(AsiaGameHub) –   Gustavo Petro has suffered a major political blow as Colombia’s Humana government has been mandated to refund “emergency taxes” that were found to be unconstitutionally implemented.

The latest ruling from the Constitutional Court of Colombia shows that judges have unanimously decided that taxes imposed by the administration, including a 19% VAT, must be returned to those who paid them.

This decision comes after the annulment last week of “emergency taxes” authorized by President Petro for 2025, which were struck down because the executive branch failed to satisfy constitutional requirements for emergency powers.

It is estimated that the Humana administration faces a COP 25bn (€5.5m–€6m) liability, mostly related to the 19% VAT on alcohol and online gambling purchases during the decree’s enforcement.

The 19% VAT, which began in March 2025, was widely criticized by the online betting industry as an overreach by Petro to fund healthcare and welfare projects in the 2026 Budget.

Petro had hoped to raise between COP 11 trillion and COP 16.3 trillion (€2.5bn–€3.8bn) through these emergency measures. This setback is now considered a turning point for the government, particularly with the presidential election set for 31 May.

The duration of the 19% VAT has caused significant upheaval in the online gambling sector. International operators scaled back their investments, with Codere announcing it would halt further capital in Colombia until the regulatory landscape became more stable.

Trade organizations Asojuegos and Fecoljuegos criticized the government’s actions, noting that DIAN tax collections from gambling fell by nearly 30% after the VAT was introduced. Meanwhile, the regulator Coljuegos reported its first funding gap for public health and education programs funded by gambling revenues.

Following the court’s decision, the DIAN tax authority must set up a system to refund money collected from late December 2025 to January 2026. However, the actual return of these funds is uncertain, as individuals must prove they personally paid the tax, creating a heavy administrative task.

Significantly, the Court made a distinction that limits the total financial damage. Funds gathered through tax incentive programs—totaling roughly COP 1.6 trillion (€350m–€400m)—will not be paid back. These payments involve about 175,000 taxpayers who settled previous debts under special terms, which the Court ruled as “legally consolidated,” allowing the state to keep most of the revenue.

The Court ruled that the emergency decrees violated constitutional principles of “exceptionality” and “unforeseeability,” emphasizing that tax policy must be reviewed and approved by Congress. Consequently, the decrees are now void, limiting the president’s ability to bypass the legislative branch.

Despite the order to repay, experts believe only a small part of the COP 25bn will be recovered, as Colombia’s “requested right” system requires taxpayers to file claims manually rather than receiving automatic payments.

For Petro, the ruling is both a fiscal obstacle and a structural setback for his tax plans. Without emergency powers, the government must use traditional legislative paths as Congress continues to discuss new tax frameworks for online gambling and other industries.