President Gustavo Petro's government presented an adjusted tax reform, cutting its revenue target from $26 billion to $16 billion after congressional agreements. Controversial taxes like VAT on fuels and bills were removed, but levies on alcohol, tobacco, and online gambling remain. The proposal aims to fund the 2026 National Budget, though it faces political opposition.
Finance Minister Germán Ávila Plazas and acting DIAN Director Carlos Betancourt presented the adjusted tax reform to Congress, aiming to reduce tax expenditures and enhance fiscal progressivity. Initially proposed at $26 billion, the figure was cut by $10 billion during the 2026 National Budget (PGN) discussions, avoiding VAT changes on fuels like gasoline and diesel.
Included levies apply 19% VAT to hybrid vehicles, aguardiente, rum (previously 5%), whisky, wine, brandy, vodka, cider, and other fermented drinks. Online gambling, previously excluded, now faces 19% VAT, expecting $1.6 billion from digital bets. Additionally, the occasional gains tax on lotteries rises from 10% to 20%, and consumption tax on pick-ups and aircraft increases from 16% to 19%. For fuels, 19% taxes the fossil component of regular gasoline, and 10% on ACPM in 2027, rising to 19% in 2028 (previously 5%). Projections include $4.1 billion from alcohol and tobacco, and $2.2 billion from new wealth taxes.
Key exclusions cover 19% VAT on lodging for non-residents, software services, cloud processing, and carburant alcohol. Representative Olga Lucía Velázquez stated: “They removed the bills, removed the gasoline, removed the topics we had discussed, totaling about $10 billion less.” The wealth tax retains five rates: 0% up to 40,000 UVT ($1.9 million), 0.5% from 40,000 to 70,000 UVT, 1% from 70,000 to 120,000 UVT, 2% from 120,000 to 240,000 UVT, 3% from 240,000 to two million UVT, and 5% above.
Yet, it faces opposition. Representative Julio César Triana (Cambio Radical) argued it lacks technical justification and political viability, as the PGN was reduced to $546.9 billion and alternatives exist without new taxes. In contrast, Representative Leyla Rincón supported the changes, such as VAT exemption on hotel services in municipalities under 200,000 inhabitants for four years, and gradual consumption tax hikes for restaurants (4% in 2025, 5% in 2026, 6% in 2027). Velázquez mentioned a Plan B economic reactivation bill to raise $5-6 billion.