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Colombia has proposed waiving gambling’s value added tax (VAT) exemption for the next 90 days to fund relief efforts for the Catatumbo region.

María Juanita Villegas, who serves as the vice minister of finance, presented the plan to Congress alongside two other measures to raise funds for the crisis.

The 19 percent VAT tax is only applicable for 90 days, and is expected to help raise COP1.06trn ($252.3m). Of that, VAT on games of chance is expected to raise COP519bn ($123.2m).

The Catatumbo region has faced a humanitarian crisis since mid January due to violence between National Liberation Army (ELN) rebels and factions of the Revolutionary Armed Forces of Colombia (FARC).

There have been dozens of casualties and, as of last week, more than 30,000 people had been displaced.

Catatumbo produces the highest volume of cocaine in the country and is a hub of money laundering and human trafficking.

The chaos could be the final straw for President Gustavo Petro’s beleaguered “Total Peace” plan, which modified public law order to allow his government to negotiate with armed groups.  

With the government in need of cash, gambling appears to be firmly in the President’s crosshairs.

Colombia attempted to add a more permanent 19 percent VAT tax to online gaming in the 2025 budget bill, which failed. The budget bill itself was also later defeated in its entirety.  

Had it succeeded, it would have reversed the 2016 tax reform law that excused online gambling operators from paying VAT in order to help the then freshly launched market flourish.

At the time of the budget, Juan Camilo Carrasco, a lawyer in Bogotá at Asensi Abogados, told ���ĺ������� that the failure of Petro’s tax plan was “super dangerous, because now the online gambling business, it's definitely going to be in his sights”.

Now, he said, the proposed temporary VAT-linked relief plan is “just political targeting from a stubborn President with lack of support”.

Under Colombian law, the tax, if imposed, could be extended twice for a further 90 days each time.

Carrasco explained, however, that taxes created during a State of Internal Disturbance must be temporary and clearly linked to the duration of the state of exception.

This ensures they do not become permanent burdens for tax payers once the emergency situation has been overcome.