Constitutional court rejects tax hike in Colombia
Constitutional court rejects tax hike in Colombia
Colombia’s Constitutional Court has provisionally suspended the economic emergency decree published by the Colombian government with which the executive branch sought to raise 16.3 trillion pesos (about US$ 4.465 billion dollars) to complete the 2026 national budget.
“The Court provisionally suspends Decree 1390 of 2025 ‘By which the State of Economic and Social Emergency is declared throughout the national territory’, while a substantive decision is issued,” the high court said in a statement.
The Court will continue to study whether the government decree is unconstitutional or not, since the presiding magistrate, Carlos Camargo, believes that the executive’s initiative could cause “irreparable damage” to the country.
The decision means that Petro’s emergency order has been put on hold while the constitutional court examines its legality further. It is the first time in Colombian history that the constitutional court has overruled a presidential order.
In November Colombia’s Senate rejected the tax reform proposal promoted by President Gustavo Petro, which represented a significant setback for the Executive. Crucially the reform would have made the 19% Value Added Tax (VAT) on online gambling permanent.
However, in December Colombian Finance Minister Germán Ávila confirmed that the government would implement new taxes and tax adjustments in response to the economic emergency caused by the recent funding shortfall, a consequence of the failure of the financing law in Congress. After declaring a 30-day state of economic emergency on December 22, Petro published decrees with the new taxes a week later.
During a press conference, Ávila stated that the tax package included changes that would significantly affect the wealth of individuals and strategic economic sectors. He emphasized that the intention was to urgently compensate for the fiscal deficit created by the fall of the main revenue-raising tool.
Regarding gambling, the finance minister noted at the time: “We believe that in terms of VAT there is a possibility of maintaining the criteria used during the economic emergency with the 19% tax for games of chance. We have taken care to set this rate at 19%, discounting or managing a taxable base that considers the reduction of the prizes awarded.”
