The Plenary Chamber of the Constitutional Court of Colombia unanimously annulled Decree 1474 of 2025, which had established a 19% VAT tax on online gambling and spirits, and reduced the threshold for declaring wealth tax to COP 2 billion. As a direct consequence, the high court ordered the National Tax and Customs Directorate (Dian) to reimburse the taxes collected between December 30, 2025, and January 28, 2026.
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Why the Court annulled the Petro government’s decree in Colombia
The questioned decree had been adopted within the framework of the State of Economic, Social, and Ecological Emergency that the government of Gustavo Petro promoted with the aim of collecting approximately COP 11 trillion (around USD 2.8 billion) to finance the national budget. However, the Court determined that this emergency violated the Constitution “by not being based on supervening or unforeseeable facts that would enable the president to use extraordinary powers.”
The ruling, with a presentation by magistrate Juan Carlos Cortés, declared Decree 1474 of 2025 unconstitutional and supported the provisional suspension that six magistrates had voted for since January 29, 2026. Magistrate Carlos Camargo Assís pointed out that the government appropriated powers belonging to other branches of public power without complying with the constitutional requirements that enable a state of exception.
Which taxes must be refunded and which not in Colombia
The court introduced a key distinction between different types of collection. Funds obtained through tax benefits, which allowed nearly 175,000 taxpayers to regularize their tax situation with discounts on penalties and interest, will not be refunded. That amount, approximately COP 1.6 trillion (around USD 400 million), was considered legally consolidated because it corresponds to previous obligations and voluntary payment decisions.
On the other hand, the refund of indirect taxes collected during the decree’s validity was ordered, in particular the VAT applied to spirits, which totals around COP 25 billion (approximately USD 6–7 million). To claim these funds, taxpayers must demonstrate that they effectively bore that cost and did not pass it on to third parties.
Who will be able to recover the money and who will not
The burden of proof required by the Court is high in Colombia. Anyone wishing to claim must present an electronic invoice in their name, certifications proving that they did not transfer the cost of the tax, and, in some cases, bank statements supporting the payment.
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In practice, liquor companies and large distributors are those with the greatest chances of recovering their money, as they have organized accounting records and the amounts involved economically justify initiating the process. For individual consumers, the outlook is much more complex: most do not keep invoices or simply will not initiate the administrative process.
How Dian’s refund mechanism will work
The ruling established that Dian will have 30 days, counted from the notification of the judgment, to apply existing legal mechanisms or create a specific one to manage refunds. Although it is technically possible to cross-reference electronic billing data and make automatic reimbursements, in Colombia the principle of “requested right” (derecho rogado) applies: the citizen must formally initiate the process, and the State is not obliged to seek them out to return the money.
According to legal experts consulted by local media, the most probable scenario is that a significant portion of those approximately USD 6–7 million will end up being consolidated as revenue for the Nation due to lack of claim, simply because those affected will not initiate the process.
A ruling that leaves lessons on the limits of executive power
The decision of the Constitutional Court not only has fiscal consequences: it also sets a clear limit on the use of states of exception as a mechanism to legislate on tax matters without going through Congress. The court established that the extraordinary powers of the Executive require genuinely unforeseeable facts, and that fiscal urgency alone is not sufficient to enable that path.
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