Colombia’s Constitutional Court has ordered President Gustavo Petro’s government to suspend an economic emergency decree aimed at boosting state finances. The ruling created uncertainty for the country’s budget and gambling regulations. The decree, introduced after a tax reform bill failed in Congress, granted the state executive power to raise funds and included new taxes on online gambling. The suspension will remain in place while the court reviews the legality of the decree in detail.
Colombia’s Constitutional Court Overturns Economic Emergency Decree to Fill COP16.3 trillion Fiscal Deficit: Highlights of the Story
- Colombia’s Constitutional Court has suspended President Gustavo Petro’s economic emergency decree that allowed the government to raise taxes by executive order. The decree was intended to help close a major budget gap and support financing for the 2026 national budget.
- The suspension immediately halts the legal effects of new taxes introduced under the decree, including a 19% VAT on the gross gaming revenue (GGR) from online gambling. Existing tax measures enacted under earlier decrees remain in force while the court reviews the legality of the new decree.
- Government officials criticised the decision, warning of higher debt costs and fiscal strain, while legal experts highlighted rare constitutional concerns raised by the court. A final ruling, expected in the coming weeks or months, will determine the scope of executive emergency powers and future tax policy in Colombia.
Background to the Emergency Decree and Its Suspension
The Petro administration enforced the economic emergency decree in December after a tax reform bill intended to raise COP 16.3 trillion (approximately €15.3 billion) failed to pass in the National Congress. Under the decree, the government was authorised to impose new taxes amounting to COP 11 trillion (about €10.3 billion) to help finance part of the 2026 national budget.
The Constitutional Court announced late on Thursday, January 29, that these emergency powers would be suspended while a final decision on the merits is being issued. The ruling immediately halted the decree’s legal effects. Colombia’s Constitution permits the use of economic emergency powers, but their implementation remains subject to judicial review of necessity, proportionality and conformity with the Constitution.
Colombia’s fiscal position has been under stress since June, when the government increased the fiscal deficit target for 2025 from 5.1% of the national GDP to 7.1%. The move contributed to a drop in sovereign credit ratings by international agencies. The suspension of the decree adds a new layer of uncertainty for several sectors of Colombia’s economy.
Impact on Tax Measures and the Gambling Industry
One of the most closely watched elements of the emergency decree was the introduction of a 19% value-added tax (VAT) on online games of chance. It applied to both foreign and domestic gambling operators and was calculated on gross gaming revenue (GGR). The measure was similar to that implemented in Brazil last month.
Following the court’s ruling, its press office clarified that decrees on wealth, alcoholic beverages and games of chance will have no legal effect until the court reaches a final decision. As a result, the online gambling VAT is currently suspended and cannot be enforced during this provisional period.
The suspension also bars the Petro government from issuing further emergency decrees that would allow tax increases to fill the budget gap approved by Congress. Tax decrees already issued remain in force. The Constitutional Court’s intervention raises questions about the President’s ability to use emergency powers to shape fiscal policies.
Legal Responses and Industry Reaction
Legal professionals and industry representatives reacted swiftly to the court’s decision. Juan Camilo Carrasco, managing partner at Sora Lawyers, noted that the court’s extraordinary measure highlights constitutional doubts about the emergency decree and suggested that such preventive suspension is unusual.
He highlighted the mixed implications for the online gambling industry, describing the suspension as “both a relief and a source of uncertainty,” and urged operators to prepare for a range of outcomes while the court deliberates. Interior Minister Armando Benedetti criticised the decision on social media.
Benedetti said:
It’s not right. By temporarily suspending the economic emergency, the mega-rich are being protected.
President Petro has argued that the suspension would make the country’s debt more expensive and accused the court of causing a “breakdown of constitutional order”, asserting that suspending fiscal measures harms working people. These comments underscore the political tensions surrounding the legal challenge.
The Court’s Verdict and What it Means for the Gambling Sector
Six of the nine magistrates in the Constitutional Court’s plenary chamber supported the verdict. Two magistrates voted against the suspension, and the court’s president, Jorge Enrique Ibañez, did not vote amid suggestions that his public comments had compromised his impartiality.
Magistrate Carlos Camargo, who proposed the suspension, questioned the validity of the signatures of acting ministers in emergency decrees. For now, online gambling operators and other businesses have a respite from the tax measures proposed under the emergency decree.
However, this does not prevent future legislative or executive efforts to revise the tax regime, nor does it determine the outcome of the court’s substantive review. In the coming days, the Constitutional Court is expected to issue a final ruling on the emergency decree.
The decision will have significant implications for executive powers, taxation authority and Colombia’s fiscal policy. The outcome will be closely watched by the business community, legal experts and international observers. The ruling will shape both the legal framework for emergency powers and the taxation landscape for key economic sectors.