Impact of new tax reforms on companies in Colombia

Tax reforms in Colombia have always had a profound impact on the business environment. In 2025, with the entry into force of new tax regulations, the landscape will change once again, forcing companies to rethink their financial and accounting strategies. Both large corporations and small and medium-sized enterprises (SMEs) must understand the major tax changes and how they affect their operations, tax burden, and growth opportunities.

This new reform introduces adjustments to corporate taxes, changes to VAT, tax incentives for strategic sectors, and key modifications to special regimes. In this article, we’ll clearly and practically break down the most relevant aspects of these modifications and how they may impact your business. Additionally, if you’re considering starting a project, it’s important to consider how the company formation in Colombia is influenced by this new regulatory framework.

Main changes in the 2025 tax reform

Changes in the income tax rate

Starting this year, the general income tax rate for legal entities has been adjusted. Companies generating revenues above 5 billion pesos annually will have a 38% rate, while those below that threshold will pay a 33% rate. This measure seeks tax progressivity, meaning that those with higher incomes contribute more.

Changes in VAT

One of the most debated changes has been the expansion of the VAT base. Products that were previously exempt or excluded are now taxed at a rate of 5% or even 19%. This primarily impacts supply chains and can increase operating costs for many companies. However, VAT refund mechanisms have also been introduced for certain export sectors.

Tax incentives for strategic sectors

The reform includes tax benefits for sectors such as renewable energy, the digital economy, creative industries, and agribusiness. For example, companies developing clean energy projects will be able to access a 50% deduction on their investments in these projects, provided they are certified by the Ministry of Mines and Energy.

Phasing out of the SIMPLE regime for some sectors

The SIMPLE Regime was created to simplify tax compliance for micro and small businesses. However, the new reform establishes that certain sectors, such as the trade of imported goods and financial services, will no longer be eligible for this regime starting next year, forcing these companies to return to the ordinary regime.

 How does this affect businesses?

Higher tax burden for medium and large companies

Companies that previously paid a 30% rate must now prepare for an increase in their tax burden. This requires adjustments to their financial planning strategies, cost optimization, and even their hiring plans.

Price and margin review

With the change in the VAT base, many companies must analyze whether they can absorb this cost or pass it on to consumers. In price-sensitive sectors, this can affect competitiveness.

New tax savings opportunities

Although the reform increases the tax burden in some respects, it also opens up new opportunities for those who adapt quickly. Deductions for investment in technology, sustainability, and youth employability are useful tools to offset the tax burden.

More strategic financial and tax planning

This new environment requires companies not only to comply with the law, but also to optimize their tax burden through strategies aligned with current regulations. From profit projections to the selection of suppliers or the type of company, everything must be precisely calculated.

Case studies: Before and after the reform

Case 1: Growing technology company

Before: It paid a 30% tax on its profits. Its investment in R&D generated no tax benefits.

After: You currently pay 33%, but you can deduct up to 50% of your investment in certified technological innovation projects. This reduces your net tax burden.

Case 2: Commercial company under SIMPLE regime

Before: He paid unified taxes under the SIMPLE regime, with benefits in withholding and advances.

After: You can no longer continue using SIMPLE because you sell imported products. You must now adopt the ordinary regime, with greater accounting and tax obligations.

Considerations when creating a company in Colombia

If you’re considering setting up a business in Colombia, it’s crucial to consider this new tax landscape. The decisions you make from the outset, such as the type of company, the tax regime, and the economic activities you’ll declare, will have a direct impact on the tax burden you’ll incur.

Having specialized advice not only guarantees regulatory compliance, but also helps you identify opportunities to optimize your financial structure from day one.

Frequently asked questions about the impact of new tax reforms on businesses in Colombia

When do the new tax reforms come into effect?

The reforms were approved in December 2024 and began to be implemented in January 2025. Some specific provisions have transition periods until July 2025.

How do I know if my business will be affected?

All companies should review their financial activity, income level, and tax regime. We recommend conducting an internal tax audit or seeking professional advice.

Should I change my tax regime?

It will depend on your sector and size. Some companies will be forced to migrate to the ordinary regime, while others will be able to continue benefiting from special regimes if they meet the requirements.

What benefits can I get if I invest in technology or sustainability?

You’ll be able to access deductions of up to 50% on your income tax, provided the investments are certified by the relevant entities.

How does the reform impact new companies?

New businesses must structure their financial model carefully from the outset. The more stringent tax environment means that poor legal form or tax planning choices can result in significant additional costs.

Conclusion: Adaptation is the key

The new tax reforms represent both a challenge and an opportunity for businesses in Colombia. While the tax burden increases for some sectors, significant tax benefits are also opening up for those committed to innovation, sustainability, and formalization.

Whether you’re in the consolidation stage or interested in incorporating a company in Colombia, it’s essential to review your tax strategy with a long-term vision. Having specialized accounting and tax advice like that of JLCAuditors can make the difference between a company that survives and one that thrives amidst change.

Ready to adapt your business to the new tax reality? Contact us and let’s get started today.