From the Colombian Association of Game Operators, it was assured that the implementation of the tax would cause users to migrate to illegal platforms.
Colombia.- The Colombian Association of Game Operators (Asojuegos) expressed its rejection of the tax reform promoted by the Colombian government, which, among other points, proposes the creation of a 19 percent VAT for online betting.
In a statement, the organization warned that the proposal of the National Government would have "devastating" consequences for the operations of legal games in the country and for the sustainability of the resources allocated to the health system.
According to Asojuegos, the goal of raising COP12 trillion (USD2.800m) through VAT is "impossible", because in online betting a user "makes a deposit into their player account and with that same amount can bet several times, reaching an average of up to six times the original amount deposited".
"The Government's proposal, where they estimate bets of COP35.6 trillion for the year 2023, does not tax real money, but credits to participate in the games. The real revenues of the operators, who have contracts with Coljuegos, were 2.1 trillion for the same year. To try to apply a VAT that would equate to 100 percent of the resources handled by the operators is completely unfeasible," they explained in their statement.
The guild pointed out that since the regulation of online games in 2015, the sector has grown exponentially in Colombia, standing out as a benchmark in Latin America. According to figures from Asojuegos, transfers to the health system from online game exploitation rights went from COP3.496m (USD821.952) in 2017 to COP317.977m (USD74.7m) in 2023, a growth of 914 percent.
In this regard, Asojuegos emphasized that of the 100 percent of the bets, 93 percent is returned to the player, so the gross profit margin is 7 percent on average.
"If VAT is applied, the return to the player would be reduced from 93 percent to 71-75 percent, this would cause players to migrate to illegal or international platforms that are not subject to these tax burdens, which would increase informality and decrease the sector's revenues," said Juan Carlos Restrepo, president of the association.
Asojuegos stressed that a new tax would make the business model unsustainable, affecting investment in technology, employment, and local advertising, with negative repercussions on the country's economy.
Finally, they requested the National Government to open a space for dialogue to find alternatives that do not affect the competitiveness of the sector or the revenues it generates for the country and despite the challenges, the guild reiterated its commitment to fiscal transparency and its fight against illegality in the gaming industry in Colombia.
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When the Executive's intention to implement this tax was known, the gaming sector firmly opposed the tax measure. The Colombian Federation of Games of Chance (Fecoljuegos) issued a statement in which it assured that "a tax now would make the online gaming sector unviable" in Colombia.
In this regard, they stated that a new burden would leave them breathless to help move the economy and, mainly, to contribute to health, since this type of activity finances part of the system.
On the other hand, in the statement, Fecoljuegos referred to the effect that the implementation of the tax could have on employment, since, according to the statistics presented by the federation, the activity generates more than 150,000 jobs between direct and indirect among online game operators and other companies that are part of the value chain, where many are vulnerable population, single mothers, diverse population or with disabilities.
