Colombia: A Tax Overview

Colombian Tax Outlook for 2026

Colombia enters 2026 under significant fiscal and tax pressure. With presidential and legislative elections scheduled for the first half of the year, the next administration will face a tight fiscal outlook. The Ministry of Finance has projected a budget gap of around 6% of GDP for 2026, making a new tax reform in the second half of the year highly likely.

Although a tax bill is currently being debated in Congress, the chances of it being approved are low. Still, the draft reflects the government’s direction: higher effective tax rates, a broader tax base, and stronger enforcement.

Key Measures in the 2025 Tax Bill

The 2025 proposal aims to increase revenue collection and reduce the fiscal deficit. It introduces adjustments in four main areas:

• corporate income tax;
• personal and wealth taxes
• VAT and indirect taxes; and
• audit powers.

For corporate taxation, the bill proposes maintaining the 35% general corporate income tax rate but adds new surcharges for specific sectors. Financial institutions would pay an additional 15% surtax, bringing their effective rate to around 50%. The bill would also make permanent the temporary 1% tax on oil and coal exports introduced during the 2025 state of emergency. Furthermore, it increases the rate applied to foreign companies providing digital services when they have no physical presence in Colombia from 3% to 5%.

For individual taxpayers, the bill seeks to raise marginal income tax rates and reduce deductions. It also proposes increasing the dividend tax for both residents and non-residents and expanding the holding period required for an asset sale to qualify as a capital gain from two to four years. At the same time, the government would lower the wealth tax threshold and raise its top rate from 1.5% to as high as 5%.

The VAT regime would also expand significantly. The proposal extends the 19% VAT to some digital services, online memberships, cloud computing, and betting platforms. It eliminates the “de minimis” rule that exempted imports below USD200 and converts specific VAT exclusions into exemptions. Fuel derivatives would gradually lose preferential treatment, and the government would apply VAT to a broader range of goods and services.

Finally, the bill strengthens tax administration and enforcement. In general, it gives the tax authority broader powers to investigate abusive transactions. It also introduces joint liability rules, under which buyers can become liable for income tax when sellers fail to report gains.

Judicial Developments and Emergency Taxes

The Constitutional Court continues to shape Colombia’s tax policy through its decisions. Two recent rulings are particularly relevant. The first ruling upheld the validity of the 15% Minimum Corporate Tax introduced in 2022, dismissing several constitutional challenges. Inspired by the OECD’s Pillar Two model, the rule requires all companies to pay at least 15% of their profits in income tax. The Court rejected arguments claiming that the measure violated principles of equality and proportionality.

The second ruling dealt with emergency taxes introduced in early 2025 under the state of emergency declared after the Catatumbo region crisis. The government created a 1% tax on the extraction and export of crude oil and coal, imposed VAT on online gambling, and reintroduced a national stamp duty. All measures were temporary, expiring at the end of 2025.

Policy Direction and Fiscal Priorities for 2026

Looking ahead, several trends are likely to define Colombia’s tax policy in 2026. First, fiscal consolidation will remain the top priority. Both the outgoing and incoming governments will need to close the current fiscal gap and manage rising debt service costs. In 2026, new measures are expected to prioritise improving tax collection and compliance rather than introducing significant structural changes.

Second, Colombia is expected to keep expanding its tax base. Extending VAT to the digital economy aligns the country with broader regional trends and OECD guidance. As consumer behavior shifts toward digital services and online transactions, these areas will become an increasingly important source of revenue growth.

Third, some industries will remain under closer scrutiny. Extractive industries, financial institutions, and large digital companies are already subject to surcharges or special rules, and these are likely to persist or expand.

Finally, tax enforcement will intensify. The tax authority (DIAN) has been modernising its systems, expanding e-invoicing, and integrating third-party data to detect evasion. Combined with the new legal tools proposed in the 2025 bill, this will lead to more audits and faster collection. Companies should expect the DIAN to focus on transfer pricing, indirect ownership structures, and cross-border transactions.

Implications for Taxpayers

For businesses, the 2026 environment will be more complex and less predictable. Effective tax rates may rise, and compliance requirements will tighten. Companies operating in regulated sectors should closely monitor legislative developments and review their structures to assess potential exposure to new surcharges or withholding rules. Digital and service-based businesses, in particular, need to prepare for expanded VAT obligations and Significant Economic Presence taxation.

For individuals, the main impact will come from higher marginal income tax rates and a broader wealth tax. The government’s emphasis on taxing capital and high net worth individuals will require closer planning around asset ownership and income recognition. Early adjustments, especially before any new law takes effect, could help reduce exposure.

From an institutional perspective, the interaction between the executive, the legislature, and the courts will define the scope and pace of change. Colombia’s tax policy is now characterised by short reform cycles – roughly one significant change every two years. This creates planning uncertainty but also opportunities for proactive taxpayers who adapt quickly to the new rules.