In a historic first for Colombia, the Constitutional Court has vetoed an emergency economic decree, affecting gambling tax as well.
In September, President Gustavo Petro and his cabinet tabled a proposal aiming to raise around COP 26trn ($6.5bn) extra to patch up deficits in the 2026 budget.
Criticised for being overtly revenue-oriented and unjust given that existing funds still remained unspent, in November the government agreed to scale back the target to COP 16trn, trimming controversial taxes on church activities and VAT hikes on fuel, but leaving in proposed changes to tax iGaming 19% VAT on GGR for both local and foreign operators.
However, the Senate’s Fourth Economic Committee still rejected the proposed tax bill, leading to an emergency economic decree being finalised and signed by the entire Petro cabinet to address the $6.5bn fiscal shortfall just before Congress went into recess on 16 December.
This would’ve not only enacted the previous measures to fund the treasury, including the 19% GGR-based iGaming VAT, but would’ve essentially allowed Petro to use extraordinary powers to bypass the break period for 30 days, implementing extra tax measures whenever he deemed necessary.
Court concerned over decree’s validity
The Constitutional Court has now moved in to suspend the decree, putting all provisions on hold until the judiciary conducts an in-depth review of its legitimacy.
Moreover, the legitimacy was put under question due to the signatures of several Ministers, which the Court is unsure whether they carry the sufficient legality to impose such emergency measures.
This is a direct result of Petro’s frequent internal restructures, which has seen him reshuffle his cabinet 15 times since taking office 2022. The Ministers in question were interim Ministers at the time of the decree’s signing, leading to the Court’s veto – which, as a reminder, is not a final ruling.
Juan Camilo Carrasco, Managing Partner of Sora Lawyers, commented: “This unprecedented measure reveals serious constitutional concerns about the emergency decree. Justice rarely adopts preventive measures of this type, which suggests that the decree could face significant obstacles in its final review.
“For an industry that is already in a complex regulatory process, this generates both relief and uncertainty. Operators must prepare for possible scenarios while the Court deliberates.”
President Petro has defended the decree, stating: “We are facing a real breakdown of constitutional order, simply because there is a government that is friendly to working people. As long as it remains in power, any debt costs will not be paid by working people.”