Tax Insight

Colombia introduces new equity tax effective in 2026

Insight
5 minute read
March 06, 2026

What happened?

Through Executive Order 0173 of February 24, 2026 (the ‘Executive Order’), the Colombian Government created a new equity tax applicable for fiscal year 2026. The tax applies to legal entities and de facto partnerships that are income tax filers in Colombia and whose equity as of March 1, 2026, equals or exceeds 200,000 tax unit’s value (UVT) (approximately COP $10,5 billion or USD $2,7 million).

The measure introduces different tax rates depending on the industry sector, sets accelerated compliance deadlines, and strengthens anti-avoidance provisions aimed at preventing artificial reductions of equity.

Why is it important?

The equity tax may create a significant cash tax cost for affected entities, particularly financial institutions and companies in the extractive sector that are subject to the higher rate. The short timeline between the measuring date (March 1, 2026) and the filing and payment deadlines increases the need for early planning and balance sheet review.

Entities near the threshold or that have undertaken recent restructuring transactions (including spin-offs) may face heightened scrutiny under the strengthened anti-avoidance rules.

Actions to consider

Taxpayers should proactively assess projected equity as of March 1, 2026, determine whether the 200,000 UVT threshold is met, and evaluate the potential cash flow impact. A timely review of asset and liability positions, as well as recent corporate reorganizations, is recommended to mitigate risks and enable compliance.