Supplier News

Colombia – Colombian operators complain of growing tax burden

By Phil - 23 January 2015

The National Consortium of Gaming and Gambling Concessionaires (CONNAZAR) has warned that small and medium gaming establishments could go out of business due to a growing tax burden.

CONNAZAR’s legal adviser León Darío Montoya complained to press that the heavy taxation, which has been generated from tax reform on the industry, now equates to three tax value units in Colombia or around US$35 per gaming position per month.

According to Montoya, the measure affects a total of 360 operators in Colombia, the vast majority of which are small size. The result of closures in the future would mean lower tax income for both the national government and the local authorities where they are located, he said.

However, Cristina Arango Olaya, President of the Colombian Gaming Control Board Coljuegos strongly refuted the claims saying that taxes introduced in the last gaming tax reform were not imposed as an additional tax on the industry. Rather the law clarified taxes on bingo halls after operators requested that Coljuegos draw a clear distinction between bingo and slot machines she said. She also said that gaming tax revenue generated for the Health Service by the Gaming industry was not at risk – a statement which was backed up by last year’s figures as tax income generated via licence fees increased by 13.1 per cent.

“First a VAT rate of five per cent was imposed in 2004, which was later increased to 16 per cent in 2009 and from 2012 this became permanent,” Mr. Montaya said. “In addition an average of 12 percent of gross revenues is applied for rights; one per cent is applied as an administrative fee, a corporate income tax of 9 percent is applied plus an income tax of 25 per cent, excluding the wealth tax or surcharge paid by large companies. That is a choking burden on industry.”

While the President of Coljuegos acknowledged that there was a higher tax burden, she also said that the industry does benefit in other ways. “Income tax can now be deducted from the awards paid in cash which are less than $50m pesos. If the sector is taxed more this is because games of chance are a state monopoly and offering these services is a privilege, “she said.