Colombia: Emergency tax measures to fund 2026 national budget adopted

The government issued Legislative Decree/Regulation 1474 on December 29, 2025, as an extraordinary fiscal package to address the economic, social, and environmental emergency declared recently. Read TaxNewsFlash

The regulation includes the following temporary measures aimed at revenue collection:

• Value added tax (VAT) on liquors, wines, aperitifs, and similar products: The tax rate was increased to 19%, with 5% of this amount allocated to the departments, in accordance with the paragraph of Article 33 of Law 1816 of 2016. This measure could potentially undermine the constitutional authority granted to territorial entities to regulate and manage the state monopoly on alcoholic beverages.
• VAT on online games of chance: Online games of chance operated exclusively over the internet will be subject to VAT at the general rate of 19% for operations conducted within the national territory. As a result, the taxable base will be calculated on the game’s gross gaming revenue (GGR), understood as the total bets minus the prizes paid in the two-month period. The tax will be borne by the operators, including those operating from abroad.
• VAT exclusion for postal traffic and express shipments: VAT exclusion will only apply to imports of goods via postal traffic, urgent shipments, or express delivery whose value does not exceed US$50, reducing the threshold from the previous regulation, which allowed up to US$200.
• Wealth tax: The tax will be triggered by holding net assets equal to or greater than 40,000 tax value units (Unidad de Valor Tributario or UVT) (approximately COP 2,094,960,000 for 2026), lowering the threshold from the current regulation, which applies from 72,000 UVT (approximately COP 3,770,928,000). The taxable base corresponds to gross assets minus outstanding debts. The rate will be progressive and marginal, starting at 0.5% and reaching up to 5% for assets exceeding 2,000,000 UVT (approximately COP 104,748,000,000), according to the ranges established in the tax law.
• Surtax on income tax for the financial sector: Entities in the financial sector must pay an additional 15% on income tax, bringing the total rate to 50%. This additional amount will be subject to a 100% advance payment, calculated on the taxable base of the previous year’s income tax. The advance payment will be made in two equal installments, implying an anticipated cash flow obligation and greater financial pressure for the sector.
• Special tax for fiscal stability (hydrocarbons and coal): A temporary 1% tax on the extraction of hydrocarbons and coal, based on specific tariff items, will apply at the time of their first sale or export. It applies from the first sale or export, focusing on revenue collection in the extractive sectors to address urgent needs of the national budget. The delivery of these items as payment of royalties to the National Hydrocarbons Agency (Agencia Nacional de Hidrocarburos or ANH) will not be taxed. This affects supply chains, with potential impacts on competitiveness and exports.
• Conditioning the deductibility of royalties: Two conditions are included for the deduction of amounts paid as consideration in hydrocarbons contracts as royalties: 1) The deduction must result in a tax loss, and 2) If the cost or deduction is rejected, a positive taxable income would result.
• Excise tax on liquors, wines, aperitifs, and similar products: The structure includes a specific component of US$750 per unit (calculated based on alcohol content) and an ad valorem component of 30%. The aim is to increase taxation in the alcoholic beverages sector, harmonizing physical and value-based criteria. However, it also includes an obligation for the departments to transfer the additional revenue collected to the government.
• Excise tax on cigarettes and manufactured tobacco: This tax aims to discourage consumption and increase revenue from products with a significant public health impact. For the first time, it taxes derivatives, substitutes, or imitations of tobacco, defined by the regulation as aerosols, vapes, and devices containing nicotine or not, among others. It establishes a specific component of US$11,200 per pack of 20 units and an ad valorem component of 10% on the retail price, and US$2,000 per milliliter for derivatives, substitutes, or imitations, with an ad valorem component of 30% on the retail price. In this case as well, departments are required to transfer the additional revenue collected to the government.
• Temporary reduction of penalties and interest and on-going tax litigation: Temporary measures were included to reduce penalties and interest on overdue or unreported tax, customs, or exchange obligations, as well as for non-compliance with formal obligations. Taxpayers involved in litigation against the tax administration may also access the contentious-administrative conciliation mechanism for tax, customs, or exchange matters.
• Complementary normalization tax: This tax is established for income tax or substitute regime taxpayers who have omitted assets or nonexistent liabilities as of January 1, 2026. The rate will be 19% on the tax cost of omitted assets or the tax value of nonexistent liabilities, as applicable. This normalization shall provide protection over several tax penalties and criminal tax offences. 

Compared to the proposed measures, the government expanded the package of tax measures to cover the expenses of the 2026 national budget. However, the measures do not include the significant economic presence regime (PES) or VAT on cloud services, nor do they propose an increase in tax rates on dividends or capital gains. In addition, although the increase in the GMF (debit tax) rate and the application of the wealth tax to resident legal entities in Colombia were initially proposed, these measures were not included in the final regulation.

KPMG observation

The review of these extraordinary and temporary measures by the Constitutional Court is mandatory, and if they do not pass the constitutionality review, the effect of the decision on the funds paid and possible fiscal strategies for their return will need to be evaluated.

For more information, contact a KPMG tax professional in Colombia:

Ricardo Ruiz | ricardoaruiz@kpmg.com

Luis Segura | lsegura@kpmg.com