1. What is the current legal landscape for tax law in your jurisdiction?

In Colombia, the current tax law landscape is shaped by the ongoing digitalization and technological modernization of the Tax Authority (“DIAN” for its Spanish acronym), aimed at strengthening tax enforcement, improving collection efficiency, and broadening the taxpayer base.

Consequently, both taxpayers and tax advisors are adapting to keep pace with DIAN’s enhanced oversight mechanisms and the dynamic tax system, which is subject to frequent reforms and regulatory changes.

Key features and recent developments include:

• The Colombian tax system is divided into: (i) national taxes such as income tax, VAT, consumption tax, wealth tax (for individuals), and stamp duty (provisionally reinstated for 2025), and (ii) local taxes, including industry and commerce tax, real estate tax, registry tax and vehicle tax, among others.
• The corporate income tax rate is generally 35%, with surcharges applicable to financial institutions and extractive industries (oil and coal).
• VAT applies to the importation, provision of services, and sale of goods at a general rate of 19%.
• The wealth tax on net worth, made permanent in 2023, applies progressive rates up to 1.5% through 2026, decreasing to 1% from 2027 onward.

This evolution also creates opportunities to implement new operational and legal tools to optimize tax burdens and ensure full compliance with both substantive and formal tax obligations.

• A new Significant Economic Presence (SEP) rule, effective as of 2024, targets non-resident digital companies earning revenue from Colombian users to taxation through withholding or gross billing mechanisms.
• A tax reform bill (Bill 507 of 2025) has been introduced, proposing several amendments to both direct and indirect taxes, including adjustments to corporate taxation and investment incentives.In summary, Colombia’s tax environment remains in constant evolution, characterized by continuous reform initiatives, tighter compliance requirements, the growing importance of digital taxation, and closer scrutiny by DIAN of both domestic and cross-border transactions.

2. What three essential pieces of advice would you give to clients involved in tax matters?

1. Be proactive with compliance and reporting

Given DIAN’s growing enforcement capacity, new reporting obligations, and the use of digital audit tools, waiting until an audit arises is increasingly risky.

Early compliance ensuring accurate returns, full disclosure, and timely fulfillment of all formal obligations is far more effective and costefficient than attempting to remedy issues after the fact.

2. Structure transactions with flexibility and tax efficiency in mind

Whether in M&A, cross-border investments, or wealth planning, it is crucial to evaluate alternative tax scenarios under which the transaction could operate.

Considering that tax reforms and regulatory changes are likely, maintaining contractual flexibility and including contingency clauses or alternative structures is a prudent approach to preserve efficiency and manage future risk.

3. Monitor reforms closely and act in anticipation

The role of tax advisors is essential in this regard. As Colombia enacts significant tax reforms roughly every two years, clients must closely follow proposed changes, assess their potential impact (e.g., on corporate tax rates, deductions, incentives, and digital taxation), and develop adaptation strategies in advance to protect and preserve existing tax planning structures.

Moreover, staying up to date with regulatory developments enables clients to properly meet their compliance and reporting obligations, which also helps to fulfil advice in point 1.

3. What are the greatest threats and opportunities in tax law in the next 12 months?

The main threats and opportunities in Colombia’s tax landscape for the upcoming year can be summarized as follows:

Threats

• Political resistance and uncertainty around tax reform proposals:

The proposed reform (Bill 507) may face significant debate and potential amendments in Congress, possibly resulting in lastminute changes or unfavourable provisions that create uncertainty for tax planning and investment decisions.

Furthermore, Colombia will undergo a change of government next year, a transition that will be decisive in determining whether the current left-leaning policy direction continues or a shift toward a more conservative approach takes place. Either outcome could lead to further tax reforms and adjustments in fiscal policy.

• Stronger enforcement, audits, and penalties:

With DIAN’s ongoing modernization and adoption of advanced digital tools, tax audits are expected to increase particularly in sectors with cross-border operations, digital services, and highvalue M&A transactions. Taxpayers who are not fully compliant may face substantial penalties and interest charges.

• Macroeconomic volatility:

Current fiscal pressures on the outgoing government to increase tax collection and address Colombia’s widening fiscal deficit have made DIAN’s audit and enforcement activity a key priority. This heightened focus on revenue generation increases the likelihood of more frequent and detailed reviews of taxpayers’ compliance.

Additionally, exchange rate volatility, inflationary trends, and fluctuations in interest rates may affect tax projections, asset valuations, and the deductibility of financial expenses, further complicating medium-term planning.

Opportunities:

• Incentives for technological and industrial investment:

Currently there are tax benefits for the investment in science and technology projects, and the draft reform introduces additional potential tax incentives to encourage investment in industrial, technological, and green sectors, creating opportunities for companies aligned with sustainability and innovation goals.

• Restructuring and transitional benefits under reform windows:

Tax reforms often include transitional provisions offering opportunities for restructuring, grandfathering, or reduction of penalties and interest. Clients that act promptly and strategically during these windows can capture significant value.

• Use of advanced compliance technologies:

Implementing automation, data analytics, and artificial intelligence
(AI) tools in tax compliance can lower administrative costs, enhance accuracy, identify risks early, and strengthen taxpayers’ position in negotiations or audits with DIAN.

4. How do you ensure high client satisfaction levels are maintained by your practice?

From the standpoint of a tax law practice, client satisfaction depends on more than technical accuracy.

Our approach focuses on maintaining clear communication, delivering practical value, and building long-term trust through transparency and innovation.

• Clear and frequent communication with effective expectation management

Regular check-ins and clear explanations of complex tax matters in accessible language allow clients to actively engage in the analysis and understand the scenarios, rather than simply receiving a lengthy legal memorandum filled with citations and case law.

• Deliver value through actionable insights, not just compliance

Our clients value advice that helps them reduce tax exposure, manage risk, and structure their operations efficiently beyond mere compliance or filing assistance.

By providing benchmarking data, timely alerts on regulatory changes, and forward-looking strategic planning, we aim to serve as trusted advisors, not just legal technicians.

• Transparency on fees, deliverables, and timelines

Ambiguity in billing or missed deadlines can undermine confidence. We prefer to first listen to the client’s expectations and budget in order to craft a tailored proposal, rather than sending a rigid engagement letter.

• Leverage technology to enhance efficiency and reduce friction

With client authorization, we are currently working to incorporate realtime dashboards, digital calendars for tax deadlines, AI-based tools, and automated notifications to improve the speed, reliability, and traceability of our deliverables and compliance processes.

• Solicit feedback and measure satisfaction

Regular surveys and one-on-one follow-ups allow us to identify potential issues or areas for improvement at an early stage. When clients are satisfied with the results, we encourage feedback, referrals, and testimonials as part of our continuous improvement culture.

5. What technological advancements are reshaping tax law and how can clients benefit from them?

The use of big data, real-time reporting tools, and AI has become increasingly common among public management and tax authorities in Colombia.

In particular, DIAN has made significant progress in its digital modernization. Electronic invoicing, the use of big data and AI to detect inconsistencies, unusual transactions, or potential omissions in tax filings are clear examples of this transformation.

These developments strengthen tax enforcement. However, experience in Colombia shows that these tools remain in an experimental phase and still lack a solid legal framework defining their scope and limitations.

DIAN itself warns that technological tools such as the suggested tax return or third-party reporting (known as “información exógena”) must always be contrasted with each taxpayer’s actual situation, and do not exempt them from potential audits.

As the Tax Authority increases its digital requirements, clients benefit from adopting integrated electronic invoicing and real-time recordkeeping systems. These tools help maintain reliable audit trails, satisfy information requests, and minimize the risk of penalties.

At the same time, the growing use of technology by the Tax Authority encourages taxpayers to implement their own analytical and AI tools. Scanning financial data, identifying anomalies, benchmarking margins, and detecting potential audit triggers allow for early corrections and a more proactive defence strategy.

Finally, DIAN’s digital oversight can also enhance taxpayers’ defensibility during audits, as real-time access to documentation for both parties increases transparency and legal certainty in evidentiary matters.