The fiscal landscape of the gambling sector in Colombia experienced a dramatic turn following a landmark Constitutional Court decision that suspended the 19% value-added tax (VAT) applied to gross gaming revenue. On January 29, the court suspended Decree 1390, which had declared an “economic and social emergency” in the country the previous year, citing serious concerns about its constitutionality.
This judicial decision represents an unprecedented event in Colombian constitutional history, marking the first time the Court has provisionally suspended a decree of this nature before issuing a final ruling. The measure has immediate and potentially lasting implications for the online gaming industry, which had been operating under intensified fiscal pressure since February 2025.
Juan Camilo Carrasco, managing partner of the law firm Sora Lawyers and a recognized expert in gaming law, described the judicial action as “unprecedented” in a LinkedIn post the Friday following the announcement. According to Carrasco, this provisional suspension marks a defining moment in the relationship between the executive and judicial branches regarding emergency fiscal policies.
Modification of VAT: from deposits to gross revenue
During its validity, the VAT application mechanism underwent a significant modification. Although originally calculated on total deposits made by players, the government later shifted the tax base to gross gaming revenue (GGR), a more standard metric in international regulations.
This modification responded to technical criticisms regarding the incongruity of taxing deposits, which do not represent income for operators but merely fund transfers from customers. Applying VAT on deposits effectively meant taxing the same transaction multiple times when a user deposited, played, won, and redeposited their winnings.
The shift to GGR represented a technical improvement but maintained the 19% rate, resulting in a combined tax burden of 34% on gross revenue when added to the standard 15% tax. This fiscal structure placed Colombia among the most heavily taxed jurisdictions for online gaming operators globally.
The emergency decree was scheduled to expire on December 31, 2025, but the government had initiated legislative processes to make the additional VAT permanent, generating a political battle that culminated in a parliamentary defeat before the judicial ruling.
Immediate implications of the judicial suspension
The Constitutional Court’s decision had an immediate effect on all measures contained in Decree 1390, not solely those related to gambling. The suspension means that online gaming operators authorized in Colombia are now exclusively subject to the standard 15% tax on GGR, temporarily eliminating the additional tax burden.
This immediate fiscal reduction significantly improves the operating margins of companies in the legal sector, potentially allowing for greater investment in advertising, product enhancements, responsible gaming programs, and operational expansion. Operators had reported that the additional VAT eroded profitability to the point of questioning the viability of maintaining a presence in the Colombian market.
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The suspension will remain in effect until the Plenary Chamber of the Constitutional Court makes a final ruling on the emergency decree. This complete constitutional review process does not have a defined timeline but typically requires several months, suggesting that the fiscal relief could be extended considerably.
Medium-term outlook: postponement until 2027
Carrasco considers it plausible that no new tax legislation affecting the online gaming sector will be enacted “until the next administration (starting in 2027).” This outlook assumes that electoral considerations will dominate the political calendar during 2026, effectively paralyzing significant tax initiatives.
However, the lawyer does not entirely rule out government action during 2026, warning that “if fiscal pressures increase, a more reduced fiscal measure will be proposed” later in the year. This contingency scenario would depend on a significant deterioration of public finances that would force the government to seek additional revenue despite political costs.
A “more reduced fiscal measure” could involve a lower VAT rate (e.g., 10% instead of 19%), limited application to certain market segments (e.g., only sports betting or only online casino), or a clearly defined temporary structure that reduces political resistance.
Impact on the competitiveness of the legal versus illegal market
The suspension of the additional VAT significantly improves the competitiveness of the Colombian legal market against illegal operators who do not pay taxes. During the period when the 19% VAT was in effect, legal operators reported intensified competitive pressure from unauthorized sites that could offer better odds, more generous bonuses, and superior conditions by not bearing tax obligations.
The black market for online gambling in Colombia is estimated to move between $800 million and $1.2 billion annually, representing approximately 40% of the total activity. Excessive tax burdens on the legal market incentivize player migration to illegal options, eroding the tax base and exposing consumers to unprotected platforms.
The reduction of the effective tax rate from 34% to 15% through the VAT suspension places legal operators on more equal footing to compete, potentially facilitating the reverse migration of activity from illegal channels to authorized ones, eventually increasing net tax revenue despite the lower rate.
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