Following the December 19 announcement of plans for an economic emergency decree, the Colombian government of Gustavo Petro on December 31 issued the tax package via Decree 1390, targeting 11 trillion pesos to address a 16.3 trillion fiscal deficit after Congress rejected reforms. Finance Minister Germán Ávila noted it covers much but not all 2026 needs, impacting liquor, cigarettes, patrimony, finance, and imports.
The issuance responds to congressional rejection of financing laws and pressures from health, security, subsidies, and disasters like the winter wave. This marks Petro's third use of such powers, following prior targeted crises.
Key measures include: raising VAT to 19% on liquors and wines, with specific taxes of 750 pesos per degree of alcohol plus 30% ad valorem; 11,200 pesos per pack of 20 cigarettes, plus first-time vaping taxes at 2,000 pesos per milliliter plus 30%; 19% National Consumption Tax on luxury items like yachts and aircraft.
Patrimony tax thresholds adjust from 40,000 UVT (~2 billion pesos), with progressive rates from 0.5% up to 70,000 UVT to 5% over 2 million UVT, affecting ~102,000 taxpayers and generating ~1 trillion extra.
Financial sector changes add a 15% income tax surcharge for banks (total effective ~50%, load 24%); online betting taxes shift to net income (bets minus prizes). VAT exemptions end for imports of 50-200 USD; a 1% tax applies to initial oil and coal sales (royalties non-deductible except in losses).
Ávila stated: 'With these increases, more than 10 trillion pesos is expected,' though short of full needs. Business groups had earlier criticized the plans' constitutionality, but no new reactions noted post-issuance.
