Colombia 2026 Emergency Tax Reform: VAT, Excise and Consumption

Under the special powers granted during the State of Economic Emergency, the Colombian government issued a Decree introducing temporary tax measures that will be effective throughout 2026. Despite the legitimacy of this emergency declaration being widely questioned, the validity of the decision is being assessed before the Constitutional Court, and Congress denying the government's proposal in 2025, the government is pushing it forward with the tax reform.

Main VAT, Consumption, and Excise Measures

Under the tax measures declared under the State of Economic Emergency, online gambling in 2026 in Colombia will be subject to VAT at a rate of 19%, calculated on gross gaming revenue, defined as total bets placed minus prizes paid out. This change in how VAT is calculated is a significant shift compared to the rules in effect until December 31, 2025, under which VAT was calculated based on the amounts deposited by players into their gambling operator accounts.

The 19% VAT rate will also apply to liquor, wine, and similar alcoholic beverages, replacing the previously applied reduced 5% rate. Additionally, these products are subject to excise taxation, consisting of a specific tax of COP 750 (USD 0.20) per 750-cc container for each degree of alcohol, or a proportional amount for different volumes, along with an ad valorem excise tax of 30% calculated on the final consumer price.

Cigarettes and manufactured tobacco products are also affected by the 2026 tax reform. They will be subject to an excise tax composed of two elements: a specific tax of COP 11,200 (USD 3) per pack of 20 cigarettes, or a proportional amount, or COP 891 (USD 0.24) per gram for chopped or similar tobacco, together with an additional 10% calculated on the final consumer price, or in the case of chopped tobacco, on the specific tax component. 

The VAT exemption for courier and urgent shipments has been significantly narrowed, applying only to consignments valued at up to USD 50, down from the previous USD 200 threshold. Simultaneously, consumption tax rates on selected goods are increased, rising from 8% to 19% for motorcycles with specific engine capacity and for yachts and other pleasure or sports vessels, and from 16% to 19% for particular vehicles and pick-up trucks with a free-on-board value of USD 30,000 or more, as well as for specific aircraft.

Conclusion

The VAT, consumption, and excise measures are only part of the tax reform, which brings novelties to the corporate income tax, the equity tax, and the tax on specific hydrocarbon and coal sales, and establishes a new normalization tax. Nonetheless, affected taxable persons should closely monitor forthcoming decisions from the Constitutional Court, as its review of these measures could significantly influence their validity and application.

Source: EY