Colombia: Council of State Provisionally Suspends Decree 572 of 2025 on Withholding and Self-Withholding Tax Rates

The Colombian Council of State has provisionally suspended Articles 2 through 8 of Decree 572 of 2025, which had introduced increased withholding and special self-withholding tax rates applicable to corporations and certain transactions.

As a result of the suspension, the tax framework temporarily reverts to the rules previously established under Decree 1625 of 2016, pending a final judicial decision.

Return to Previous Withholding Regime

Effective from 8 May 2026, withholding agents must once again apply the withholding bases and rates set out under Decree 1625 of 2016, namely the regime that was in force prior to the implementation of Decree 572 of 2025.

The suspension effectively halts the increased rates and reduced exemption thresholds introduced under the newer decree, although the measure remains temporary until the Council of State issues its final ruling.

Practical Impact for Businesses

For companies operating in Colombia, the provisional suspension means:

• The increased withholding and self-withholding rates are temporarily halted;

• Previous withholding thresholds and rates under Decree 1625 of 2016 are reinstated;

• Companies should immediately review current withholding practices to ensure compliance with the reinstated rules;

• Payroll systems, invoicing procedures, ERP configurations, and accounting processes may require adjustment;

• The position may change again depending on the final judicial outcome.

Businesses, finance departments, tax teams, and withholding agents should therefore monitor developments closely.

Selected Withholding Changes Reinstated Under Decree 1625 of 2016

The provisional suspension reinstates several higher exemption thresholds and lower withholding rates previously applicable under Decree 1625 of 2016, including:

Certain rates applicable when thresholds are exceeded remain unchanged. For example, the 1.5% withholding rate for certain agricultural products and the 0.5% rate for coffee purchases continue to apply once the relevant thresholds are exceeded.

Real Estate Transactions

One of the more commercially significant temporary reversions concerns real estate withholding thresholds.

Under the suspended decree, the preferential 1% withholding rate for housing transactions would only have applied up to 10,000 UVT (approximately COP 523.7 million in 2026), with amounts above that threshold taxed at 2.5%.

Following the suspension, the previous threshold of 20,000 UVT (approximately COP 1.047 billion in 2026) again applies, substantially increasing the value range eligible for the lower withholding rate.

Gold Purchases and Agricultural Sector

The suspension is also particularly relevant for the agricultural and commodities sectors.

For purchases of gold by international marketing companies, the withholding rate temporarily returns from 2.5% to 1% of the total transaction value.

Likewise, higher exemption thresholds have again become applicable for agricultural goods and coffee transactions, reducing the circumstances in which withholding obligations arise.

Self-Withholding Rates

Article 8 of Decree 572 of 2025 had also modified self-withholding income tax rates according to taxpayers’ economic activities based on ISIC classification codes.

With the provisional suspension now in force, those amended self-withholding rates are likewise temporarily suspended, and the prior regime again applies.

Outlook

The Council of State’s decision is provisional and does not constitute a final ruling on the legality of Decree 572 of 2025. Companies should therefore continue monitoring developments closely, as a future decision could reinstate the suspended provisions or introduce additional changes.

In the meantime, taxpayers and withholding agents should ensure that their compliance procedures reflect the reinstated rules under Decree 1625 of 2016.

By LLOREDA CAMACHO & CO, Colombia, a Transatlantic Law International Affiliated Firm.  

For further information or for any assistance please contact colombia@transatlanticlaw.com 

Disclaimer: Transatlantic Law International Limited is a UK registered limited liability company providing international business and legal solutions through its own resources and the expertise of over 105 affiliated independent law firms in over 95 countries worldwide. This article is for background information only and provided in the context of the applicable law when published and does not constitute legal advice and cannot be relied on as such for any matter. Legal advice may be provided subject to the retention of Transatlantic Law International Limited’s services and its governing terms and conditions of service. Transatlantic Law International Limited, based at 84 Brook Street, London W1K 5EH, United Kingdom, is registered with Companies House, Reg Nr. 361484, with its registered address at 83 Cambridge Street, London SW1V 4PS, United Kingdom.