temporary taxes amid the state of internal unrest is a significant move to address the security and humanitarian crisis in Catatumbo. We’ve seen similar measures with the rise of gambling taxes in France, aiming to reduce the deficit of the french budget. While these measures aim to bolster public finances, they also present challenges for the affected industries.
Disclaimer: This article was crafted with the assistance of AI tools to ensure smooth and optimized content. The information provided is based on the latest available data and expert analysis. Source of the content : EY Bogota.
