COLOMBIA Trends and Developments Contributed by: Rodrigo Castillo Cottin, Ana María López and Alejandra Becerra, Rimon, P.C.
Nacionales , or DIAN) to resolve administrative liti - gation proceedings. Collection data • The government projected COP8.3 trillion in rev - enue from the extraordinary wealth tax (Decree 173 of 2026). • Actual collection reached approximately COP5.1 trillion, according to the DIAN, falling short of the projected target. The political transition As mentioned earlier, Abelardo de la Espriella was elected in the presidential election runoff on 21 June 2026 and will assume office on 7 August 2026. His administration proposes a fiscal adjustment of approximately COP70 trillion, including a “fiscal read - justment program” aimed at reducing the size of the State by up to one quarter. The fiscal deficit, which closed in 2025 at 6.4% of GDP (a reduction of 0.3 percentage points compared to 2024), is targeted to fall below 3.5% by 2030. The administration’s most ambitious commitment is to stabilise the fiscal deficit at 4.8%, a reduction of 2.3 percentage points, within the first 360 days of gov - ernment. At the time of writing, the incoming administration of President-elect Abelardo de la Espriella announced a proposed tax reform bill aimed at fundamentally simplifying Colombia’s tax system. According to Min - ister of Finance-designate Miguel Gómez Martínez, the reform would reduce the number of national tax - es administered by the DIAN from 15 to just three: (i) Impuesto sobre la Renta (income tax); (ii) IVA (VAT); and (iii) IVA externo (external VAT on digital services, licences, and intangibles consumed domestically). The 12 taxes slated for elimination or consolidation have not been formally enumerated, though the proposal contemplates eliminating the wealth tax ( impuesto al patrimonio ) as “antitechnical and costly”. The stated objectives are to simplify compliance, reduce admin - istrative burdens on taxpayers and the DIAN, combat tax evasion (estimated at 35% for IVA and 40% for income tax), and attract foreign investment through regulatory stability. However, passage remains uncer -
tain, as the incoming government lacks automatic majorities in Congress. The reform is expected to be filed after the administration takes office on 7 August 2026, and will be accompanied by a public spending freeze to address a fiscal deficit projected at 6.5–7.5% of GDP. Legal risks and investor considerations Taxes were collected between 1 and 29 January 2026, operating under the presumption of legality; however, no further revenue could be collected under the first emergency framework. This has raised numerous unresolved questions regarding the refund of taxes already collected. The principle of fiscal legality exists because taxation is, in essence, an act of power that demands democratic legitimacy. As the Constitutional Court observed in Ruling C-1383 of 2000, a tax is constitutionally admissible when the consent of the political community, whether direct or indirect, has been obtained such that citizens recog - nise taxation as an effective and necessary mecha - nism to fund the State. The creation of taxes must accordingly reside in the organs of popular represen - tation and be exercised with clarity and precision, as required by the democratic principle and the rule of law. When emergency decrees supplant democratic delib - eration, legal certainty evaporates. Taxpayers find themselves subject to obligations that their elected representatives never debated or approved, eroding the confidence of both investors and compliant tax - payers who already bear the heaviest fiscal burden. Compliant taxpayers must now navigate a fragment - ed fiscal regime: ordinary legislation on one hand, and still-enforceable emergency legislation from the second declaration on the other. The tax system has ceased to be reliable because legislative deliberation has been supplanted by executive exceptionalism, and because the most fundamental principle of the rule of law in tax matters (ie, that taxes must origi - nate in the legislature) has been subordinated to the urgency of the moment.
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