Colombia Tax Reforms Leave Gambling Winnings Mostly Unchanged

August 18, 2022
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​​​​​​​Gambling’s central importance to funding the Colombian healthcare services has spared it from the sweeping reforms to occasional gains taxes proposed by new President Gustavo Petro, according to a local legal expert.

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Gambling’s central importance to funding the Colombian healthcare services has spared it from the sweeping reforms to occasional gains taxes proposed by new President Gustavo Petro, according to a local legal expert.

Juan Camilo Carrasco, the head of the gambling practice at Asensi Abogados in Bogotá, told VIXIO GamblingCompliance that he was not surprised that gambling winnings were carved out from the new President’s plan to increase many taxes.

“The funds paid by the gambling industry to the government are part of an important source for the health system, which is one of the key elements of the social benefits and welfare of Petro’s government projects,” he said.

“However, bear in mind that the gaming duties paid by operators are not considered a tax but a type of royalty; therefore, gaming duties are not stated into the tax code.”

Gambling did not entirely escape the tax changes, however.

Although the tax of 20 percent on gambling winnings at the time of payment remains the same, Article 306-1 of the tax code, which dictates the tax on prizes for horse and dog betting, has been repealed.

The article stated: “Prizes for equestrian or canine bets and contests, obtained from horse or dog races, at legally established racetracks or dog tracks, whose value does not exceed 410 UVT, are not subject to occasional earnings tax or withholding at source.”

The proposed repeal means that all winnings on bets from horse and dog races and events will now be subject to the 20 percent tax rate.

According to Carrasco, the plan explains that exemption for race bet winnings was repealed because a 410 UVT exemption for winnings on horse and dog events “does not constitute a recurrent source of income for the persons and therefore is not necessary to guarantee the welfare or minimum vital income of the individual … there is no justification of social benefit to support this tax benefit”.

Despite that rationale, Article 404-1 remains unchanged, which governs lotteries and raffles. It says that a winnings tax will be paid only “when the value of the corresponding payment or credit to the account is greater than 48 UVT [~$439]”.

UVT is a monetary unit used in Colombia tax regulations, which for the year 2022 is valued at 38,004 Colombian pesos ($9.15). A 410 UVT exemption is about $3,751.

Petro’s government aims to collect $5.85bn in 2023 to finance social programmes and to settle government debts, according to the documents his government has submitted.

Part of his overall ethos of evening out the social order is to waive tax benefits for the top 2 percent of earners, which officials have identified as those who earn more than $2,413 per month.

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