Did your company already adjust its tax planning or accounting provisions based on Colombia’s recent emergency tax measures?
If so, a key judicial decision now changes the landscape. On January 29, 2026, the Constitutional Court of Colombia suspended the effects of Decree 1474 of 2025, which implemented a State of Economic Emergency declared by the national government. As a result, all extraordinary tax measures adopted under that decree are temporarily unenforceable while the Court conducts its final constitutional review.
For companies operating in Colombia, this decision creates a dual impact: immediate relief from certain tax burdens, combined with legal and accounting risks that require prompt and technically sound reassessment.
At Nieto Lawyers, we outline what has changed, which taxes no longer apply, and how companies can protect their legal and tax position amid heightened regulatory uncertainty.
What Is an Economic Emergency Decree in Colombia?
Under the Colombian Constitution, the Executive may declare a State of Economic and Social Emergency when facing extraordinary and unforeseeable events that severely disrupt the economic order. During such periods, the government may issue decrees with the force of law, including tax measures, subject to subsequent constitutional control.
On December 22, 2025, the Colombian government declared such an emergency to address a fiscal gap estimated at COP 16.3 trillion, following the rejection of a Financing Law by Congress. In this context, Decree 1474 of December 29, 2025 introduced a package of extraordinary tax measures.
Key Tax Measures Introduced by Decree 1474 of 2025
Among the most relevant provisions were:
- A net worth tax applicable to legal entities for fiscal year 2026
- An increase in corporate income tax for the financial sector to 50%
- 19% VAT on online gambling platforms
- Increase of VAT to 19% on spirits, wines, and aperitifs
- A special tax on hydrocarbons and coal
These measures had an immediate impact on tax planning, accounting provisions, and pricing strategies across multiple sectors.
Why Did the Constitutional Court Suspend the Decree?
In its suspension order, the Court concluded that the alleged fiscal crisis did not arise from an extraordinary or unforeseeable event, but rather from a structural and ongoing fiscal imbalance of the State.
The Court emphasized that states of exception are temporary instruments and cannot be used to address permanent fiscal challenges. It also highlighted that several of the measures introduced through the decree had previously been rejected by Congress, reinforcing the principles of separation of powers and democratic legitimacy.
Which Taxes Are No Longer Applicable Following the Suspension?
As a result of the suspension, the following measures are currently without legal effect:
- Net worth tax on legal entities: not applicable for 2026 under this decree
- 50% income tax rate for the financial sector: reverts to the 40% general rate; 100% advance payments are not enforceable
- 19% VAT on spirits, wines, and aperitifs: suspended
- 19% VAT on online gambling services: sector-specific benefits are reinstated
- Lower VAT exclusion threshold on imports: remains at 200 USD (does not decrease to 50 USD)
- Special tax on hydrocarbons and coal: additional levy suspended
What Happens to Taxes Already Paid?
During the period in which the decree was in force, taxpayers were required to comply based on the presumption of legality. However, the potential recovery of amounts paid depends on the nature of the tax and the Court’s final ruling:
- Direct taxes (e.g., net worth tax): may be recoverable if the decree is ultimately declared unconstitutional
- Indirect taxes (e.g., VAT passed on to consumers): generally not recoverable
This distinction is critical for defining recovery strategies, accounting adjustments, and contingent asset recognition.
Immediate Actions Companies Should Consider
Companies with operations in Colombia should take the following steps:
1. Immediate review of tax obligations
Identify which measures under Decree 1474 were being applied and suspend related payments or provisions where appropriate.
2. Accounting and financial adjustments
Update tax provisions, cash flow forecasts, and financial scenarios to reflect the suspension.
3. Monitoring the final constitutional ruling
Prepare for potential recovery actions in the event of a final declaration of unconstitutionality.
4. Risk management vis-à-vis the tax authority
Properly document decisions and supporting analyses in anticipation of possible reviews by the DIAN.
Why Work with Nieto & Nieto Lawyers?
Nieto Lawyers provides specialized, cross-border legal and tax advisory services, including:
- Advisory on economic emergency regimes, with continuous experience since 2020
- Strategic tax planning aligned with legal sustainability
- Defense in tax audits and proceedings before Colombian authorities
- Tax risk assessment and contingency prevention
- Ongoing regulatory monitoring of critical legal developments
Final Takeaway
The suspension of Decree 1474 creates a window of opportunity, but also demands swift, technically sound decisions. Companies that fail to reassess their tax position risk unnecessary exposure, misstatements, or lost recovery opportunities.
For a tailored legal and tax impact assessment, contact our team at planeaciontributaria@nietolawyers.com
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