What Colombia’s July 20 Tax Reform Would Mean for Foreign Residents
Colombia · Taxes
Key Facts
- The bill. Colombia’s government plans to file a financing law, its fifth tax-reform attempt, on July 20.
- Income tax. It would raise the top personal income-tax rate, reportedly from 39% to 41%, and widen who pays more.
- Wealth tax. It leans on a wealth tax with higher tariffs on the largest fortunes.
- VAT. It would trim the list of goods exempt from VAT, while sparing the basic family basket.
- The target. The reform aims to raise about 21.8 trillion pesos next year, rising toward 37 trillion by 2030.
Colombia’s long-trailed tax reform now has a shape, and for foreign residents it is the detail that matters. The bill the government plans to file on July 20 would push up income and wealth taxes on higher earners — the group many established expats fall into.
What the bill would do
The government plans to file a financing law, its fifth attempt at a tax reform, in Congress on July 20. According to the finance ministry and the tax authority, it revives much of an earlier bill that Congress struck down.
The headline measures raise the top personal income-tax rate, reportedly from 39% to 41%, and make the schedule more progressive. It would also trim tax deductions and benefits that reduce what high earners pay.
The wealth tax and VAT
Alongside income tax, the reform leans on a wealth tax with higher tariffs on the largest fortunes. That is the part most likely to reach foreign residents who hold significant global assets.
On VAT, the bill would shorten the list of exempt and excluded goods, while sparing the basic family basket. Reports suggest higher duties on strong liquor and gambling, and possibly fuel and foreign online platforms, though those are not yet firm.
Why it reaches foreigners
Once you are a Colombian tax resident, which generally means more than 183 days in a year, you are taxed on worldwide income and, for the wealth tax, on worldwide assets. That is what pulls foreign residents into the reform.
An established expat with a global portfolio could face the new wealth-tax tariffs and the wider income brackets. Newer arrivals and those below the thresholds would feel less, and short-term visitors are unaffected.
What is not changing
The reform is a bill, not law, and nothing takes effect on the day it is filed. It would have to pass a divided Congress, and the incoming government has asked for it not to be filed at all.
Even if it advances, it would apply from a future tax year rather than retroactively. There is nothing residents need to do today beyond understanding where they might stand.
What to watch
The near-term marker is July 20, when the government says it will file the bill. From there, the debate in Congress and the incoming administration’s stance will shape whether it survives.
If you are a tax resident with substantial assets, it is worth modelling your exposure to a higher income rate and a wealth tax now. A local tax adviser can tell you where the thresholds would bite.
Frequently Asked Questions
What would Colombia’s tax reform change?
It would raise the top income-tax rate, reportedly to 41%, add wealth-tax tariffs on large fortunes and trim VAT exemptions. It is a bill, not yet law.
Would it affect foreign residents?
It could. Colombian tax residents are taxed on worldwide income and assets, so higher earners with global wealth are most exposed.
When would it take effect?
Not immediately. It must pass Congress and would apply from a future tax year, not retroactively.
Does it change anything today?
No. Nothing changes before the bill is filed on July 20, and nothing before the August 7 handover.
What should I do?
If you are a tax resident with significant assets, model your exposure and speak to a local tax adviser. Short-term visitors are unaffected.
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