1. Overview and effective dates
The bill introduces significant adjustments to VAT and the National Consumption Tax (INC), income tax for individuals and corporations, dividends paid to non-residents, the net worth (wealth) tax, a special tax on the extraction of hydrocarbons and coal, updates to the national carbon tax, and new rules for digital assets. Several measures would take effect upon enactment of the law, while others have phased schedules—especially for fuels and payroll withholding.
2. VAT and National Consumption Tax (INC)
- Games of chance. Operations involving games of chance, including those offered by online platforms, are subject to VAT. The taxable event occurs upon the bet or deposit, and operators are liable, even when operating from abroad. For online games, the base includes deposits in money or crypto-assets.
- Condominium (horizontal property). Commercial-use condominium properties that exploit common areas or provide services such as parking and security would become VAT-liable. Residential properties would not be covered by this rule.
- Goods at 5%. The group of goods at the 5% rate is redefined, focusing on agro-industrial inputs and components for e-mobility. The aim is to target benefits to specific value chains and reduce scattered treatments.
- Fuels (schedule). A VAT transition is established: gasoline moves to an intermediate rate in 2026 and the general rate in 2027; diesel (ACPM) transitions through 2028; ethanol fuel moves to the general rate in 2026; biodiesel for blending with diesel phases in gradually. This seeks to harmonize taxation along the chain and allow time to adjust prices and logistics.
- Liquor and beer. In addition to the departmental consumption tax, alcoholic beverages are subject to VAT. A percentage of the VAT is transferred to the departments to finance healthcare, with an ad valorem component added to the existing specific component in the consumption tax.
- Cultural and sports entertainment (INC). Tickets and related services for shows and cultural or sports activities are taxed at 19% on the total service value, including additional charges such as ticketing, pre-sales, or ancillary services.
- Vehicles, motorcycles, and luxury goods (INC). Family vehicles, SUVs/off-roaders, and pick-ups pay 8% when the FOB value is below a dollar-denominated threshold, and 19% when it exceeds it. Higher-displacement motorcycles, yachts, and private-use aircraft are also taxed, aiming for progressivity in high-end consumption.
3. Corporate income tax
- Financial sector. The income tax rate for the sector is set at 50% as the result of a 15-point surtax on the general rate. Applies to financial institutions and insurers, broker-dealers (securities and agricultural), commodity and goods exchanges, and market infrastructure providers.
- Extractive activities. For crude oil extraction (CIIU 0610) and coal (CIIU 0510 and 0520), 0, 5, 10, or 15 points are added to the general rate depending on the average price level in the tax year relative to the 30th, 45th, and 60th percentiles calculated over a 120-month window. Applies only when the taxable income for the year is equal to or greater than 50,000 UVT (aggregated by related parties). If there is natural gas income, the points are prorated according to that income’s share.
- Religious entities with commercial activity. Income from commercial activities is subject to the ordinary income tax regime, with a requirement to segregate those operations in the accounts from non-taxable ones.
- Digital services by non-residents. An option is enabled to file and pay 5% on total gross revenues from sales of goods and/or provision of digital services to users in Colombia; those who opt in may request that withholding tax not be applied to such payments.
4. Individual income tax and withholding at source
Schedule and procedure (individuals and withholding).
The resident individual income tax brackets are updated with marginal rates of 0%, 19%, 29%, 35%, 37%, 39%, and 41%. Payroll withholding is harmonized to a monthly table with the following UVT bands: 0–95 (0%), >95–150 (19%), >150–360 (29%), >360–640 (35%), >640–945 (37%), >945–2,300 (39%), and >2,300 (41%). The new withholding applies from July 1, 2026, with an option for early application at the employee’s request. Payroll must adjust system parameters, simulate net pay effects, and consider the “monthlyized payments” rule for contractors.
Deduction for consumption with electronic invoice.
Individuals under the general basket may deduct purchases supported by an electronic invoice or electronic POS receipt: 5% in tax year 2026, 3% in 2027, and 1% thereafter, with an annual cap of 240 UVT, provided the document identifies the purchaser and meets formal requirements.
Capital gains.
Gain on the sale of fixed assets is treated as capital gain if the asset was held for 4 years or more; if held for less time, the gain is ordinary income. For inheritances, exemptions are maintained for the decedent’s primary residence and other real estate up to the VIS value, and for other assets up to 3,250 UVT. Lotteries, raffles, and bets are taxed at 30%.
Dividends to non-residents and permanent establishments.
Dividends from untaxed profits paid to non-residents and to permanent establishments are taxed at 30%.
5. Net worth (wealth) tax
Clean version (for the bulletin)
Net worth tax (amounts in 2025 pesos). The tax becomes permanent and is levied each January 1 on net worth. The taxable event starts from $1,991,960,000 (40,000 UVT). A progressive marginal scale applies as follows:
• 0% up to $1,991,960,000 (40,000 UVT).
• 0.5% on the excess between $1,991,960,000 and $3,485,930,000 (>40,000–70,000 UVT).
• 1% on the excess between $3,485,930,000 and $5,975,880,000 (>70,000–120,000 UVT).
• 2% on the excess between $5,975,880,000 and $11,951,760,000 (>120,000–240,000 UVT).
• 3% on the excess between $11,951,760,000 and $99,598,000,000 (>240,000–2,000,000 UVT).
• 5% on the excess above $99,598,000,000 (>2,000,000 UVT).
Operational notes. The base is gross assets minus debts as of January 1. Amounts are expressed using the UVT in force for 2025 and must be updated annually with the UVT for the corresponding year.
6. Special tax on extraction
A 1% levy is created on the first sale in the national territory or on the export of crude oil and coal. The base is the sale price or FOB, as applicable. Taxpayers are those who carry out these operations and meet a prior-year net income threshold, aggregated with related parties. Collection is through a return for domestic sales or payment with customs documents for exports. Penalty and control rules are established.
7. National carbon tax
Rates per tonne of CO₂ equivalent for fossil fuels are updated, with an annual increase path to converge to a UVT-denominated target value. Coal phases in over several years until reaching the full rate. Non-taxable cases are maintained, such as producer exports, and certification traceability is reinforced. The tax is deductible for income tax purposes, partially mitigating its effect on the corporate tax base.
8. Alcoholic beverages, beers, and tobacco or vaping products
Alcoholic beverages (liquors, wines, aperitifs, and similar). The consumption tax has a specific component of $750 per alcohol-by-volume (ABV) degree in a 750 ml container (proportional for other volumes) and an ad valorem component of 30% on the retail price certified by DANE. Specific rates update each January 1 by annual inflation plus four points. Additionally, these goods are subject to VAT at the general rate, and five points of the VAT are transferred to departments to fund healthcare.
Beer, sodas/siphons, and beer mixes. The dual scheme is maintained: a specific component of $330 per ABV degree in a 330 ml presentation (proportional for other volumes) and a 30% ad valorem component on the retail price certified by DANE. The specific component updates each January 1 by inflation plus four points. Operational example: a 330 ml can with 5% ABV pays $1,650 for the specific component (330 × 5), plus 30% ad valorem on the certified retail price.
Cigarettes, heated tobacco, and vaping. For cigarettes, cigars, and similar tobacco products, the specific component is $11,200 per 20-stick pack (proportional) and $891 per gram of loose tobacco; there is also a 10% ad valorem on the retail price certified by DANE. For derivatives/substitutes (SEAN/SSSN) and vaping, the specific component is $2,000 per milliliter plus a 30% ad valorem on the certified retail price. Specific rates are updated annually by inflation plus four points; additional revenues are earmarked for healthcare.
9. Digital assets and transaction reporting
Definitions. The concept of a digital asset is incorporated, and rules are specified for tax situs. In principle, digital assets are not deemed held in Colombia unless they represent an underlying asset located in the country. Tax basis corresponds to the acquisition price or development costs, as applicable, with the possibility to amortize certain intangibles.
Indirect transfers. The disposal of tokens representing assets located in Colombia is taxed locally as if the underlying asset were disposed of, even when the transaction occurs between non-residents.
Reporting obligations. Providers that intermediate conversions of digital assets must report to the DIAN when, per user, the annual amount of conversions reaches or exceeds 1,400 UVT. With UVT 2025 = $49,799, the threshold equals $69,718,600 in the calendar year. All conversions during the year are aggregated (fiat-crypto, crypto-fiat, and between crypto-assets, valued in pesos at the applicable rate for each transaction). Each provider evaluates the threshold based on the transactions it actually intermediates for that user. The report must include, at a minimum, user identification, dates and type of transaction, asset involved, and peso-equivalent value, and must be filed at the frequency and in the format established by the DIAN. Non-compliance is sanctioned under the general information regime (monetary fines and other applicable measures).
10. Procedure, invoicing, and corrections
- General obligation to invoice. The obligation to issue an electronic invoice is unified and reinforced for those who sell goods or provide services, with specific exceptions defined by the tax authority. Periodic certificates are enabled to facilitate cross-checking of input VAT and withholdings.
- It is also specified that costs or deductions will not be allowed if the obligation under Article 632 of the Tax Code is not met or if withholding tax due is not paid, when applicable, before the initial filing of the income tax return. Finally, VAT-liable taxpayers and large taxpayers who contract with non-residents for services taxable in Colombia will act as VAT withholding agents for those payments.
- General rule (payment supports). For costs, deductions, liabilities, or input VAT to be accepted for tax purposes, payments must be made through financial or electronic means: deposits, transfers, checks to the first beneficiary, debit/credit cards, and other means or cards/vouchers authorized by the Government.
Permitted cash (global annual cap). Recognized for tax purposes only up to the lesser of:
• 20% of the amount paid, with an absolute cap of 20,000 UVT (= $995,980,000), and
• 18% of total annual costs and deductions.
(That is, the cash component may not exceed both limits simultaneously.)
High-value individual payments (financial means mandatory). Any payment > 50 UVT (= $2,489,950) made by legal entities, or by individuals earning non-labor or capital income, to the same beneficiary within the tax year must be routed through financial/electronic means. Otherwise, it will not be accepted as a cost, deduction, liability, or input VAT. - For taxpayers filing VAT bimonthly, deductions and input VAT must be recognized in accounting at the time of the economic event and claimed in the return for the same period or, at the latest, in one of the following two bimonthly returns. If claimed in those subsequent periods, the taxpayer must support it in the VAT tax reconciliation.
- The VAT tax period will be bimonthly with the following cut-offs: January–February, March–April, May–June, July–August, September–October, and November–December. The four-monthly period is repealed. For business start-ups, liquidations, or terminations within the year, the period runs from the start date or until the end date set by the rule (or RUT cancellation). Returns filed for periods other than those indicated will be deemed invalid without the need for an administrative act.
- Rules for amending returns are unified: when the amendment increases the tax due or decreases the refund, the taxpayer, responsible party, or withholding agent may file it within the statute of limitations and provided no special requirement notice or statement of charges has yet been served, applying the amendment penalty; if the amendment reduces the tax or increases the refund, it must also be filed by the mandatory method and within the same statute of limitations. Errors in applying prior-year credits, withholdings, or prepayments may be corrected within those time limits, and where there is an amendment, the administration’s review period runs from the date the amendment was filed.
11. Regularizations and transitionals: opportunities to close debts and litigation
- Withholding returns filed without payment (effectiveness and cure).
From the new law onward, withholding tax returns filed without payment produce legal effects. For prior returns that became ineffective, the withholding agent may restore their effectiveness by filing and paying the withholding no later than March 31, 2026, with a reduced penalty of 15% and no late-payment interest. Recommendation: prioritize periods with higher cross-check risk and clear pending third-party certificates. - Temporary reduction of penalties and interest (omissions and amendments).
a) Omitted returns: if returns were omitted as of November 30, 2025, they may be filed until April 30, 2026, with a reduced late-filing penalty of 15%, paying the tax and penalty, with no interest.
b) Amendments that increase tax/reduce refund or losses: for returns up to December 31, 2024, a full-payment amendment with a 15% penalty applies if filed by December 20, 2025; if filed between December 21, 2025, and March 31, 2026, the reduced penalty is 40%. In both cases, no interest. - Special payment condition (interest and penalties).
For assessed or enforceable obligations, the taxpayer may get current as follows: (i) pay 100% of the tax, (ii) pay late interest at 20% of the TIBC if paid by December 20, 2025, or at 50% of the TIBC if paid by March 31, 2026, and (iii) pay 15% of penalties if opting in before December 20, 2025, or 40% if by March 31, 2026 (never below the minimum penalty). If the omission by the withholding/collecting agent is ≤ 100 UVT (≈ $4,979,900 with 2025 UVT), the case will not be subject to criminal complaint, but administrative collection must be exhausted. - Cure of formal obligations (tax, customs, and FX).
A “window” is enabled to cure formal obligations existing upon the law’s entry into force, as follows:
• Taxpayers required to file income tax: pay 3% of gross income for TY 2024, no later than April 30, 2026.
• Not required to file income tax: pay 2% of gross net worth and/or total assets as of December 31, 2025, no later than March 31, 2026.
Does not apply to the duty to file nor to transfer pricing. If invoicing is involved, in addition to payment, omitted or improperly invoiced operations must be reported and transmitted as instructed by the DIAN. The cure of formal obligations does not validate income/costs/deductions or input VAT. - Judicial conciliation (tax, customs, FX).
Allows closing court cases with high reductions in penalties and interest:
• In single or first instance: 85% of penalties/updates and interest are conciliated (15% is paid, plus 100% of the tax; interest recognized at 4.5% per year).
• In second instance: 80% is conciliated (20% is paid, plus 100% of the tax; interest at 4.5% per year).
• Penalty-only acts: 80% of the updated penalty is conciliated.
• Improper refunds/offsets: 70% of penalties is conciliated; the taxpayer pays the remaining 30% and returns the refunded/offset amount with interest at 30%.
• Key requirements: lawsuit filed before December 31, 2025; conciliation request by May 31, 2026; no final judgment; and proof of payment of TY 2024 income tax where applicable.
Tip: review the litigation portfolio to segment by instance and act type; the penalty/interest savings often justify a quick closure. - 2026 Tax normalization (omitted assets/non-existent liabilities).
A complementary normalization tax is created for omitted assets and non-existent liabilities held on January 1, 2026, at a 15% rate. Inclusion does not trigger net worth comparison nor liquid income for omission in the year of normalization or prior years; nor penalties in income/VAT/informative returns/wealth tax, nor criminal action. Late registration with the Central Bank of financial investments/assets abroad does not create an FX violation if normalized. It does not legalize assets of illicit origin.
12. Calendar and entry points
Payroll withholding. Full application from mid-2026; companies may consider coordinated early application with the employee and adjust payroll parameters well in advance.
VAT on fuels. Transition by fuel between 2026 and 2028, with specific dates for ethanol fuel and biodiesel; it is advisable to model the impact on logistics costs and pricing policies.
Carbon. Annual increase path with a UVT-per-tonne target and graduality for coal through 2029.
ANY QUESTIONS, WE WILL BE HAPPY TO ASSIST YOU.
The information in this bulletin is strictly for informational purposes. Therefore, for specific decision-making on the topics discussed, you should seek support from an expert advisor on the relevant subject.
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