Colombia's Court overturns Petro's emergency, removes iGaming VAT
The Plenary Chamber of Colombia's Constitutional Court has issued a momentous ruling that dismantles the National Government's revenue collection claims under the state of emergency. By declaring Legislative Decree 1390 of 2025 unconstitutional, the highest court has removed from the legal system the pillar upon which President Gustavo Petro sought to implement an aggressive package of fiscal reforms. With a vote of six magistrates against two, the judiciary has determined that the declaration of an economic, social, and ecological emergency lacked the necessary constitutional foundations, thus halting a plan that aimed to inject 11 trillion pesos into state coffers at the expense of various strategic sectors.
This judicial setback has a direct and immediate impact on the entertainment and iGaming industry. The invalidated decree contemplated a severe tax burden for the sector, including the application of a 19 percent VAT on revenues derived from online gaming, a vertical that until now has been a driver of growth and formalization in the country. In addition to digital betting, the failed reform sought to increase the tax on alcoholic beverages from 5 to 19 percent and raise the income tax rate for financial entities to a historic 50 percent, also taxing luxury goods such as yachts and high-displacement motorcycles.
The defense of the separation of powers against the state of emergency
The central argument of the ruling, led by the presentation of Magistrate Carlos Camargo Assis, maintains that the Executive overstepped its functions, violating the essence of Colombian democracy. According to the Court, the National Government attempted to appropriate exclusive powers of the Congress of the Republic without complying with the requirements of unpredictability and exceptionality demanded by the Constitution to enable extraordinary powers. In plain terms, the judiciary considered that the fiscal problems invoked by the Petro administration were not unforeseen events, but situations that should be resolved through ordinary legislative debate.
The Court's declaration was emphatic in pointing out that the decree represented an affront to the functioning of the legislative power, suggesting that the declaration of emergency was a tool to circumvent political disagreements in the Capitol. By revoking the validity of this norm, the court has sent a clear message about the limits of presidential authority, ensuring that far-reaching fiscal reforms must have the consensus and scrutiny of the people's representatives, and not be imposed through decrees of necessity and urgency.
Uncertainty about secondary decrees and the fiscal future
The decision of the Plenary Chamber not only annuls the main decree but also leaves other provisions derived from the emergency in legal limbo. Legislative Decrees 1474 of 2025 and 044 of 2026 have officially been rendered without legal effect, pending a definitive decision on their constitutionality. This means that the tax rules in Colombia return to the state prior to December 2025, temporarily eliminating the additional fiscal pressures that weighed on gaming operators and other taxpayers affected by the luxury reform package.
This ruling represents operational relief for authorized betting platforms, which saw the new VAT as a threat to their competitiveness against the informal market. However, it also raises a question about how the National Government will address the fiscal deficit it intended to cover with these 11 trillion pesos. What is clear is that any new attempt to modify the tax structure of the iGaming sector or digital services must now pass through the rigorous filter of Congress, under the rules of institutionalism and legislative transparency.
Tags: Colombia, Colombia betting, VAT on betting in Colombia, Legislative Decree 1390 of 2025 Colombia