The bill’s passage is uncertain, particularly with the 2026 presidential elections approaching. However, the breadth of the proposed changes warrants close attention. A summary of the key provisions, based on a document from PwC, is outlined below.

Value Added Tax (VAT)

The proposed reform includes several significant changes to the Value Added Tax (VAT) system:

• Online Gambling: Online gambling would be permanently subject to VAT, a measure that is currently in place temporarily until the end of 2025. This would also require non-resident operators to register for, collect, and file VAT where applicable.
• Filing Frequency: The VAT filing frequency would be standardized to every two months for all registered suppliers, a change from the current system, where some businesses file four times a year.
• Input VAT Creditability: The window for claiming input VAT credits would be reduced from eight to six months.
• Self-Charging VAT: Large taxpayers would be required to self-charge VAT on taxable services imported into Colombia.
• Fuel Oils: Taxation on fuel oils would be increased through adjustments to the taxable base and higher rates.
• Cultural and Sporting Events: Recreational, cultural, and music festivals, as well as sporting events, would be subject to a 19% VAT.
• Low-Value Shipments: The “de minimis” exemption for low-value shipments would be eliminated.
• Digital Services: The VAT exemption for cloud computing, hosting, and software licenses for digital content would be removed. This change is likely to impact non-resident providers selling services to VAT-unregistered customers in Colombia.

Energy Sector

The energy sector would also see significant changes:

• Extraction Tax: A 1% tax would be imposed on the extraction of coal and oil for domestic sale or export. This would apply to taxpayers with a taxable income of $585,000 USD or more in the previous year.
• Coal Producers: The income tax brackets for coal producers would be tightened, aligning them with those for oil producers.
• Renewable Energy: The 50% “super deduction” for qualified renewable energy projects would be replaced with bonds redeemable over 15 years. Supplies for these projects would become zero-rated.

Corporate and Capital Gains Tax

Several changes are proposed for corporate income and capital gains taxes:

• Financial Industry Surcharge: The surcharge for the financial industry would increase from 5% to 15%, in addition to the 35% headline corporate tax rate.
• Deductibility of Expenses: Withholding tax would become a prerequisite for the deductibility of costs and expenses.
• Amortization: Tax amortization of fixed-term assets and shares would be permitted.
• Capital Gains Tax: The capital gains tax for lotteries, raffles, and gambling would increase from 20% to 30%. The 15% rate for the sale of fixed assets would remain, but the required ownership period would increase from two to four years.
• Non-Resident Dividend Tax: The tax on dividends paid to non-residents would increase from 20% to 30%.

Personal Income Tax

The proposed reform would also impact personal income tax:

• Withholding Tax: The current withholding tax system, based on a 12-month average, would be replaced by a system based on monthly income tax brackets. The top marginal rate would increase from 39% to 41%.
• Dividend Tax Credit: The dividend tax credit for individuals would be eliminated.

International Taxation

The bill includes several provisions related to international taxation:

• Sale of Shares: For direct sales of shares, non-resident sellers would be required to provide proof of filing and tax payment to the local recipient’s agent. Both the agent and representative would be jointly liable for any outstanding taxes.
• Indirect Sales: Joint liability would be introduced for any unfiled income tax returns from the seller in indirect sales.
• Corporate Restructuring: Corporate restructurings using “effective place of management” rules would need to be reported to the tax office and in financial statements.
• Information Exchange: Failure to provide data for automatic exchange of information could result in the closure of bank accounts.
• Permanent Establishments: Taxation for permanent establishments would be aligned with the rules for tax residents.
• Related Parties: Limitations on costs and deductions for related parties would continue to be lifted if they are arm’s length compliant, but withholding tax would still be due where applicable.

Digital Taxation

The proposed reform also addresses digital taxation:

• Significant Economic Presence: The tax rate for taxpayers with a “significant economic presence” who elect to file annual income tax returns would increase from 3% to 5%.
• Digital Assets: Digital assets would be outside the scope of income tax, except where they represent underlying assets. They could also be eligible for tax amortization.
• Indirect Disposal of Assets: The indirect disposal of assets in Colombia through the international transfer of digital assets would become subject to income tax.

Tax Amnesty

The bill includes provisions for a tax amnesty program:

• Penalties and Interest: Penalties and interest could be reduced under certain circumstances for unfiled returns, unpaid taxes, or ongoing tax disputes, provided the underlying tax is fully paid.
• Undeclared Assets: Underreported assets or over-reported liabilities as of January 1, 2026, would be subject to a 15% complementary tax rate, without triggering penalties or interest.

Miscellaneous Provisions

Other notable provisions include:

• Excise Tax: Excise tax rates for beers and liquors would be leveled to 30%, with a broadened taxable base based on liquor content.
• Amended Returns: The window to file amended returns to pay more tax or increase a tax receivable would be tied to the statute of limitations (3 or 5 years).

The proposed tax reform is extensive and could have a significant impact on businesses and individuals in Colombia. As the bill makes its way through Congress, taxpayers must stay informed of any developments.

Finance Colombia will continue to monitor the progress of this legislation. Readers are encouraged to follow financecolombia.com for the latest updates.

Gustavo Petro at his 2025 Labor Day rally. Photo credit: Presidencia de la República de Colombia.

A significant portion of Colombia’s propane is imported from the United States

Charle Gamba, President and CEO of Canacol Energy, commented: “Given the limited capacity of the gas pipeline infrastructure in Colombia, industrial, commercial, and residential consumers not located along existing pipeline routes currently use 145 MMscfpd (Millions of Cubic Feet of Gas Per Day) of compressed natural gas and propane that is transported long distances via truck as an energy source.  LNG can replace diesel, fuel oil, compressed gas, propane, and other fuels at a considerable reduction in price given the relatively lower cost of natural gas and the large volume of liquified gas that can be transported by truck.  Compressed natural gas for example costs three times more to transport than LNG, resulting in the potential for significant cost savings for consumers who switch to LNG.  With our joint venture partners Galileo providing the technology, our objective is to build other liquefaction terminals at other strategic sites in Colombia with the goal of replacing the use of diesel, fuel oil, compressed natural gas, propane, and other fuels with LNG at both lower cost to consumers and lower emission of pollutants.”

During the course of 2019 Canacol Energy installed four natural gas liquefaction modules purchased from Galileo at its main gas processing facility located at Jobó, Cordoba.  The modules are capable of converting 2.4 million standard cubic feet per day (“MMscfpd”) of gas into 29,000 gallons of LNG.  This LNG is being sold to a third party at the plant gate for distribution via trucks to their clients in Antioquia and Santander as far as 800 kilometers from Jobo.

65 MMscfpd of compressed natural gas and 80 MMscfpd of propane are currently consumed in Colombia, with a significant amount of the propane being imported from the United States.  The objective of the joint venture with Galileo is to install terminals in other parts of Colombia close to gas pipelines where Canacol can physically ship or swap its gas to be liquified, with the goal of replacing diesel, fuel oil, compressed natural gas, propane, and other fuels with lower cost and lower emission LNG.

Canacol wins three new gas exploration blocks

The company also announced that it won three new conventional gas exploration blocks in the recent bid round administered by Colombia’s Agencia Nacional de Hydrocarburos (ANH). Under its wholly owned subsidiary CNE Oil & Gas S.A.S., Canacol was awarded conventional exploration contract VIM 33 (155,310 acres, 62,852 hectares) in the Lower Magdalena Valley basin, and conventional exploration contracts VMM 45 (12,422 acres, 5,027 hectares) and VMM 49 (148,244 acres, 59,992 hectares) in the Middle Magdalena Valley basin. On a net acreage basis, these conventional exploration contracts increase Canacol’s land position for conventional natural gas in Colombia by 29 % from 1.1 mm net acres to 1.4 mm net acres.

Canacol is an exploration and production company with operations focused in Colombia.  Canacol Energy’s common stock trades on the Toronto Stock Exchange, the OTCQX in the United States of America, and the Colombia Stock Exchange under ticker symbol CNE, CNNEF, and CNE.C, respectively.

Above photo courtesy Canacol Energy

Port developer Pacific Infrastructure told Finance Colombia that this terminal will address a necessity in Cartagena’s port transport, handling loose cargo, such as that with unique specifications, or cannot be shipped via standardized containers. Pacific Infrastructure expects Puerto Bahia to be the primary point of departure from Cartagena for this type of cargo, and another primary goal is to convert the port into the regional RoRo (Roll on – Roll off) hub for vehichles, heavy machinery, and specialized shipments.

Juan Ricardo Noero, President of Pacific Infrastructure

Pacific Exploration & Production has a 41.65% equity interest in Pacific Infrastructure Ventures Inc., the company that developed Puerto Bahía. The other primary investor is the International Finance Corporation, an entity of the World Bank. The port, built at a cost of approximately US $600 million, consists of two terminals: a hydrocarbon terminal and a dry cargo terminal. The hydrocarbon terminal has an initial storage capacity of 2.4 million barrels, in eight storage tanks for both naphtha and crude oil and has the capacity to load Suezmax tankers (up to a one million barrels capacity). In addition, it has two 125 ton mobile cranes, a truck loading/unloading station and a barge terminal delivering flexibility in hydrocarbon transportation logistics. The bulk loading terminal has a 300 meter long dock and can handle post-Panamax ships. It has 30 acres of extra space available for storage with room for future expansion. The port is accessed by sea, river, and land in the Bay of Cartagena, on the north side of Barú Island and has a natural draft of 20 meters.

Juan Noero, President of Pacific Infrastructure, said in a statement: “This is a key strategic project for the development of Colombia and a fundamental piece in our challenge to become a more competitive and innovative nation.”

The port has two 125 ton cargo cranes

First phase: General cargo

• 300 meter wharf
• 2 external docking positions
• 5 ton per square meter plate capacity
• 2 lane viaduct
• 40 acres of cargo patio
• Connecting bridge
• 100% fire protection coverage

Second phase: General cargo

• 600 meter wharf
• 4 external docking position
• 2 viaducts, 4 lanes

Ronald Pantin, Chief Executive Officer, commented: “The official opening of the port is the fulfillment of our strategy to promote infrastructure projects that are complementary to our exploration and production investments. Puerto Bahia adds flexibility to our operations and supports our belief that the right infrastructure project begets progress for the entire country. The port offers an alternative oil export point for Colombian producers as well as providing import/export and storage capabilities in close proximity to the new Reficar refinery.”

DCIM100GOPRO