Vice President Jose Manuel Restrepo described the legislation as an economic rescue operation necessary to neutralize a “time bomb” set for 2027. He noted that currently, one of every three pesos raised in taxes goes toward servicing public debt interest. The government stated that approximately 70% of the fiscal adjustment will come from spending restraint, with the remaining burden falling on wealthier taxpayers through an expanded tax base and stricter enforcement. President Abelardo De La Espriella, who assumed office in August, framed the reform as part of a pro-investment agenda, arguing that Colombia must stop punishing those who generate wealth.
The bill includes several significant changes to the corporate tax landscape. Financial institutions, insurance companies, and stockbrokers would face a permanent 15% corporate income tax (CIT) surtax on taxable income exceeding 120,000 tax units (approximately US$1.4 million), raising their total CIT rate from 40% to 50%. Coal companies would see their CIT surtax increase to 15%, potentially resulting in a combined rate of 50%. Additionally, the withholding tax on dividends paid to nonresidents would rise from 20% to 30%, and the holding period required to apply the reduced 15% capital gains rate on fixed assets would extend from two to four years.
Individual tax provisions include revisions to personal income tax and the introduction of a temporary levy on the financial sector. The reform also pledges reduced tax rates for micro, small, and medium-sized enterprises (MSEs) and incentives for large investment projects. Conversely, the administration has announced plans to abolish the wealth tax, a levy that was made permanent in 2022 under former President Gustavo Petro. While the wealth tax repeal cannot be enacted by decree and requires congressional approval, Finance Minister Miguel Gómez Martínez indicated the government will prioritize this structural change. The wealth tax currently applies to individuals holding net assets of at least 72,000 tax value units (approximately US$1.2 million in 2026), with marginal rates reaching up to 1.5%.
The bill also tightens rules on digital assets and indirect transfers. Joint tax liability for the buyer of an indirect transfer will expand to cases where the seller fails to file an income tax return, and indirect transfers will now include digital assets referencing Colombian assets. Failure to file returns within the month following a direct transfer of Colombian shares will result in the revocation of shareholder registrations.
The legislation now moves to Congress, where debate is expected to be contentious as the legislative session nears its end. While the government aims to present the full structural reform in September, the initial phase involves a fiscal adjustment plan through administrative measures. Independent analysts, including Mikkel Thorup of Expat Money, have noted that the current “legislative honeymoon” period may facilitate the passage of these reforms, potentially allowing for taxpayer relief as early as 2027 if the revenue gap is effectively managed.
