On September 1, 2025, the Colombian Ministry of Finance, under President Gustavo Petro’s administration, introduced a sweeping tax reform bill to Congress. This is the third major tax reform of his term and aims to raise an ambitious COP 26.3 trillion (approximately $6.54 billion) in 2026. The primary goals are to cover a shortfall in the 2026 budget, stabilize the nation’s finances, and ensure long-term macroeconomic stability.
The proposal faces a challenging path in Congress, where the current government has limited support, making its approval uncertain. According to Finance Minister Germán Ávila, the reform is designed not only to secure immediate funding but also to benefit future administrations.
The bill proposes significant changes across a wide spectrum of taxes. Below is a detailed breakdown of the key measures.
Key Comparison Table
Corporate Income Tax
The reform introduces a dual-track approach for corporations:
- Large Corporations: A temporary 3% surcharge will be levied on companies with annual gross revenues exceeding ~$2 million USD for the 2026 and 2027 tax years. This raises their effective income tax rate to 38% and primarily targets the financial, mining, and hydrocarbon sectors.
- Small and Medium Enterprises (SMEs): To encourage growth, the corporate income tax rate for SMEs will be reduced from 35% to 30%. To qualify, companies must have assets up to ~$1.2 million USD and a maximum of 200 employees.
Individual Income and Capital Gains Tax
Individuals, particularly high earners, will see notable changes:
- Income Tax: The top marginal income tax rate is set to increase to 41% for individuals with annual earnings over 31,000 Tax Value Units (UVT).
- Capital Gains: The general capital gains tax rate for both individuals and companies would rise from 15% to 20%. Winnings from lotteries, raffles, and betting are also targeted, with the tax rate on these activities increasing to as high as 30%.
Net Worth and Wealth Taxes
The proposal seeks to expand the base for wealth-related taxes. The net worth tax threshold would be lowered from 72,000 UVT to 40,000 UVT. Furthermore, the reform would extend this tax to include legal entities holding non-productive real estate assets.
Value-Added Tax (VAT)
The VAT regime is slated for a significant overhaul, with several exemptions and preferential rates being eliminated:
- Gaming and Tourism: The standard 19% VAT will be extended to cover most games of luck and chance, and the VAT exemption currently available for tourist services provided to non-residents will be removed.
- Vehicles and Fuel: The reduced 5% VAT rate for hybrid vehicles will be eliminated. Preferential rates for liquid fuels like gasoline and diesel will be phased out between 2026 and 2028, eventually aligning them with the standard 19% rate.
New Levies and Other Key Provisions
The reform bill introduces several new and expanded taxes on specific sectors and activities:
- Digital and Financial Services: The bill proposes new taxes on foreign digital service providers, such as Netflix and Amazon Prime. Additionally, the surcharge on financial institutions is set to increase.
- Extractive Industries: A new 1% tax would be imposed on the initial sale or export of crude oil and coal.
- “Sin Taxes”: Taxes on tobacco, alcohol, and online gambling are slated for an increase.
- Religious Institutions: For the first time, the reform proposes to tax the commercial activities of religious institutions, which are currently exempt.
- Cryptocurrency: The bill includes new provisions to establish clear tax rules for transactions involving crypto-assets.
Next Steps
The bill has been submitted to Congress for debate and approval, where it is expected to undergo intense scrutiny. Given the political climate and upcoming elections, its final form may differ significantly from the current proposal. Brookfort will continue to provide updates on the progress of this landmark legislation.
Brookfort Added Value
Brookfort Group offers specialized support to clients seeking to implement robust legal structures for asset and wealth protection in light of Colombia’s evolving tax landscape. With deep experience in the setup and management of companies, trusts, and foundations, Brookfort provides guidance on international structuring, estate and succession planning, and ongoing compliance across multiple jurisdictions.
The team’s comprehensive services include corporate governance, tax and accounting compliance, regulatory reporting, and trust or foundation administration. By partnering with Brookfort, clients gain tailored strategies to safeguard assets, optimize wealth transfer, and mitigate risks presented by regulatory changes—ensuring that personal and business wealth remains protected and aligned with family or corporate objectives even as Colombia’s tax rules evolve.
This article is provided for informational purposes only and does not constitute legal or tax advice. The content herein should not be relied upon as a substitute for consultation with qualified tax or legal professionals. Readers are strongly encouraged to seek professional guidance tailored to their individual circumstances before making any tax or legal decisions regarding the topics discussed above.