The Colombian Government issued Decree 1474 on 29 December 2025, pursuant to the special powers granted under the State of Economic Emergency declared through Legislative Decree 1390 of 2025. The new decree introduces temporary tax measures that will be effective throughout 2026.

Background

In October 2025, the Colombian Congress approved an unbalanced 2026 expenditure budget proposed by the Government. To address the resulting fiscal gap, the Government submitted a financial law proposal (tax reform) on 1 September 2025. (For more on this proposal, see EY Global Tax Alert, Colombia's Executive Branch submits 2026 tax reform bill to Congress, dated 9 September 2025.) However, Congress rejected the proposal.

Therefore, the Government declared a State of Economic Emergency to obtain special powers allowing the implementation of temporary tax measures aimed at generating revenue to close the 2026 budgetary gap. The validity of this State of Emergency is unclear and has faced criticism, with some arguing that the situation was not unforeseen and that alternative tools are available to manage or reduce the deficit. The Constitutional Court is expected to review these measures shortly and rule on their constitutionality.

Corporate income tax (CIT)

Financial institutions, insurance and reinsurance companies, stockbrokers, and similar entities will be subject to a 15-percentage-point CIT surtax for 2026, resulting in a total CIT rate of 50%. Previously, the surtax for these taxpayers was 5 percentage points, for a total CIT rate of 40%.

Royalties paid for the exploitation of nonrenewable resources will not be deductible for CIT purposes in 2026. However, if a reduction in the non-renewable resource prices causes the non-deductibility to create taxable income that would not otherwise exist, the deduction will be allowed. It is important to note that Law 2227 of 2022 introduced another rule on non-deductibility of these royalties, which was declared unconstitutional by the Constitutional Court in Decision C-489 of 2023.

Value-added tax (VAT) and consumption/excise taxes

Online gambling will be subject to a 19% VAT in 2026, calculated on gross gaming revenues (i.e., total bets minus prizes paid). Until 31 December 2025, VAT was determined based on deposits made into the gambler's account with the operator. The 2025 VAT regime was based on temporary measures under the State of Internal Unrest, as this activity is generally excluded under regular provisions. (For more information, see EY Global Tax Alert, Colombian Government establishes temporary taxes amid State of Internal Unrest, dated 17 February 2025).

Liquor, wine and similar products will be subject to a 19% VAT in 2026 (previously 5%). Additionally, these products will incur excise taxes as follows: (1) 750 Colombian pesos (COP750) for each degree of alcohol in a 750-cc container, or proportionally, plus (2) 30% ad valorem tax based on the final consumer price.

Cigarettes and manufactured tobacco will be subject to excise tax as follows: (1) a specific element of COP11,200 per box of 20 units (or proportionally) or COP891 per gram of chopped tobacco or similar, plus (2) 10% of the final consumer price (for chopped tobacco or similar the 10% applies to the specific element mentioned in (1) above). For derivatives and substitutes for cigarettes, the excise tax will apply as follows: (1) 30% of the retail price, plus (2) COP2,000 per milliliter.

The VAT exemption for courier and urgent shipments is reduced to those not exceeding US$50 (previously US$200).

The consumption tax on certain goods is increased: (1) from 8% to 19% for motorcycles with cylinder capacity exceeding 200 cc, yachts and other vessels for pleasure or sports, and (2) from 16% to 19% for certain vehicles and pick-up trucks with free-on-board (FOB) value equal to or greater than US$30,000, as well as certain aircraft, including planes and helicopters.

Equity tax

For 2026, the threshold for equity tax liability is reduced to 40,000 tax units (approx. COP2.905m, US$551k), down from 72,000 tax units (approx. COP3.771m, US$992k). Additionally, the progressive rate now ranges from 0.5% to 5% (previously 0.5% to 1.5%).

Despite initial speculation that equity tax would apply to companies filing CIT returns, this provision was ultimately not included in the final decree.

Tax on certain sales of hydrocarbons and coal (Special Tax for Fiscal Stability)

The 1% tax on the first sale or export of hydrocarbons or coal classified under tariff headings 27.01 and 27.09, originally established in 2025 under temporary measures adopted during the State of Internal Unrest, is extended through 2026.

Normalization tax

A new normalization tax (i.e., tax amnesty) is introduced. This tax applies to income taxpayers who, as of 1 January 2026, failed to declare certain assets or claimed nonexistent liabilities for tax purposes. The normalization tax rate is 19%.

The rules generally follow those of previous normalization taxes. To benefit, taxpayers must file a normalization tax return and pay the tax by 31 July 2026.

Measures to advance payments and resolve existing controversies

To accelerate the resolution of existing tax, customs and foreign exchange disputes and enhance collection, while also offering incentives to taxpayers, several measures are introduced, including:

• Cases in collection stage as of 31 December 2025: Penalties are reduced to 15% and interest to an annual rate of 4.5%, provided the total obligation and reduced penalties and interest are paid by 31 March 2026.
• Non-filings as of 30 November 2025, and amendments to filings made by 31 December 2025: Penalty reduced to 15%, provided filing and payment occur by 30 April 2026, with no late payment interest applied.
• Cases in litigation before the courts: For first-level (or only) courts, a 15% penalty (85% reduction) applies; and for second-level courts, a 20% penalty (80% reduction) applies. In both cases, 4.5% annual interest applies. Requests for this treatment must be filed by 31 May 2026.
• Omission of formal obligations: Omissions may be cured by 30 April 2026, with payment of a penalty equal to 3% of the gross income reported in the 2024 income tax return, capped at 1,500 tax units (approx. COP79m or US$21k).

Implications

Implications of these changes for affected taxpayers may include:

• Potentially higher taxes for some taxpayers, particularly in financial and extracting sectors
• Higher equity taxes and other indirect taxes in certain goods and services
• The possibility to conclude certain tax controversies in advance by paying reduced tax penalties and interests

Affected entities should also watch for potential developments from the Constitutional Court on its review of these measures.