New plans in place could cut tax revenue by as much as half for the slot sector according to regulator Coljuegos. In April the Colombian Congress approved the National Development Plan put forward by Colombia’s President Ivan Duque.
In it he sets out socio-economic spending for his administration. Parts of the plan could reduce revenues as rules governing the conditions of gambling companies that operate in the country will change. With the new adjustments, the revenue generated by gambling could fall by as much as up to 50 per cent, according to estimates made by Coljuegos, in a regulatory impact analysis.
The impact will be felt most of all in the bingo, horse racing, virtual sports, and slots sectors, all of which help finance the Colombian health system. The regulator reported that the collection could stand between 44 per cent and 50 per cent less annually, going from $345,000m to a value that could range between $195,000m and $172,000m citing figures in a Ministry of Finance draft decree.
However, Evert Montero Cárdenas the President of the Federation for Casinos and Bingo Businesses (Fecoljuegos) said that he disagreed with the assessment put forward by the regulator as new measures will bring in a large number of new operators.
Talking to newspaper PortaFolio he said:”We estimate that if it falls, it would be around 20 per cent – about $70,000 million, but there are many alternative measures that could be taken so that it does not fall so much,” he said. Cárdenas added that “this measure will allow a large part of the sector to be formalised’ and that businesses will be able to prosper due to the end of the high tax burden.
The change in gaming rules will do away with the presumptive income scheme rate which means that operators currently have to pay tax even if the machines do not generate sales. The changes to the National Development Plan implies that from now on operators will pay exclusively for operating rights of 12 per cent on gross revenues as long as they meet the minimum connectivity and industry standards which Coljuegos, would have until mid-2020 to define. This takes into account that regulation is currently being drafted and would take effect on January 1, 2020 and gives the entity six months to set the conditions for all land based games that operate in the country.
Ultimately, the initiative seeks to “broaden the base of elements (of the sector), modernise the slot parlour sector, combat illegal operation and promote the professionalisation of the gaming industry,” according to the wording of the new project.
“This is the only chance that the industry will not die, because in Colombia the number of machines and contracts has been falling, and contributions have been reduced. Although the collection is reduced by this lower rate, the figures can be netted together, taking into account that the lower burden will increase investments, and the collection, through formalisation and regularisation,” said Montero.
Illegal gambling has plagued the industry for many years. The measure aims to curb a black market that generates $ 1.5 billion every year. According to the most recent estimates there could be as many as 49,036 machines operating illegally in Colombia. About 40 percent of gambling in Colombia is illegal, meaning that the state loses between $700bn and $800bn, – almost US$250m according to gaming regulator Coljuegos.
President Ivan Duque’s $325 billion spending plan determines how the administration plans to develop the social and economic landscape in the coming four years. The plan identifies a range of aspects of Colombian society that are in urgent need of government attention.