Colombia’s newly inaugurated president, Abelardo De La Espriella, announced that his administration will repeal the country’s wealth tax and introduce a structural reform of the tax system. The move is presented as a cornerstone of a pro‑investment agenda aimed at making Colombia a more attractive destination for both domestic entrepreneurs and foreign residents.
Current wealth‑tax framework
- Legal basis: Law 2277 of 2022, enacted under former President Gustavo Petro, made the wealth tax permanent.
- Threshold: Individuals with net assets of at least 72,000 UVT (≈ COP 3.77 billion, about US $1.2 million in 2026) on 1 January each year are liable.
- Rates: Marginal rates of 0.5 %, 1 %, and 1.5 %; the top rate is set to fall after 2026, leaving 1 % as the ceiling.
- Residency scope: Residents are taxed on worldwide assets; non‑residents are taxed only on Colombian assets.
- Recent emergency decree (late 2025): Temporarily lowered the threshold to 40,000 UVT and raised rates up to 5 %, the highest statutory wealth‑tax rate among major economies. The Constitutional Court annulled the emergency declaration and the decree in April 2026, restoring the permanent rules.
Process for elimination
- The wealth tax is embedded in statute; it cannot be removed by executive decree.
- Finance Minister Miguel Gómez Martínez plans to submit a tax‑reform bill to Congress in September 2026, following an interim fiscal adjustment through administrative measures.
- Congressional approval is required for repeal.
Implications for foreign residents
- Tax residency rule: Spending more than 183 days in a 365‑day period makes an individual a Colombian tax resident, exposing worldwide net assets to the wealth tax once the threshold is exceeded.
- Investor visas and long‑stay permits: The wealth tax has been a deterrent for holders of Colombia’s investor visas and other long‑term residency programs.
- Potential impact: Relocation specialists suggest that removal of the tax before the end of the year would send a strong signal to prospective expatriates, potentially increasing Colombia’s appeal relative to nearby alternatives such as Panama, which does not levy a wealth tax.
Regional tax context
- Wealth‑tax holdouts: Colombia joins a shrinking group of Latin American countries that still impose a recurring net‑wealth tax; the others are Argentina, Bolivia, and Uruguay.
- Trend elsewhere: Nations like Panama, Costa Rica, and Paraguay use territorial tax systems and have no wealth tax, making them popular among expatriates.
- Prospects for broader reform: Analysts note that shifting from residence‑based to territorial taxation would be a major structural change for a country of over 40 million people and may conflict with OECD standards, which Colombia adopted in 2020.
Outlook and additional considerations
- Retiree market: Colombia’s network of double‑taxation treaties and exemptions for foreign pensions (e.g., Canadians, Americans, Europeans) could position it as a retiree destination, offering low living costs, good healthcare, and favorable climate.
- Further reforms: There is speculation about additional measures such as reduced income‑tax rates for foreigners or a tax‑holiday program modeled on Portugal’s Non‑Habitual Resident regime, which could attract high‑earning migrants if implemented.
The upcoming September tax‑reform bill will determine whether the wealth tax is repealed and how Colombia reshapes its broader fiscal landscape.
Source article: www.imidaily.com
