What the Filed Colombia Tax Reform Says for Foreigners: A Wealth-Tax Threshold Cut

Colombia · Taxes

Colombia’s outgoing government has filed its fifth tax reform, and buried in it is the line that matters most to foreign residents: a sharp cut to the wealth-tax threshold that would pull in thousands more people with global net worth. Here is what it says, and why it may not survive.

The wealth-tax threshold cut

The reform lowers the floor for the wealth tax, the impuesto al patrimonio, from 72,000 UVT to 40,000 UVT. At the 2026 tax unit, that moves the entry point from roughly 3.77 billion pesos to about 2.09 billion, or from around US$1.12 million to about US$620,000 of net worth.

The finance ministry’s own estimate is that the change would raise the number of people paying the tax from about 32,000 to more than 105,000, close to a tripling. That is the single most concrete line in the bill for foreigners.

Why it reaches foreign residents

Colombia taxes its tax residents on worldwide assets for the wealth tax. Anyone who spends more than 183 days in the country in a year is a tax resident, and their global net worth, not just their Colombian assets, counts toward the threshold.

So a lower floor pulls in more foreign residents whose worldwide property, investments and other assets add up to more than about US$620,000. Many long-term expats who never expected to owe the tax could fall inside it.

The rates, step by step

The tax is progressive. From 40,000 UVT the marginal rate starts at 0.5 percent, giving an effective rate of about 0.2 percent at the bottom of the band, and rises through 1, 2 and 3 percent.

At the very top, above 2,000,000 UVT, the marginal rate reaches 5 percent, with an effective rate near 3.2 percent. The effective burden is well below the marginal figure because only the slice above each threshold is taxed at that rate.

The rest of the bill

Beyond the wealth tax, the reform raises the tax on lottery, raffle and betting winnings from 20 to 30 percent, and lifts the financial sector’s income-tax rate by 15 points to 50 percent. It targets about 21.8 trillion pesos in 2027, rising toward 37 trillion by 2030.

For most individual foreign residents, the wealth-tax threshold is the provision to watch; the gambling and financial-sector changes fall on narrower groups.

Why it may not survive

The bill faces long odds. It essentially reproduces the 2025 financing law that Congress already rejected, and it arrives with about 15 days left in the outgoing president’s term and no majority, in a Senate whose new president comes from the opposition-aligned Centro Democrático.

A former tax-agency official has said it will “surely be withdrawn.” The incoming government, which takes office on August 7, is free to modify or drop it entirely.

What residents should do now

Nothing changes before August 7, and nothing changes at all unless the bill passes. The current year’s wealth-tax rules stand as they are.

If your worldwide net worth is near the proposed floor, it is worth understanding your exposure in case a similar measure returns under the new government. Confirm your position with a Colombian tax adviser; this is general information, not tax advice.

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