Colombia's new VAT: key insights for iGaming operators and investors
The recent removal of VAT exemption for online gambling in Colombia has shaken the iGaming industry. The measure, implemented under a state of internal commotion, has generated uncertainty among operators, who warn about its application’s technical, legal, and fiscal challenges.
To better understand the impact of this decision and its implications, SiGMA News spoke with lawyer Tatiana Mara Vsquez Pastrana, a legal expert in gaming law and co-founder of V&I Legal Consultants. With over 16 years of experience in law and nearly a decade in the gaming sector, she has closely followed the evolution of the Colombian regulatory framework and worked with operators, regulators, and other key stakeholders. In this interview, she analyses the sector’s challenges with this new measure, the concerns of operators, and possible strategies to mitigate its impact.
You have had a long career in the gaming and legal sectors. What do you consider the biggest challenge you have faced in these years, specifically with this decree?
“Currently, the online gaming industry faces considerable challenges. The removal of VAT exemption for online games within the framework of internal commotion has generated ambiguous regulation, with significant gaps due to the lack of understanding of the technical reality of the industry and its business model.”
“Colombia has always been a reference in regulation in the region, among other factors, because its authorities have maintained a close link with the industry, creating spaces for discussion and collaboration. However, it is worrying to see that in this process, the concerns and difficulties of the industry have not been adequately addressed.”
The lawyer also pointed out that, despite the industry’s efforts, the lack of an adequate grace period has made it difficult to comply with the new regulations. Adjusting systems, assuming additional costs, and ensuring compliance with licenses in such a short time represents an enormous challenge with considerable impact on operations. The combined tax burden could potentially reach a staggering 70.5% when factoring in all levies, making it incredibly difficult for operators to remain competitive.
After more than 16 years in law and almost a decade in the gaming industry, why do you think the authorities made this decision?
According to Vsquez, eliminating VAT exemption in the online sector primarily responds to the National Government’s need to increase tax collection. The lawyer explains that the decrease in revenue and low budget execution last year has led to an urgent search for resources to finance government programmes. This includes .
“However, the specific application of VAT to the online industry reflects a lack of understanding of the operation and particularities of the sector. Collection figures have been estimated based on an interpretation that does not consider the true income of gaming and economic activity and its costs.”
The legal expert indicated that VAT in the online industry reflects a lack of understanding of its functioning and characteristics, with erroneous figures that do not consider the actual costs of the sector. She emphasises that VAT exemption has been key in the fight against illegality. Its elimination could increase non-regularised operations, putting Colombia at a disadvantage compared to countries in the region that are advancing in regulation.
How will this measure affect operators already in operation? What are their main fiscal, operational, and legal challenges?
“Implementing this measure represents a significant challenge for operators already in operation. Given that these systems operate through duly certified technical gaming platforms developed under the operating conditions established by the decree introduces substantial changes to these conditions.”
To illustrate the impact of this new regulation, before the decree, the concept of deposit referred to the balance available for betting. The change now includes tax. Vsquez mentioned that, although seemingly minor, this change forces the system to modify and separate the tax from the value available for betting, representing a significant modification.
“At a technical level, operators must develop their platforms in critical elements of the technical gaming system such as gaming accounts, user accounts, and payment methods. Once the deposit is received, the tax value and the value available for betting can be disaggregated. In this way, the extraction, transformation, and loading process can be carried out in the reporting system so that Coljuegos and eventually the tax administration can perform the corresponding audit.”
Vsquez comments that platform adjustments require a technological process that usually takes between 4 and 8 weeks, in addition to certification time. Despite this, the decree establishes that VAT collection must begin within five business days, which is difficult to understand given the complexity of the process.
“It is important to highlight that the measure imposed by Decree 175 of 2025 implies earlier adjustments. No authorised technological platform had this development, as VAT was exempt in this operation. This is a novelty, as it is a measure dictated in a state of exception that the Government has unexpectedly declared. The taxable base on which the tax would be imposed was unknown.”
Operators face operational challenges and new fiscal obligations such as VAT responsibility, declaration and payment, and accounting management. Concession contracts with Coljuegos, signed under different conditions, give rise to legal challenges as they did not account for these changes. Tatiana Mara Vsquez Pastrana emphasises that no clear measures have been established to implement these modifications, which creates uncertainty about their impact on contractual relationships.
Do you think there is room for the sector to dialogue with the Government and propose adjustments?
“From the industry, we hope that spaces for dialogue will be generated in which the activity and functioning of the sector are thoroughly understood and in which the Government is receptive to the proposals and concerns that we raise. Only then can tax and technical regulations align with the sector’s reality.”
For those considering entering the Colombian market, what new costs and obligations should they consider due to this decree?
Vsquez points out that, despite the new imposition of VAT, Colombia maintains its position as one of the most stable and secure markets in Latin America regarding regulation. The expert in gaming legislation emphasises the solidity of the Colombian regulatory framework, despite recent fiscal changes.
“We trust our institutions and hope this measure will have a temporary validity following the nature of internal commotion. Likewise, we are attentive to the pronouncement of the Constitutional Court, which could declare the unconstitutionality of this measure.”
“The gaming industry has proven to be resilient, and we trust that we will successfully overcome this crisis to ensure the sector’s sustainability and continue driving its growth.”
The legal consultant advises potential investors to thoroughly analyse the financial impact and adjust their business models. She suggests strategies such as cost optimisation, product diversification, and loyalty programmes to maintain competitiveness and prevent player migration to illegal platforms.
In line with Tatiana Vsquez’s observations on the importance of adapting to regulatory changes, investors in Colombia must adjust to the new fiscal landscape. This involves conducting a detailed analysis of the economic impact and adjusting the business model to maintain competitiveness. Cost optimisation, product diversification, and loyalty programmes can help mitigate migration risk to illegal platforms. Ultimately, success will depend on innovating and satisfying customers in this dynamic regulatory environment.
