The National Corporation of Entrepreneurs of Games of Chance and Luck issued a statement against the initiative called "financing law".
Colombia.- While the Colombian government, through the Ministry of Finance, leads the tax reform or financing law project, which seeks, among other points, to increase taxes on betting houses, the guilds representing the gaming sector accumulate criticisms against the initiative.
To the position of Asojuegos and Fecoljuegos, a statement from the National Corporation of Entrepreneurs of Games of Chance and Luck (Cornazar) was added, titled: "May the financing law not extinguish the industry of games of chance and luck".
"From Cornazar we remain firm, as a guild representing more than 90 legal games of chance and luck companies in Colombia, in supporting and protecting the entire business fabric of the industry. We will continue to carry out the technical tables and the approaches that are necessary with the national government, in order to show the reality of the gaming sector in the country", the statement indicates.
And it adds: "It is essential to guarantee the protection and formalization of this economic sector. It is necessary to avoid regression and any new practice that limits growth, competition, and legal business competitiveness in the country".
In this sense, Cornazar assures that "more tax burdens on formal companies do not generate a favorable change for the reduction of informality and unemployment". And they maintain that "these factors are directly related to the progress achieved in the legal, transparent, and responsible dynamics of the sector".
For the guild representing more than 90 companies in the sector, "unfavorable economic and social changes would bring setbacks due to the imposition and increase of tax levies on the sector".
And they conclude: "From Cornazar we make a call to the national government to ensure that the commitment to the sustainability and growth of the gaming industry continues.
It is worth remembering that one of the novelties of the bill that put the gaming sector on alert was the proposal to raise taxes on online gaming platforms.
The project proposes a 19 percent VAT for games of chance and luck operated exclusively online. Today, these platforms do not pay this tax and would be on the same level as localized games (casinos).
In the justifications of the project, the government says: "Games of chance can be considered luxury goods", and adds: "The current VAT exclusion for online gambling creates a distortion in the market. This is because these digital services enjoy preferential treatment compared to physical establishments that offer gambling and are already taxed with this tax. This difference in tax burden can lead to unfair competition and market distortions, where consumers might opt for online platforms to avoid paying taxes, negatively affecting physical operators who comply with their tax obligations".
Furthermore, the document explains that "by applying VAT to online platforms market conditions are equalized, promoting fair and balanced competition among all operators, regardless of the channel through which they offer their services".
According to the explanatory memorandum of the Ministry of Finance, "taxing online gambling would generate tax revenues of about $2.1 trillion in 2025 and would not have inflationary impacts on the economy".
Another article of the document presented by the Ministry of Finance on September 10, would modify article 317 of the Tax Statute, which regulates occasional gains from lotteries, raffles, bets, and similar.
In that sense, it seeks to set "at 25 percent the rate of tax on occasional gains from lotteries, raffles, bets, and similar". According to the current Tax Statute, this tax is set at 20 percent.
Asojuegos and Fecoljuegos, guilds that group the main companies of the games of chance and luck sector in Colombia, categorically rejected the insinuations made by the Minister of Finance, Ricardo Bonilla, about alleged pressures on the Congress of the Republic during the discussion of the financing law project.
"Our purpose has been to inform transparently and substantively about the serious economic and social impacts that these measures would generate in a formal and regulated industry. If this is considered pressure, then we are seeing our right to participate democratically and to expose the disastrous consequences that this change of rules would bring, not only for our sector but also for the contributions to the health of Colombians", affirmed Juan Carlos Restrepo, president of Asojuegos.
For his part, Evert Montero, president of Fecoljuegos, highlighted the efforts made by the guilds to clarify the functioning of the activity: "We have advanced a series of actions before the National Government, including meetings with the DIAN and with the Third Commission of the Chamber of Representatives, to explain in detail the mathematical and economic model of the sector. Our objective has been to correct erroneous figures that do not reflect the reality of the industry and contribute to informed decision-making".
For Restrepo and Montero, the lack of openness and understanding by some government entities is concerning and regrettable. "Despite our efforts, there is an evident lack of knowledge about the activity, which has prevented the establishment of working tables where we can demonstrate, in greater depth, the impact that these tax burdens would have on the sector", Montero affirmed.
According to the representatives of these two guilds, there are three concerns about the reform being proposed. The first is about the VAT levy on the online gaming sector, the second is the increase in the presumptive VAT rate in localized games, and the differential rate of occasional gain of 25 percent.
"The proposal to apply VAT to the online gaming segment would severely affect its competitiveness against platforms operating outside the Colombian jurisdiction. While globally players receive a return between 90 and 96 percent, in the country this range would decrease to levels between 72 and 78 percent, encouraging migration to foreign platforms. This segment, regulated since 2016, has contributed more than COP 1.2bn (USD 272m) to the health system and has energized industries such as sports and media", stated Evert Montero.
He also highlighted that doubling the presumptive VAT rate from 20 UVT to 40 UVT would represent a setback in the formalization of the sector. "This tax change would jeopardize these achievements".
Finally, Juan Carlos Restrepo stated that the differential rate of occasional gain of 25 percent would increase the tax burden on the sector and promote marginalization and illegality, contradicting the efforts made to comply with current regulations."What we are doing is providing the technical and legal elements necessary to demonstrate that a measure of this nature would wither the sector", concluded Restrepo.
