Colombian gambling operators blast VAT decision
The government has decided to maintain a 19 per cent VAT rate on online gambling.
Colombia.- Gambling operators in Colombia have criticised the government’s decision to keep a 19 per cent VAT rate on online gambling as a permanent measure. The move is part of a tax reform bill.
Fecoljuegos, the Colombian Federation of Gambling Entrepreneurs (Fecoljuegos) said the decision was based on a fundamental misconception of how stakes in online gambling work.
“The 19 per cent VAT applied to deposits on online gambling platforms is based on fictitious grounds, not a real business variable,” it said in a statement. ”It is comparable to applying this tax to deposits made in the financial sector. The money enters the system, is reused several times, but does not in itself constitute added value or capital income for the financial intermediary.”
The association noted that players’ deposits in online gambling accounts are converted into digital money, which is recycled an average of six times. Approximately 94 per cent returns to players in the form of prizes, while the operator’s gross gaming revenue is around 6 per cent. “It’s on this value, and not on deposits, that any tax burden that aims to be technically fair and sustainable should be calculated,” it said.
It added: “This level of pressure is financially unsustainable. If it were passed on to the user, operators would lose competitiveness compared to international operators who do not face these burdens and who offer better rates, global payment methods, or even cryptocurrencies. And if the operator absorbs it, the sustainability of legal operations is directly compromised, leaving fertile ground for the growth of illegal activities.”
Meanwhile, the Colombian Association of Gaming Operators (Asojuegos) warned that the measure would not only impact on operators but also reduce contributions to healthcare and encourage migration to unregulated international platforms.
Juan Carlos Restrepo, the organisation’s president, told Mañanas Blu: “What the trend has shown in recent months is that the transfer to healthcare that was made directly has decreased. Even the VAT itself that has been collected has lost strength.”
Restrepo said Asojuegos was willing to talk with the government to seek solutions that could avoid compromising the sustainability of the sector or resources for healthcare. It suggested that this could include modifying the tax base so that it does not fall directly on player deposits.
