Colombia’s Constitutional Court has struck down a 19% value-added tax (VAT/IVA) imposed on online betting under the government’s 2025 economic-emergency framework. This removes the additional levy on wagers placed through digital gambling platforms.
The ruling invalidates Decree 1474 of 2025. The Court found that the measure exceeded the legal limits of emergency economic powers and failed to meet constitutional standards required for extraordinary tax measures. As a result, online betting taxation will revert to the previous VAT structure that applied before the emergency decree was introduced.
Court Rules Emergency Tax Was Unconstitutional
The Constitutional Court determined that the VAT increase was not legally justified under Colombia’s emergency regime. This regime allows the Executive to enact temporary measures only under strict constitutional conditions. The Court concluded that Decree 1474 did not meet those requirements and therefore could not remain in effect.
The decision represents a major legal and financial setback for the government. The government had sought to raise additional revenue through the betting sector during a period of fiscal instability.
DIAN Ordered to Create Refund Mechanism
In addition to annulling the tax, the Court ordered Colombia’s tax authority, DIAN, to establish a formal refund process for VAT collected during the period the decree remained in force.
DIAN will not issue refunds automatically. Only taxpayers who can demonstrate that they directly bore the VAT burden can submit claims. This will likely include registered operators, legal entities, or businesses that paid VAT tied to betting activity or platform transactions while the decree remained active.
Government estimates suggest a substantial share of collections under the emergency tax package came from the gambling and betting sector.
Tax Reversal Follows Failed Reform Effort in Congress
The ruling follows broader political tension over Colombia’s fiscal strategy. In November, Colombia’s Senate rejected a major tax reform promoted by President Gustavo Petro. One of the most controversial provisions of that proposal was the plan to make the 19% VAT on online gambling permanent.
After the reform failed, the government moved to implement emergency measures instead. Finance Minister Germán Ávila confirmed in December that new taxes would be introduced to address funding shortfalls caused by the collapse of the financing law in Congress.
Emergency Decrees Introduced After Petro Declared Fiscal Crisis
President Petro declared a 30-day state of economic emergency on December 22. A week later he issued decrees introducing new tax measures, including the VAT increase on online betting. The Constitutional Court’s decision now effectively dismantles one of the most significant revenue-generating components of that emergency package.
Major Implications for Colombia’s Betting Sector
The annulment is expected to ease tax pressure on Colombia’s regulated online betting market. This will improve operator margins and potentially stabilise player activity. However, the requirement for DIAN to manage refunds could create administrative complexity and lead to disputes over eligibility and documentation.
The ruling also signals stricter judicial limits on the government’s ability to impose sector-specific taxes through emergency powers. This may shape how Colombia approaches future regulatory and fiscal measures targeting the gambling industry.
