Background on the Colombian Fiscal Situation
In an effort to address a significant fiscal shortfall estimated at COP 16.3 trillion (approximately USD 3,000 million), the Colombian government has introduced a new set of tax measures using its extraordinary powers granted by the Economic Emergency Decree (Decree 1390 of 2025). The aim is to raise an estimated COP 11 trillion (nearly USD 3,000 million) to close the gap.
Key Tax Changes
Alcohol, Tobacco, and Luxury Goods
The new tax package directly impacts consumption, wealth, the financial sector, online shopping, and activities like online gambling and hydrocarbon extraction.
- Alcohol and Wine: The Value Added Tax (VAT) for spirits and wines increases to 19%. An additional consumption tax component of COP 750 per alcohol percentage and a 30% ad valorem on the selling price before other taxes and/or royalties is introduced, certified by the National Directorate of Statistics (DANE).
- Cigarettes: A specific tax of COP 11,200 per cigarette pack of 20 units is established. For the first time, vape devices and electronic cigarettes are taxed with a rate of COP 2,000 per milliliter of liquid plus an additional 30% on the verified retail price by DANE.
- Luxury Goods: A 19% National Consumption Tax is imposed on luxury items such as yachts, boats, aircraft, and high-performance motorcycles.
Financial Sector
Banks will face an additional 15 percentage points surcharge on the income tax, raising their total rate to 50%.
E-commerce and Online Gambling
The tax base for online commerce and gambling will now be based on real gaming income, which is the total value of bets placed minus payouts to players during each bimonthly period. Simultaneously, the VAT exemption for low-cost imports under USD 200 is eliminated. Only purchases below USD 50 will remain tax-free, affecting international e-commerce platforms directly.
Mining and Energy Sector
A 1% tax is introduced on the first sale or export of crude oil and coal. Additionally, it’s confirmed that royalties cannot be deducted as costs or expenses in the income tax, except for specific loss fiscal cases.
Government’s Rationale
According to the government, these measures are a response to an “aggravated fiscal situation,” stemming from the lack of newly approved funding sources by Congress, health obligations ordered by the Constitutional Court, the electricity subsidy crisis—especially in the Caribbean region—and costs associated with winter attention.
Minister of Finance Statement
Finance Minister Germán Ávila highlighted that these new increases for taxpayers aim to collect over COP 10 trillion, attempting to cover the shortfall left by the falling oil tax revenue in the Senate.
