The Colombian Ministry of Finance and Public Credit published a revised version of Decree No. 1625 of 2016 on 8 May 2026, consolidating Colombia’s tax regulations including income tax, VAT, withholding tax, transfer pricing, and the SIMPLE regime. It also updates rules on key regimes, incentives, compliance procedures, electronic invoicing, and reporting requirements covering RTE, PES, ZOMAC, Obras por Impuestos, and related administrative tax processes.

RF Report

The Colombian Ministry of Finance and Public Credit published a revised edition of Decree No. 1625 of 2016 on 8 May 2026.

The decree consolidates rules covering income tax, occasional gains tax, transfer pricing, withholding tax, VAT, national consumption tax, stamp duty, financial transactions tax, carbon tax, and the SIMPLE regime, while also updating provisions on incentives, compliance, and administrative procedures.

Key tax regimes and generalities

  • Income tax and special regimes: The decree outlines the Special Tax Regime (RTE) for non-profit entities, cooperatives, and religious institutions, which must develop merit-based activities of general interest accessible to the community [23, 1.2.1.5.1.2]. These entities must undergo an annual update process in a web registry managed by the DIAN (National Tax and Customs Directorate) to remain in the regime.
  • Simple tax regime (SIMPLE): This regime substitutes income tax and integrates other taxes like the national consumption tax for food and beverage services. It aims to simplify tax compliance for small businesses and individuals who meet specific gross income thresholds.
  • Presencia económica significativa (PES): Non-resident individuals or non-domiciled entities with a “Significant Economic Presence” in Colombia through digital interfaces or services (such as automated digital services with minimal human intervention) are subject to specific taxation and reporting requirements.

Major tax incentives and investments

  • ZOMAC (Zonas más Afectadas por el Conflicto Armado): Companies operating in these conflict-affected municipalities can access progressive income tax rates if they meet specific investment and direct employment generation targets.
  • Obras por Impuestos (Works for taxes): This mechanism allows legal entities with high gross income to pay up to 50% of their income tax by investing directly in social projects (e.g., water, energy, health, education, or road infrastructure) in ZOMAC regions.
  • Energy and environment: There are significant deductions for investments in non-conventional energy sources (FNCE) and efficient energy management. Additionally, tax credits are available for investments directed at environmental control, conservation, or improvement.
  • Tourism and creative Industries: The decree provides a 9% preferential income tax rate for hotel services in new or remodeled hotels in certain municipalities. It also defines tax exemptions for “Orange Economy” activities, including software production, filmmaking, and various artistic and technological activities.
  • Megainversions: New investments in property, plant, and equipment exceeding 30 million UVT (Unidades de Valor Tributario) that generate at least 400 direct jobs are eligible for special tax stability contracts and benefits.

Compliance and reporting procedures

  • RUT (Registro Único Tributario): The RUT is the mandatory mechanism to identify, locate, and classify all subjects under DIAN’s administration. It must be updated whenever there are changes in identification, location, or economic classification.
  • Electronic invoicing: The decree regulates the electronic billing system, which includes the electronic invoice (requiring prior validation by DIAN), equivalent documents, and electronic debit/credit notes.
  • Transfer pricing: Taxpayers conducting operations with foreign affiliates or entities in low-tax jurisdictions must follow the Arm’s Length Principle. This involves preparing documentation such as the Local Report, Master Report, and, for large multinational groups, a Country-by-Country Report.
  • Conciliación fiscal (Tax Reconciliation): Entities obligated to keep accounting records must maintain a “control of detail” to register differences between accounting standards (IFRS) and tax regulations.

Deadlines and administrative matters

  • Filing Deadlines: The decree establishes specific calendars for filing income tax, VAT (IVA), and retentions, often based on the last digits of the taxpayer’s ID (NIT).
  • Refunds and Offsets: Procedures are detailed for requesting the refund or offset of credit balances (saldos a favor) in income tax and VAT, including a “devolución automática” (automatic refund) for low-risk taxpayers who meet specific electronic invoicing criteria.
  • Tax Withholding: Rules are provided for various withholding types, including labor income, financial yields, and cross-border payments.

This document, which serves as the single regulatory decree on tax matters, incorporates all updates effective as of that date.