A new tax regulation in Colombia could slash the government’s gaming tax revenue by up to 50%. The impact of the tax cut will be felt mostly in slot machines, virtual sports, horse racing, and bingo.
Coljuegos lays out the plan
According to the national gaming industry regulator Coljuegos, the collection for gaming tax could be reduced by 44% to 50% annually. The new law is a part of the National Development Plan accepted by the Congress in April. The plan is the idea of Colombian President Ivan Duque, which details the socio-economic spending of his government.
G3 Newswire reported that the government is planning to change the rules related to gambling operators in the country, which could make gambling revenue fall by 50%. Most of the revenue collected by slot machines, virtual sports, horse racing, and bingo goes to fund the country’s health system, and with a steep decline, the system may be in trouble.
According to the regulator, the revenue may decrease from $345,000 million to anywhere between $195,000 million and $172,000 million.
The gambling industry disagrees
Fecoljuegos is the trade body for the Colombian gaming industry. Its president Evert Montero Cardenas recently said that he doesn’t agree with the regulator’s assessment. He pointed out that it would bring a large influx of new gambling operators in the country. He said, “We estimate that if it falls, it would be around 20 percent––about $70,000 million, but there are many alternative measures that could be taken so that it does not fall so much.”
He also expressed his enthusiasm about the new rules, suggesting that it would help in formalizing the country’s gambling sector. As businesses will finally be free from a high tax burden, they will be able to prosper.
Gambling operators in Colombia have breathed a sigh of relief as the new regulations will not charge tax on machines that don’t generate sales. Earlier, the presumptive income scheme used to charge machines on the assumption that they would generate an income for the operators. The operators will be paying 12% of their gross revenues for operating rights if they comply with the industry standards and minimum connectivity. The regulator will decide these minimum compliance standards by the middle of next year.
However, the new regulation will take effect on January 1, 2020. This will reduce the tax burden much before compliance is defined.