Colombia’s Capital Votes Higher Taxes on Banks, Car Sales and Alcohol
COLOMBIA · BOGOTÁ · TAXES
Key Facts
- The country Colombia has 53 million people and a US$420 billion economy, about a ninth of Britain’s. Bogotá, the capital, has nearly eight million residents, like New York City.
- Why it matters Colombian cities tax business revenue, not profit, through a levy called ICA. Bogotá produces a quarter of national output, so its rates shape costs for banks and foreign firms.
- Why now Mayor Carlos Fernando Galán wants money to rebuild the city’s street lighting, with LED lamps, sensors and cameras. He paired that with a rewrite of ICA rates across hundreds of activities.
- What happened On Thursday 24 September the city council approved the core of the plan in its final debate. Banks’ rate rises from 1.4% to 2% of taxable revenue in 2027.
- The numbers The city expects about COP 1.2 trillion (about US$368 million) a year in new revenue. Rates fall for 275 activities and rise for 169.
- What it means for you Firms selling cars, alcohol or financial services face higher bills from 2027. Restaurants, bars and most industry pay less. Owners of pricier homes face a lighting surcharge.
- Still open More than 20 of the 54 articles are still to be voted, on Monday 28 September. The mayor must then sign the measure into law.
Colombia’s capital has voted to charge banks, car dealers and alcohol sellers more from 2027. The Bogotá tax reform passed its key votes in the city council on Thursday 24 September.
The plan also cuts rates for most shops, restaurants and factories. The mayor’s office says 275 business activities will pay less and 169 will pay more.
What ICA is, and who pays it
ICA stands for impuesto de industria y comercio, the industry and commerce tax. Every Colombian municipality charges it on businesses that earn revenue within its limits.
It is levied on gross income, not on profit. Rates are set “per thousand.”
A rate of 14 per 1,000 means COP 14,000 (about US$4.30) per COP 1 million (about US$307) of revenue. Because it ignores whether a firm made money, business groups see ICA as one of the heaviest local charges in the country.
Bogotá’s finance office notes that companies can deduct it when they calculate national income tax. Figures here use COP 3,257 to the US dollar, the open.er-api.com rate on 27 September 2026.
Who pays more from 2027
Banks and other financial firms carry the biggest rise. Their rate goes from 14 per 1,000 today to 20 per 1,000 in 2027, then 19 in 2028 and 18 from 2029.
That first-year jump is about 43%. The mayor’s original draft asked for 21 per 1,000, and the council settled lower after lobbying by the financial sector.
Vehicle sales, now taxed at 6.9 per 1,000, move to three tiers by engine type. Electric vehicles go to 8, hybrids to 10 and petrol or diesel vehicles to 11, a rise of almost 60%.
Sellers of alcohol and tobacco face a single rate of 19 per 1,000, up from 13.8. The draft had proposed 21 for them as well.
Who pays less
Most of the city’s businesses come out ahead on paper. Restaurants and hotels fall from 13.8 to 12 per 1,000, and bars from 13.8 to 11.
Book publishing is halved, from 8 to 4 per 1,000. Cooperatives and employee savings funds also get lower rates.
“Nine in ten industries and eight in ten shops in Bogotá will see their taxes go down,” Galán said, per Bloomberg Línea. The cuts are larger in number, but the rises fall on sectors with much bigger revenue.
Where the money goes
The city puts the reform’s yield at about COP 1.2 trillion (about US$368 million) a year. Local reports give estimates between COP 1.08 trillion and 1.26 trillion (about US$332 million to US$387 million).
Bloomberg Línea reports that more than COP 750 billion (about US$230 million) of that would come from ICA. The rest comes from a new surcharge on property tax.
That surcharge funds the flagship project, a network of about 370,000 “smart” street lights with LED lamps, sensors and security cameras. It applies to homes in the upper-middle and upper income bands, known as strata 4 to 6, and to commercial property.
Estimates published by El Tiempo put the household charge at roughly COP 133,000 to COP 348,000 a year (about US$41 to US$107). Homes in strata 1 to 3 are exempt.
Business groups push back
Asobancaria, the national banking association, says the higher rate could make credit and financial products more expensive. Its president, Jonathan Malagón, called Bogotá “the financial capital of the country” in opposing the change.
It also warns that smaller lenders will be hit hardest, and some may move operations to nearby towns with lower rates. Fenalco, the national retailers’ federation, objects to the rises on vehicles, alcohol and tobacco.
“Bogotá cannot expect to collect more by weakening those who generate the revenue,” said its Bogotá director, Juan Esteban Orrego. Opposition councillors called the package regressive and said it would raise prices for households.
Supporters framed the lighting and camera network as a security investment for a city worried about crime. The vote comes as Galán looks for money beyond the national budget.
Earlier this month the city secured Bogotá Wins US$150 Million IDB Loan Without Nation’s Backing, its own borrowing without a federal guarantee.
What comes next
The council meets again on Monday 28 September to vote the remaining articles. They cover proposed ICA exemptions for large new investments, urban renewal incentives and administrative rules.
If they pass, Galán must sign the measure before it takes effect. The new ICA rates start on 1 January 2027, and banks’ rate steps down each year until 2029.
The package also offers a 60% discount on penalties and interest on overdue city taxes and traffic fines, Portafolio reports. The deadline is 18 December 2026.
The vote does not change national taxes, and it does not raise ICA for most small shops. Foreign residents pay nothing extra unless they own a strata 4 to 6 home or run an affected business.
Personal income tax for foreigners is a separate, national matter, explained in Taxes in Colombia for Expats: The 183-Day Residency Rule Explained.
More: Colombia news in English, every day from The Rio Times.
Frequently Asked Questions
What is ICA in Colombia?
ICA is the industry and commerce tax that every Colombian municipality charges on the gross revenue businesses earn within its limits. It is set per thousand of revenue, so it is paid whether or not a firm makes a profit.
How much will banks pay under the Bogotá tax reform?
The rate for banks and other financial firms rises from 14 to 20 per 1,000 of taxable revenue in 2027. It then falls to 19 in 2028 and 18 from 2029.
Is the Bogotá tax reform final?
Not yet. The city council approved the core articles on 24 September and votes the rest on 28 September. The mayor must then sign it, and the new ICA rates apply from 2027.
Do foreign residents in Bogotá pay more?
Only in some cases. Owners of homes in strata 4 to 6 face a new street-lighting surcharge on property tax. Firms selling cars, alcohol, tobacco or financial services face higher ICA, while most other businesses get lower rates.
Sources: El Espectador, 21 and 26 September 2026; El Tiempo, 25 September 2026; El Nuevo Siglo, 25 September 2026; Portafolio, 25 September 2026; La República, 26 September 2026; Bloomberg Línea, 24 September 2026; Cambio, September 2026; Valora Analitik, 9 September 2026; Concejo de Bogotá. Exchange rate: open.er-api.com, 27 September 2026.
In depth
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