Hi Asma, I'm from venezuela and I had never heard that expression but I can say that Burlao is a degradation of burlado that come from the word burla that mean derision, In Venezuela is more common say "estoy bromeando" or "estoy jodiendo" that literarilly mean "I'm fuking you" but all these sentences mean something like I'm kidding.

Well Asma, in Spain that word doesn't exist but recently it became famous because of a spanish-youtuber made a video of a group of guys singing a song with that word (the word which doesn't appear at the Real Academia Española / Spanish Real Academy of Language) He's trolling you! >-<

I think "estoy burlao" means ... kiding you it's should be a regional expression from Venezuela Bye

Yes Paul that would make sense but he refuses to tell me. He says it's too "rico" for me... perhaps he's right.

Given your friend is the one who uses it perhaps they are the one to ask...