The Colombian government has presented a new Tax Reform Bill to Congress, proposing higher taxes on financial institutions, changes to VAT, income and wealth taxes, and new environmental measures as part of a fiscal consolidation strategy.
The Colombian Ministry of Finance submitted a new 2026 Tax Reform Bill to Congress on 20 July 2026, introducing a broad package of tax measures aimed at strengthening public finances. Although the legislation is titled the 2026 Tax Reform Bill, most of its provisions are proposed to take effect from 2027. The bill follows the rejection of an earlier 2026 tax reform proposal at the end of 2025.
The reform forms part of the government’s fiscal consolidation strategy, which seeks to address structural pressures on public finances while maintaining macroeconomic stability. The government targets additional revenue of COP 21.9 trillion, equivalent to about 1.0% of GDP, in 2027 and an average of 1.5% of GDP annually from 2028.
Corporate and business taxation
Among the key business measures, the bill proposes increasing the corporate income tax surtax on financial institutions from 5% to 15% above the standard corporate income tax rate, resulting in a total tax rate of 50%. The higher surtax will become permanent from the 2027 tax year.
The optional tax rate on gross income earned by non-resident entities providing digital services or selling in Colombia under the Significant Economic Presence (SEP) rules will increase from 3% to 5% from 1 January 2027.
The proposal also establishes a permanent 1% tax on the FOB export value or domestic sales invoice value for crude oil and coal for companies with net ordinary income of at least 50,000 UVT. In addition, surtax rules for coal extraction will be aligned with those already applied to crude oil.
Preferential corporate income tax regimes for hotels, theme parks, ecotourism, docks and mega-investment schemes will be reduced or removed from the 2027 tax year.
Individual income and wealth taxes
The bill will raise the maximum marginal individual income tax rate from 39% to 41% for net taxable income exceeding 31,000 UVT from the 2027 tax year. Other income tax brackets will also be revised, including increases in the 29%, 35%, 37% and 39% bands.
The additional deduction of 72 UVT per dependent, introduced in 2022, will be eliminated, while the existing deduction of 10% of gross income, capped at 32 UVT per month, will remain.
The wealth (equity) tax threshold will be reduced from 72,000 UVT to 40,000 UVT. The revised scale will introduce rates ranging from 0.5% to 5%, with the highest 5% rate applying to wealth exceeding 2,000,000 UVT.
Other proposed changes include repealing the dividend tax discount and the non-taxable inflationary component deduction on financial yields for individuals from 1 January 2027.
The tax rate on winnings from lotteries, raffles and gambling, together with related occasional gains, will increase from 20% to 30% from the date the law enters into force.
VAT and consumption tax measures
The reform includes several VAT changes affecting multiple sectors.
Online gambling and sports betting platforms will become permanently subject to the general 19% VAT rate from 1 January 2027, replacing the current preferential treatment and aligning them with physical betting establishments.
The VAT rate on hybrid vehicles will rise from the preferential 5% rate to the standard 19% rate from the date of enactment, while the reduced rate will remain available for zero-emission electric vehicles.
Producer-level VAT on motor gasoline and diesel willincrease from 5% to 10% on 1 January 2027 and to the general 19% rate from 1 January 2028. Biodiesel will become subject to the 19% VAT rate from 1 January 2027, followed by fuel ethanol from 1 July 2027. A multi-stage VAT system will also be introduced for the gasoline supply chain, applying 19% VAT to retail margins from 1 January 2027.
The government also proposes applying the general 19% VAT rate to alcoholic beverages from the first day of the month following enactment.
The bill will eliminate the VAT exemption for imported goods valued below USD 200, removing the de minimis relief for low-value online purchases. It willalso end the VAT exemption for hotel and accommodation services supplied to non-resident foreign tourists in Colombia while retaining the existing VAT refund mechanism at airports and border crossings.
For non-conventional renewable energy projects, the current VAT exemption for equipment, machinery and related services will be replaced with zero-rated treatment, allowing businesses to recover input VAT.
In addition, the national consumption tax rate will increase from 16% to 19% from 2027.
Environmental measures
The proposal willincrease the carbon tax base rate from COP 29,070.49 to COP 42,609 per ton of CO2 from 2027. Coal will be phased into the carbon tax regime, with taxation reaching 40% of the full rate in 2027, 60% in 2028, 80% in 2029 and 100% from 2030.
The fiscal strategy also includes the introduction of Energy Transition Bonds, allowing investors to deduct 50% of qualifying investments.
Social security and fiscal impact
The bill will reduce the salary threshold for employer exemptions from health and parafiscal contributions, including SENA and ICBF contributions, from employees earning up to 10 minimum wages (SMMLV) to those earning up to 3 SMMLV.
The government estimates the package will have a one-off inflationary effect of about 0.43% in 2027 from VAT measures and 0.74% from other consumption-related taxes. It also argues that increased public investment funded by the additional revenue will result in GDP growth being around 0.20% higher over the next decade than under a scenario based on spending cuts.
Several measures included in the bill had previously been introduced under Legislative Decree No. 1474 of 29 December 2025, which was later declared unconstitutional. The current tax value unit (Unidad de Valor Tributario – UVT) is COP 52,374 for 2026.
