Tax Reform 2026

Among the main changes evident in the project are modifications to issues related to personal income tax, VAT on certain products, regulations on the taxation of digital assets, adjustments to the international regime, electronic invoicing, asset normalization measures, incentives for renewable energy, procedural provisions on administrative litigation conciliation and termination by mutual agreement, among others.

Sales Tax – VAT and consumption tax

The project proposes substantial changes to the Sales Tax (VAT), with the aim of extending the tax basis, improving tax efficiency, and adapting the system to new economic and digital realities.

• New taxable transactions

New transactions subject to VAT are included, such as:

1. The sale of memberships and admission rights.

2. Games of chance and gambling through digital platforms.

3. The list of goods taxed at the 5% rate is modified.

4. Goods subject to excise duty on spirits, wines, aperitifs, and similar products will be taxed at the general rate of 19%.

5. The acquisition of software licenses for the commercial development of digital content and the provision of websites, servers, and computing services will now be taxed at the general rate of 19%.

• Real estate

The VAT exemption for the sale of real estate is repealed.

Additionally, the liability to charge VAT on the use of common areas in condominiums is extended, with only residential condominiums being excluded from this obligation.

• Datelines and discounts

Quarterly reporting is eliminated, and any filing in different periods will be invalid without the need for administrative action.

• Withholding tax on behalf of VAT

Major taxpayers who are not liable for VAT and who contract taxable services in Colombia with foreign entities that are not liable for VAT must withhold VAT at source.

• Cultural, sports, and entertainment services.

It is proposed to levy a 19% consumption tax on recreational, cultural, and sports services whose value exceeds 10 TVU (COP $497,990, according to TVU 2025), including the admission price and associated charges.

Income Tax

• Corporations

A surcharge of 15 additional points to the general income tax rate is proposed for financial entities and institutions.

For the extraction of coal and crude oil, 0% to 15% of income is added, depending on international prices.

This measure will only apply to taxpayers with a net income greater than 50,000 TVU (COP $2,489,950,000).

• Individuals

It is proposed to modify the progressive tariff as follows:

Additionally, a temporary increase in the deduction for purchases supported by electronic invoices is proposed, established as follows: 5% for 2026, 3% for 2027. From 2028 onwards, it will be reduced again to 1%.

The project proposes the elimination of the deduction for additional dependents, equivalent to 72 TVU (COP $3,585,528) for each dependent, with a maximum of four (4) dependents.

Finally, the elimination of the treatment of the inflationary component of financial returns as non-taxable income is contemplated.

• Dividends

An increase to 30% is proposed for the withholding tax rate applicable to dividends received by foreign companies and entities, as well as by non-resident individuals.

Likewise, the project seeks to eliminate the tax credit related to dividends received by individuals.

• Withholding on employment income

A modification to the withholding tax rate is proposed as follows:

The project proposes the elimination of Procedure 2 for withholding applicable to employees, which has been in force for several years as an alternative method for calculating monthly withholdings.

With its elimination effective January 1, 2026, all taxpayers will be subject exclusively to Procedure 1, thereby standardizing the withholding mechanism and facilitating oversight by the Colombian Tax Authority (DIAN). However, this change may result in more abrupt monthly withholding variations for certain salaried individuals.

Wealth tax

A modification to the progressive rate is proposed as follows:

Capital gains – G .C

The gain derived from the disposal of a fixed asset shall be treated as a capital gain when such asset has been held for a period exceeding four (4) years (currently two (2) years or more); otherwise, it shall be classified as ordinary taxable income.

Additionally, the project proposes an increase in the applicable rate for capital gains derived from gambling, raffles, and similar activities, raising it from 20% to 30%.

Regarding exemptions associated with the decedent’s real estate, the exemption is limited to the maximum value established for Social Interest Housing (VIS) (135 or 150 Monthly Legal Minimum Wages for the year 2025). This applies both to the decedent’s primary residence and to other real estate properties.

Likewise, a modification is introduced to the exemption applicable to each allocation of spousal portion, inheritance, or legacy, establishing an exemption of 3,250 TVU for other assets not previously mentioned (i.e., primary residence and other real estate).

Currently, the exemption applies to the first:

1. 13,000 TVU (COP $647,387,000) of the decedent’s primary residence.

2.  6,500 TVU (COP $323,693,500) of real estate other than the decedent’s primary residence.

Special tax on the extraction of hydrocarbons and coal

The project proposes the creation of a special tax of 1% on the first sale or export of the following:

1.     Coal (including hard coal and briquettes).

2.     Crude oil.

National carbon tax

A new rate of COP $42,609 per ton of CO₂eq is proposed for the carbon tax applicable in 2026. The specific rates per fuel type are as follows:

1.     Gasoline: $384 per gallon.

2.     Diesel: $432 per gallon.

3.      Natural gas: $83 per m³.

4.     Thermal Coal: COP $109.285 per ton.

In the case of coal, a gradual tax rate is established as follows:

• For 2026, the applicable rate will be equivalent to 40% of the full rate.
• In 2027, it will increase to 60%.
• In 2028, it will reach 80%.
• As of 2029, the full rate will apply.

On another note, regarding the non-taxable mechanism, taxpayers who demonstrate carbon neutrality status may apply this benefit only up to 30% of the tax due, with no possibility of exceeding that limit.

Tax on the consumption of beer, siphons, and refajo

The project proposes to include non-alcoholic beer within the taxable event for this excise tax.

Additionally, the following changes must be taken into account:

• Specific component: COP $330 per each alcohol degree in a 330 ml unit.
• Ad valorem component: 30% on the retail sale price.
• The specific component rate will be increased annually based on the Consumer Price Index (CPI) variation plus 4 percentage points.

Liquors, wines, aperitifs, and similar beverages

• Specific component: COP $750 per each alcohol degree in a 750 ml unit.
• Ad valorem component: 30% on the retail sale price.
• The specific component rate will be increased annually based on the Consumer Price Index (CPI) variation plus 4 percentage points.

Cigarettes, manufactured tobacco, derivatives, substitutes, or imitations

• Specific component: COP $11,200 per pack of 20 units; COP $891 per gram of shredded tobacco, snuff, or chimu.
• Ad valorem component: 10% on the retail sale price.
• Derivatives, substitutes, or imitations: COP $2,000 per milliliter and 30% ad valorem.
• The rates are updated annually based on the Consumer Price Index (CPI) variation plus 4 percentage points.

Taxation of digital assets 

The project introduces specific rules for the taxation of digital assets, establishing that such assets shall not be deemed to be held in Colombia nor generate Colombian-source income, except when backed by an underlying asset located in Colombia, in which case the tax treatment applicable to that underlying asset shall apply.

Additionally, a formal obligation is created for digital asset service providers to report to the Colombian Tax Authority (DIAN) any user transactions exceeding 1,400 TVU (COP $69,718,600) annually, thereby strengthening fiscal oversight over such operations.

Non-conventional energy sources

The project includes incentives aimed at promoting the energy transition. It provides for the issuance of transition bonds or “climate bonds,” which will allow investors to deduct up to 50% of the investment made in renewable energy or energy efficiency projects.

Additionally, the tax treatment of equipment, machinery, and services related to such projects is modified: these items will shift from being excluded to being exempt from VAT, thereby granting the right to request a VAT refund on the tax paid upon acquisition.

International taxation

In the international context, the project proposes to increase the tax rate applicable to taxpayers under the Significant Economic Presence (SEP) regime from 3% to 5%, applicable to income derived from the sale of goods and digital services from abroad.

Finally, new restrictions are introduced regarding indirect transfers, the anti-abuse clause is strengthened, and a new obligation is imposed to report on corporate structures or effective places of management.

Electronic invoicing

The project strengthens penalties for failure to issue invoices, expanding the scope of the obligation to issue electronic invoices.

Tax procedure

In procedural matters, the project eliminates the current audit benefit and harmonizes the deadlines for amending tax returns with the statute of limitations for finality.

It also introduces mechanisms for conciliation and temporary reduction of penalties and interest for taxpayers in arrears, along with a strengthening of penalties for failure to file, which will be calculated based on gross income.

In this regard, the project provides amendments to tax returns—whether increasing the amount payable or reducing the refund, or vice versa—shall be subject to the same deadline as the statute of limitations for finality of the respective return.

Tax normalization

The project introduces a tax normalization measure for individuals or entities holding undeclared assets or non-existent liabilities as of January 1, 2026.

The applicable rate is set at 15%, and the corresponding tax return must be filed no later than July 31, 2026. This measure is intended to provide a final opportunity to regularize undeclared assets, without additional penalties or foreign exchange obligations on the normalized assets.

Repeals

In addition to the amendments discussed in the preceding sections, the tax project repeals special rules on financial returns and dismantles the control mechanism over exempt transactions and amounts under the Financial Transactions Tax (GMF), which financial institutions were required to apply pursuant to Article 881-1 of the Colombian Tax Code, among others.