Colombia Tax Regime

Colombia operates a self-assessment tax system administered nationally by the Dirección de Impuestos y Aduanas Nacionales (DIAN). The principal national taxes are corporate income tax (impuesto sobre la renta), personal income tax organised through a cedular (schedular) system, value-added tax (IVA), the national consumption tax, and a range of transactional and wealth levies. Municipalities separately impose the industry-and-commerce tax (ICA) and property taxes. The Colombian peso (COP) is the functional currency and most statutory thresholds are expressed in Unidades de Valor Tributario (UVT), an inflation-indexed unit that DIAN resets annually — for fiscal year 2026 one UVT equals COP 52,374.

Residence is central to the system. A company is resident if it is incorporated in Colombia or has its effective place of management in the country; resident companies are taxed on worldwide income, while non-residents are taxed only on Colombian-source income, generally through final withholding. Individuals become tax resident by spending more than 183 days (continuous or not) in Colombia within any 365-day period, among other tests, and residents are likewise taxed on worldwide income and net worth.

Colombia's tax framework was substantially reshaped by Law 2277 of 2022 (the Petro administration's structural reform), which raised effective corporate burdens, restructured dividend taxation, introduced a domestic minimum tax, and created significant-economic-presence rules for the digital economy. A further financing-law package presented to Congress on 1 September 2025, seeking to close a fiscal gap, was rejected by the Senate's Finance Commission on 9 December 2025. As a result, the rates and thresholds described in this handbook reflect the law in force for tax years 2025 and 2026, without the withdrawn 2025/2026 proposals (which would have raised the top personal rate, increased non-resident dividend withholding, and expanded the wealth tax).

As of July 2026 the 2025 financing-law bill has NOT been enacted. Practitioners should monitor for a re-tabled reform, since the government's budget pressures persist. The Government's alternative route also failed: on 22 December 2025 it declared a nationwide State of Economic and Social Emergency under article 215 of the Constitution (Decreto 1390 de 2025) and on 29 December 2025 issued Decreto Legislativo 1474 de 2025, a package of temporary measures for tax year 2026 that lowered the wealth-tax threshold to 40,000 UVT on a scale rising to 5%, added 15 percentage points to financial-sector income tax, charged IVA at 19% on spirits and on online gambling, levied 1% on hydrocarbon and coal extraction and opened a 19% asset normalisation. The Constitutional Court suspended the declaration on 29 January 2026 (Auto 082 de 2026) and stopped the tax decree producing effects (Auto 084 de 2026), so Decreto 1474 operated only between 30 December 2025 and 28 January 2026; the Court then held the declaration unconstitutional in Sentencia C-075 de 2026 of 9 April 2026, the invoked fiscal circumstances being structural and foreseeable rather than sudden, and struck the tax decree down by consequence in Sentencia C-079 de 2026 of 15 April 2026. The effects were modulated rather than simply annulled: direct taxes modified or accrued in that window may not be declared, assessed or collected by DIAN and any advance payment must be refunded; indirect taxes paid in the window are refundable to whoever actually bore them, on proof; and reliefs taxpayers had already earned in the window stand. Decreto 044 de 2026, which had charged the electricity sector under the same emergency, fell the same way with retroactive effect in Sentencia C-115 de 2026 of 6 May 2026. A separate emergency declared in February 2026 for flood-affected departments (Decreto 150 de 2026) was upheld, subject to conditions, in Sentencia C-191 de 2026 of 24 June 2026, so the corporate wealth tax in Decreto 173 de 2026 and the consumption tax on online gambling in Decreto 240 de 2026 rest on a live declaration and remain applicable while under review.

Headline statutory corporate income tax rate for a resident company. Where sub-national (state, provincial, cantonal or municipal) corporate taxes apply, the combined rate reported by the OECD is shown. Projected 2026–2028 rates carry the current rate forward unless a change is already enacted or officially scheduled. As-of 2026.

Top marginal statutory personal income tax rate on employment income for a resident individual. Where sub-national (state, provincial, cantonal or municipal) income taxes are a standard part of the system, the combined top rate is shown. Projected 2026–2028 rates carry the current rate forward unless a change is already enacted or officially scheduled. As-of 2026.

Standard rate and tax base

The general corporate income tax rate is 35% under Article 240 of the Tax Statute (Estatuto Tributario, ET). It applies to resident entities on worldwide net taxable income and to Colombian permanent establishments of foreign entities on their attributable income. Taxable income is computed on an accrual basis starting from commercial accounting profit, adjusted for non-deductible items, special deductions, and tax-specific timing rules. Colombia permits carryforward of tax losses for twelve years (with no carryback) and allows indefinite carryforward of excess presumptive-tax credits, though the presumptive minimum income regime itself was reduced to 0% and effectively neutralised.

Capital gains realised by companies on assets held for two or more years are taxed separately at a flat 15% rate (occasional-gains tax), distinct from the ordinary 35% rate; gains on assets held under two years fold into ordinary income. Dividends received by a Colombian company from another Colombian company are subject to an intercompany dividend withholding mechanism designed to avoid economic double taxation while ensuring the underlying profits bear tax at least once.

Surcharges for specific sectors

Financial institutions — banks, insurers, reinsurers, stockbrokers and similar entities — pay a temporary surcharge of 5 percentage points (for a combined 40% rate) where taxable income exceeds 120,000 UVT, in force through tax year 2027. The extractive sector faces variable surcharges: oil producers pay additional points (5, 10 or 15) tied to international crude price levels relative to historical averages, and coal producers face comparable price-linked surcharges, producing combined rates that can reach 50–60% in high-price years. Hydroelectric generators are also subject to a temporary surcharge. A special reduced 9% rate applies to qualifying hotel, ecotourism and certain publishing activities under legacy incentive regimes.

Minimum tax (Tasa Mínima de Tributación)

Law 2277 of 2022 introduced a domestic minimum effective tax rate for legal entities. The 'Tasa de Tributación Depurada' (TTD, purged/adjusted effective rate) is computed by dividing an adjusted tax figure by an adjusted financial-profit base; where the resulting effective rate falls below 15%, the taxpayer must pay a top-up so that the effective burden reaches 15%. This mechanism, conceptually aligned with a domestic minimum-tax floor, applies broadly to resident companies and PEs, subject to certain carve-outs, and interacts with the incentive regimes that would otherwise depress effective rates.

Significant economic presence (SEP)

Also from Law 2277 of 2022, Colombia taxes non-resident suppliers of digital services and remote sales of goods to Colombian customers where they have a 'presencia económica significativa' (SEP). A SEP arises where the non-resident has deliberate and systematic interaction with the Colombian market — generally at least 300,000 users/clients in Colombia — and gross Colombian-source revenue of at least 31,300 UVT in the year. SEP taxpayers may either register and file a return paying 3% on gross Colombian revenue, or be subject to a 10% withholding at source on the relevant payments. This regime operates independently of the physical-PE threshold and captures streaming, advertising, online intermediation and similar business models.

The cedular system

Colombian residents are taxed on worldwide income through a cedular (schedular) architecture in which income is grouped into cédulas that are then combined for rate purposes. The 'cédula general' aggregates labour/employment income, non-labour (business and independent) income, and capital income (rents, interest, royalties); a separate schedule covers pension income; and a third covers dividends and participations. Deductions, exempt amounts and cost recognition differ by cédula, but the general cédula is subject to a global cap on exemptions and deductions of 40% of net income, limited to 1,340 UVT per year.

General schedule brackets

The general cédula and pension income are taxed under a single progressive scale of seven brackets, expressed in UVT and running from a 0% zero-rate band up to a top marginal rate of 39%. Because thresholds are UVT-denominated, they adjust automatically each year for inflation. The table below states the rates for tax year 2026.

Dividends received by individuals

Following Law 2277 of 2022, dividends distributed to resident individuals from profits that were taxed at the corporate level are folded into the general cédula and taxed at the ordinary progressive rates (0%–39%), with a partial credit mechanism to relieve the combined corporate-plus-shareholder burden; the older flat 10% dividend rate for residents was replaced. Dividends paid from profits that were not taxed at the corporate level are first subjected to a 35% gross-up equivalent tax before the progressive rates apply. For non-resident individuals and foreign entities, dividends from taxed profits bear a 20% withholding, while dividends from untaxed profits bear a combined burden reaching approximately 48%.

Occasional gains

Capital (occasional) gains on assets held two years or more — including gains on real estate and share disposals — are taxed at a flat 15% for individuals, having been raised from 10% by the 2022 reform. Lottery and gambling winnings are taxed separately at 20%. Colombia also grants limited exemptions for the sale of a primary residence and certain inheritances, subject to UVT caps.

Payments of Colombian-source income to non-residents are generally subject to final withholding tax (retención en la fuente), which for most passive income discharges the recipient's full Colombian liability. The domestic statutory rates below apply before any treaty relief. Colombia maintains an expanding bilateral treaty network (including Spain, Chile, Canada, Mexico, Switzerland, the United Kingdom, France, Italy, Japan and others) and applies Andean Community Decision 578, which allocates exclusive taxing rights among Bolivia, Ecuador, Peru and Colombia on an exemption basis and can eliminate Colombian withholding on intra-Andean flows.

Interest on foreign loans is generally withheld at 15% (or 20% for shorter-term or certain arrangements), with a preferential 5% rate for qualifying long-term infrastructure financing (terms of eight years or more) and 1% for aircraft and vessel leasing. Royalties, technical assistance, technical services and consulting fees, and software licences are withheld at 20%. Management fees paid abroad are similarly captured. Colombia has adopted the OECD/G20 BEPS multilateral instrument (MLI) principal-purpose test, so treaty benefits are conditioned on anti-abuse screening.

Transfer pricing

Colombia applies OECD-aligned transfer pricing rules to transactions between Colombian taxpayers and foreign related parties, and to any transaction with parties located in non-cooperative jurisdictions or preferential tax regimes. Taxpayers exceeding gross-equity or gross-income thresholds (broadly 100,000 UVT equity or 61,000 UVT income) must prepare a Local File and Master File and file an informative return; qualifying multinational groups must submit Country-by-Country reports. The arm's-length standard and the five OECD methods apply, and commodity transactions are subject to specific pricing rules referencing quoted market prices.

Controlled foreign companies (ECE)

The CFC regime, known locally as Entidades Controladas del Exterior (ECE), attributes passive income of foreign controlled entities to Colombian resident controllers on a current basis, regardless of distribution. Control is generally established at 10% or more direct or indirect participation held by Colombian residents. Passive income (dividends, interest, royalties, most capital gains) is imputed and taxed currently, while active business income generally escapes attribution.

Thin capitalisation and interest limits

Interest deductibility on related-party debt is restricted by a thin-capitalisation rule capping deductible interest to debt not exceeding two times the taxpayer's net equity as at the prior year-end (a 2:1 debt-to-equity ratio applied to related-party financing). Interest above the cap is non-deductible. Additional documentation is required to substantiate that intra-group financing is genuine and that arm's-length terms apply.

GAAR and Pillar Two

Colombia has a statutory general anti-avoidance rule (abuso en materia tributaria) permitting DIAN to recharacterise transactions lacking economic substance and undertaken principally for tax advantage, subject to a special administrative procedure. On the OECD/G20 Two-Pillar project, Colombia is an Inclusive Framework member and its domestic 15% minimum effective rate (TTD) partially anticipates Pillar Two's logic; however, as of mid-2026 Colombia has not enacted the GloBE income-inclusion or under-taxed-profits rules or a qualified domestic minimum top-up tax, so a full Pillar Two transposition remains pending legislation.

Digital economy (SEP)

As detailed under corporate taxation, the significant-economic-presence rules extend Colombian taxing rights to non-resident digital and remote-sales businesses meeting user- and revenue-based nexus thresholds, taxed at 3% on gross revenue (filing) or 10% withholding. These rules were designed to operate whether or not a multilateral digital-tax solution ultimately displaces them.

Value-added tax (IVA)

The standard VAT (Impuesto sobre las Ventas, IVA) rate is 19%, applying to most sales of goods, provision of services, and imports. A reduced 5% rate covers certain foodstuffs, agricultural inputs and specified goods and services, and a broad category of essential items (basic foodstuffs, public transport, education, health services) is exempt or excluded. Exports are zero-rated, preserving input-credit recovery. VAT is generally filed bimonthly or four-monthly depending on turnover, and non-resident digital-service providers to Colombian consumers must register and collect Colombian VAT on B2C supplies.

National consumption tax

The national consumption tax (impuesto nacional al consumo, INC) applies at 8% to restaurant and catering services (outside the VAT net for those operators), mobile telephony and certain vehicles, and at higher rates to some luxury items. A separate consumption levy applies to sugary drinks and ultra-processed foods introduced by the 2022 reform, phased in with ad-valorem and specific components.

Municipal industry-and-commerce tax (ICA)

The ICA (Impuesto de Industria y Comercio) is a municipal turnover tax on industrial, commercial and service activities, levied on gross revenue at rates set by each municipality, generally between 0.2% and 1.4% depending on activity and locality; Bogotá and other large cities publish their own schedules. A complementary 'avisos y tableros' surcharge of 15% of the ICA applies to signage. ICA paid is partially creditable against national CIT.

Financial transactions tax (GMF)

The Gravamen a los Movimientos Financieros (GMF, the 'cuatro por mil') imposes 0.4% on debits from bank and savings accounts and similar financial movements. Half of the GMF paid is deductible for income-tax purposes, and various exemptions apply (including a monthly exempt threshold on a single designated account).

Wealth tax

A permanent net-wealth tax applies to resident individuals (and certain non-residents on Colombian assets) whose net worth on 1 January reaches 72,000 UVT. Rates are progressive: 0.5% on net wealth above 72,000 UVT, 1.0% above 122,000 UVT, and 1.5% above 239,000 UVT — the top 1.5% band applying through tax year 2026 before reverting to 1.0% under current law. Valuation rules and exclusions (e.g. a portion of the primary residence) mitigate the base.

DIAN administers national taxes and customs, operating a mandatory electronic-invoicing regime and increasingly digital filing and payment platforms. Taxpayers self-assess and file electronically; DIAN retains audit and reassessment powers, and the ordinary statute of limitations for review is generally three years from the filing due date, extended to five years for taxpayers subject to transfer-pricing obligations or carrying forward losses (and longer still where those losses are utilised). After the annulment of the December 2025 emergency tax decree described in section 1, DIAN stated on 15 April 2026 that it would examine the ruling in full and adopt the administrative and operational measures needed to comply with it, and confirmed in Concepto 007820 of 11 May 2026 that IVA paid between 30 December 2025 and 28 January 2026 on imports above the reduced de minimis threshold would be refunded. Taxpayers who paid tax in that window should expect to substantiate the payment; at the time of writing DIAN had not published a resolución setting out the refund procedure.

Assessment disputes proceed first through an administrative phase: DIAN issues a 'requerimiento especial' (special requirement), the taxpayer responds, and a 'liquidación oficial de revisión' (official reassessment) may follow, which can be challenged by a reconsideration appeal within DIAN. Exhausting the administrative stage opens the judicial phase before the administrative-litigation courts (Tribunales Administrativos and, ultimately, the Consejo de Estado).

Penalties are significant and formula-driven: late-filing and inaccuracy penalties, interest at a moratorium rate tied to the market usury rate, and specific sanctions for transfer-pricing and information-reporting failures. Colombia periodically offers reduced-penalty settlement and normalisation mechanisms, and taxpayers may seek advance pricing agreements and, in limited cases, private rulings from DIAN.

DIAN publishes an annual decree fixing filing and payment dates, which are staggered by the taxpayer's tax identification number (NIT). Corporate income tax for a calendar year is generally filed and paid in two installments during the following year (large taxpayers pay in three), with due dates spread across February to May depending on the last NIT digits. Individual income tax returns for the prior year are due between August and October of the following year, again ordered by NIT.

Indirect and periodic obligations follow their own cadence: VAT is filed bimonthly or four-monthly by turnover; withholding-tax returns are monthly; and the GMF is remitted by collecting agents weekly. The wealth tax, where applicable, is declared and paid on the schedule set in the annual decree, typically in May. Because all dates key off the NIT and the annual decree, taxpayers should confirm exact due dates against the current-year DIAN calendar.

The most common vehicle for inbound investment is the Sociedad por Acciones Simplificada (SAS), prized for its flexible governance, single-shareholder capability and limited formalities; the traditional Sociedad Anónima (SA) and branch of a foreign company remain available. Foreign investment must generally be registered with the central bank (Banco de la República) through the foreign-exchange system to secure remittance and repatriation rights, and profit repatriation is permitted subject to applicable dividend withholding.

Colombia offers free-trade zones (zonas francas) where qualifying operators access a preferential 20% corporate rate (subject to an export-commitment or investment plan under recent reform conditions) and customs advantages, as well as sector incentives for renewable energy, the orange (creative) economy, agriculture and tourism. Mandatory electronic invoicing, payroll electronic reporting (nómina electrónica) and robust related-party documentation mean that operational tax compliance is data-intensive; early registration for the RUT (tax registry) and appointment of a legal representative and, where relevant, a statutory auditor (revisor fiscal) are practical prerequisites.

Employers face substantial payroll on-costs beyond income tax: contributions to health, pensions and payroll-linked parafiscal funds (SENA, ICBF, family-compensation funds), plus mandatory severance and benefit accruals, materially raise employment cost. Businesses should also budget for ICA in each municipality of operation and for the GMF on banking flows. Given the pace of reform, transaction and structuring decisions should be stress-tested against the possibility of a re-tabled financing law.