Published on July 27, 2026
On July 20, 2026, the National Government filed a new tax reform bill which, according to public reports, is intended to shield departing government officials from potential claims for alleged abuses relating to the level of public indebtedness with which the country is being left and the activation of the escape clause under the Fiscal Rule. The following is a preliminary overview of the contents of the bill:
Income Tax:
For individuals:
- The progressive income tax rates applicable to individuals would increase up to 41%. The current maximum rate is 39%.
- By increasing the progressive tax rates and eliminating the dividend tax credit, the tax burden on dividends would effectively double for individuals receiving dividends exceeding approximately COP 57 million (USD 17.956)
- The tax rate on dividends received by foreign companies, foreign entities, and non-resident individuals would increase from 20% to 30%.
- The exclusion from taxation of the inflationary component of financial yield would be eliminated.
- The tax credit for dependents would be eliminated.
For legal entities:
- The income tax surcharge applicable to the financial sector - including banks, insurance companies, brokerage firms, and similar entities—would increase from 5% to 15%.
- The income tax surcharge applicable to coal extraction activities would increase from 10% to 15%.
- The optional gross revenue rate applicable to Entities with Significant Economic Presence in Colombia providing internet-based services, would increase from 3% to 5%.
Capital Gains Tax:
- The tax rate applicable to lotteries, raffles, and gambling winnings would increase from 20% to 30%.
Net Wealth Tax:
- The threshold for being subject to Wealth Tax would be reduced to 40,000 Tax Value Units ("UVTs"). Consequently, taxpayers with net assets exceeding COP 2,094,960,000, (USD 659.934) estimated on the value of the2026 UVT, would become liable . However, this amount may vary, since the tax would only become effective in 2027.
- The marginal tax rates would range from 0.5% to 3%, while the maximum Net Wealth Tax rate would increase to 5.0%.
Employer Payroll Contributions:
- The exemption from employer contributions to the health system, SENA, and ICBF, which currently applies in respect of employees earning more than ten monthly minimum wages, would be restricted to employees earning less than three monthly minimum wages.
Value Added Tax:
- Among others, the following goods and services would become subject to the standard 19% VAT rate:
* Games of chance, including those operated exclusively online.
* Hybrid vehicles.
* Gasoline and diesel fuel (ACPM), beginning in 2028. Biofuels and fuel alcohol intended for blending would also become taxable.
* Liquors, wines, and aperitifs. - The VAT exemption for tourism services provided to non-residents would be eliminated. However, the VAT refund mechanism for foreign tourists upon departure from the country would remain in force.
- Imports with a value below USD 200 would also cease to be VAT-exempt.
- Goods and services intended for projects involving power generation from non-conventional energy sources would change their status from VAT-excluded to VAT-exempt, thereby becoming eligible for VAT refunds.
Consumption Tax.
- The Consumption Tax rate applicable to vehicles valued above USD 30,000, motorcycles with engine displacement exceeding 200 cc, yachts, and aircraft would increase from 16% to 19%.
- Entertainment, cultural, and sporting services costing more than 10 UVTs (COP 523,740 / USD 165 for tax year 2026) per person, would become subject to the 19% tax rate.
- The specific tax component per pack of 20 cigarettes would increase from COP 4,068 / USD 1,28 to COP 11,200 /USD 3,53, while vaping liquids would become subject to a tax of COP 2,000/ USD 0,063 per milliliter, in addition to a 30% ad valorem component.
Environmental Taxes:
- The carbon tax would increase to COP 42,000/ USD13,23 per metric ton of CO₂ equivalent.
- For coal, the full applicable tax rate would increase from 40% to 100% between 2027 and 2030.
- A new special 1% tax would be introduced on exports and on the first sale of hydrocarbons and coal, applicable to taxpayers with taxable income equal to or exceeding 50,000 UVTs (COP 2,618,700,000/ USD 824.917 for tax year 2026).
This bulletin is for informational purposes only and does not constitute legal advice. For specific cases, we recommend obtaining tailored legal counsel before making decisions based on the information provided herein. In compliance with personal data protection regulations, REYES ABOGADOS ASOCIADOS S.A. invites you to contact us if you do not wish to continue receiving our legal updates.