On December 22nd, 2025, president Gustavo Petro’s cabinet issued Decree 1390/2025 to declare an economic emergency in Colombia for a period of thirty days. The reasoning behind this decision, according to president Petro, is that Colombia is facing a fiscal crisis after Congress did not approve the government’s proposed fiscal reforms on two occasions in the past year. The preface of Decree 1390 also quotes reasons for the economic emergency related to increased internal debt, post-pandemic economic difficulties (at a worldwide level) and increased expenses with no income to balance the country’s economy overall.

Even though the economic emergency can be declared void (we know this can be confusing, but keep reading for a detailed explanation), it’s still important to understand how this mechanism of economic emergency works and how certain taxes could potentially increase, thus affecting certain economic sectors and business models.

What Does an Economic Emergency Even Mean?

Article 215 of the Colombian Constitution allows the president to declare a state of economic, social or ecological emergency or of major public disaster for thirty days which can be extended for a total maximum period of one year. The decree that declares the state of emergency must be:

1. Reasoned
2. Signed by the President and all the ministers
3. Exclusively aimed at addressing the crisis and preventing the extension of its effects
4. Related to matters that have a direct and specific connection with the state of emergency
5. And it may, on a temporary basis, establish new taxes or modify existing ones, which shall cease to apply at the end of the following fiscal year, unless Congress, during the subsequent year, grants them permanent status.

In this particular case, the President presented a reasoned decree, signed by himself and all his ministers, in which he aims to establish new taxes and modify existing ones.

However, thanks to the principle of balance of power established in the Colombian constitution, the decree still has to face two additional controls:

1. The Constitutional Court must exercise control over the decree’s form, content, purpose, connexion with the causes that led to the state of emergency and, overall, use their criteria and case law to ensure no arbitrary decisions take place and/or are masked under a state emergency declaration.
2. According to Article 215 of the Colombian Constitution, Congress must also analyze the proposed decree and:
   • Examine, for a period of up to thirty days, the reasoned report submitted by the Government on the causes that led to the state of emergency and the measures adopted, and shall expressly pronounce on their advisability and timeliness
   • May repeal, amend, or supplement the decrees in matters that are ordinarily within the Government’s initiative, as well as exercise its constitutional powers (through specialized constitutional committees)
   • Convene on its own authority if not called together by the National Government

Current State of Affairs

The decree declaring the state of emergency was issued on December 22nd, 2025 which falls right between the judicial vacancy period in Colombia (from December 20th, 2025 to January 10th, 2026), a time in which judges and workers in the Judicial Branch of government are in collective leave (although some courthouses remain open for matters related to fundamental rights and habeas corpus).

The Constitutional Court clearly stated they would review the decree only once the judicial vacancy period was over. Thus, Decree 1390/2025, which declares a state of economic emergency in Colombia, can be declared void by the Constitutional Court after January 10th.

In the meantime, the government has issued decrees, the first and main one being Decree 1474/2025, that aim to establish and modify taxes in certain cases:

Proposed Taxes

Tax	% / Rate (or amount in COP)	Description
VAT on liqueurs and wines	19%	General VAT rate raised from the preferential 5% to 19% for liquor products (excluding beer)
Consumption tax on cigarettes	$11,200 per pack + 10% ad valorem Vapes: $2,000 per ml + 30% of retail price	Increased consumption tax for cigarettes and vapes with both a fixed amount per pack and a percentage component.
VAT on online gambling	19%	VAT applied on gross revenues from online games of chance (previously had benefits and exemptions)
VAT on luxury goods (vehicles, yachts, aircraft, etc.)	19%	National consumption tax raised to general VAT for high‑end items
Wealth (patrimony) tax (base threshold)	Progressive: 0.5%–5%	Applies to individuals/entities with net wealth ≥ 40,000 UVT (approx. ~COP 2 billion), with rates rising up to 5% for the richest
Surtax on banks’ income tax	15% extra	Financial institutions pay an extra 15 percentage points on the general corporate income tax (raising total to ≈50%)
Temporary extractive sector levy (oil and coal)	1%	A temporary 1% tax on first sale/export of crude oil and coal
Tax on undeclared/omitted assets (normalization)	19%	A levy at 19% to encourage taxpayers to legalize previously unreported assets or remove nonexistent liabilities
VAT on imports through postal services surpassing USD $ 50	19%	Decrease threshold from the prior USD $ 200 limit

Final Thoughts

Ultimately at CLE, we choose to look at the best case scenario for our clients, so our final takes are:

1. Constitutional and Legislative controls prevent arbitrary government decisions, thus making Colombia a stable investment destination
2. Even though some of the tax increases may seem harsh, they are all temporary and subject to the state of emergency, so long-term effects are, in our opinion, unlikely to take place (especially prior to presidential elections)
3. New and improved compliance processes are still necessary to be on the safe side, even though the Constitutional Court might declare the decree void.

In short: keep your hopes up, nothing changes for now and so long as you stay compliant, there shouldn’t be any reason to be concerned. In any case, at CLE we’re here to walk along with you every step of the way.