Colombia Plans to Raise 26 Trillion Pesos Through New Tax Reform

Bogotá – June 27, 2025 | 🌐 www.zonadeazar.com Colombia Plans to Raise 26 Trillion Pesos Through New Tax Reform

Colombian government prepares sweeping fiscal reform

Colombia’s Ministry of Finance announced that by late July it will present a comprehensive tax reform focused on reviewing VAT and consumption tax exemptions, without raising general rates. The plan targets tax deductions and sector-specific benefits, impacting industries like iGaming, digital platforms, churches, and extractive activities.

The goal is to reduce the projected 7% fiscal deficit of GDP this year.

Withholding tax increase already implemented

Since June 1, the government began applying higher withholding tax rates, which could generate an additional 7 trillion pesos in 2025. However, analysts warn of negative impacts on corporate liquidity and public revenue in 2026.

The reform aims to collect up to 25.4 trillion pesos

According to the Medium-Term Fiscal Framework, the reform could raise between 19 and 25.4 trillion pesos via:

  • VAT reform on exempted items

  • Aligning consumption tax to 19% VAT

  • New taxes on iGaming, vape products, noise, pesticides, coal, oil, and streaming platforms

Fuel price subsidy to be eliminated

The government plans to issue a decree removing the Fuel Price Stabilization Fund (Fepc) subsidy, which cost over 76 trillion pesos in the past three years. Authorities argue it’s a regressive benefit that favors car owners disproportionately.

Targeting 26 trillion pesos in new revenue

By combining advance withholding, fiscal reform, and subsidy removal, the government expects to generate 26 trillion pesos in new revenues.

Vice Minister Betancourt’s explanation

“We triggered the escape clause this year. Colombia must reduce tax expenditures amounting to 8.5% of GDP, or 135 trillion pesos,” stated Vice Minister Carlos Emilio Betancourt, adding that 65% of this relates to VAT exemptions on essentials like food, medicine, education, and exports.

🖋 Edited by: @_fonta
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