Legislative Decree 0173/26 introduces an equity tax applicable to corporations

Through Legislative Decree 0173 of 2026 (the "Decree"), issued on February 24, 2026, the President of the Republic, pursuant to the state of emergency declared by Legislative Decree 0150 of 2026, introduced an equity tax applicable to corporations and unincorporated entities, with the purpose of obtaining resources to meet the expenses derived from the public calamity caused by hydrometeorological phenomena in the departments of Córdoba,  Antioquia, La Guajira, Sucre, Bolívar, Cesar, Magdalena and Chocó.

Through Legislative Decree 0150 of February 11, 2026, a State of Economic, Social and Ecological Emergency was declared in part of the national territory, for a term of thirty (30) days, as a result of multiple converging hydrometeorological events. These events caused serious impacts on people, families, homes, roads, aqueducts, educational and health centers, and public utility services, among others.

The national government justified the adoption of extraordinary tax measures on the grounds that the 2026 General Budget of the Nation provided insufficient resources to address the emergency. This constraint was aggravated by the failure to enact two financing laws and by the fact that a high proportion (approximately 93%) of budget appropriations are inflexible. The preliminary fiscal impact of the crisis was estimated at approximately COP 8.3 trillion.

Taxable subjects of the equity tax are corporations and unincorporated entities that are corporate income taxpayers and that file the corresponding return, provided that their net equity as of March 1, 2026, is equal to or greater than 200,000 Tax Value Units (approximately USD 2,828,520).

The following corporations are not liable for the equity tax: (i) companies in the health sector; (ii) companies subject to State intervention in the exercise of inspection, surveillance, and control functions; and (iii) residential public utility service companies of municipalities that have declared a public calamity and that are in the area affected by the emergency.

The tax is triggered by the possession of a net-equity as of March 1, 2026, whose value is equal to or greater than 200,000 Tax Value Units (approximately USD 2,828,520). Net Equity is determined by taking the gross equity held minus the taxpayer’s current liabilities.

As an anti-avoidance measure, companies that carried out spin-offs between the entry into force of the Decree and March 1, 2026, must aggregate the liquid assets of the spun-off entities and beneficiary entities to determine whether they are subject to taxation. If the aggregate amount is equal to or greater than 200,000 Tax Value Units, the beneficiary company will be a taxpayer and must compute and pay the tax as if the spin-off had not occurred.

The Decree establishes two different rates, as follows:

The differentiated rate of 1.60% is justified, according to the Decree’s recitals, by (i) the financial sector’s lower effective tax rate compared to other sectors with comparable returns, and (ii) the extractive sector’s high structural profitability and the negative externalities it generates.

The Net Equity, of the taxpayer, which is the taxable base, is determined by taking the gross equity held minus the taxpayer’s current liabilities. The following concepts are excluded:

• The net equity value of shares, quotas, or equity interests in domestic companies, held directly or indirectly.
• The net equity value of fixed real estate assets acquired and/or used for environmental control and improvement by public aqueduct and sewerage companies.
• The value of the technical reserves of Fogafín and Fogacoop.
• The equity value of the social contributions made by the members of the taxpayers referred to in Article 19-4 of the Tax Code.

In the case of compensation funds, employee funds and trade associations, the taxable base is limited to gross equity minus liabilities attributable to the activities in respect of which they are subject to corporate income tax.

The tax is filed and paid as follows:

The DIAN will prescribe the tax return form and will enable the corresponding payment form.

In addition to the facts of inaccuracy provided for in Article 647 of the Colombian Tax Code, accounting and/or tax adjustments that do not correspond to actual transactions and that reduce net equity constitute a sanctionable inaccuracy. The foregoing, without prejudice to the criminal sanctions that may apply.

The resources obtained will be used exclusively to cover the expenditures under the General Budget of the Nation necessary to address the causes of the state of emergency and to prevent the escalation of its effects. The Government may prioritize payments derived from the public calamity over its other obligations.

The Decree enters into force on the day following its publication in the Official Gazette.

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