04 June 2026 Colombia's highest tax court revokes provisional suspension of Decree 572 of 2025, thus reinstating higher self-withholding tax rates as of 1 July 2026 - On 2 June 2026, Colombia's Council of State revoked its prior provisional suspension of Articles 2 through 8 of Decree 572 of 2025, confirming that the Decree remains applicable pending a final ruling.
- As a result, the withholding and self-withholding tax rates established by Decree 572 of 2025, which are generally higher than the previous rates, will be reinstated.
- The reactivated higher rates will apply from 1 July 2026, giving taxpayers approximately four weeks to adjust.
- Businesses will need to prepare for system reversals and updates, consider the valid treatment of transactions during the suspension period and assess the impact on 2026 income tax prepayments and potential refund positions.
| |
On 2 June 2026, Colombia's highest tax court, the Council of State (the Court), issued a decision on interim preventive measures related to Decree 572 of 2025, confirming that the Decree remains formally applicable until a final decision is reached. As a result of the 2 June decision, the rates established in Decree 572 of 2025 will once again become fully applicable. These rates are generally higher than those applicable under the prior rules. The Court did not rule on whether the Decree is lawful; this will be decided later. Timing of the reactivation of Decree 572 of 2025. The incremented rates of Decree 572 of 2025 will apply from 1 July 2026, giving taxpayers four weeks' time to adjust their systems for calculation, payment and reporting. What applies in the meantime Until 1 July 2026, taxpayers must continue to apply the reduced rates that were in force prior the issuance of Decree 572 of 2025. Points for companies to consider The new decision has several practical implications, including: - System adjustments. Companies that modified their systems in May 2026 to apply the old rates will need to reverse those changes once the new rates come back into force.
- Treatment of transactions during the suspension period. Withholding applied using the previous reduced rates during the suspension period is not considered incorrect, as it was based on the Court's 7 May 2026 provisional suspension decision and was also validated by the Colombian Tax Authorities.
- Impact on income tax for 2026. Companies should review the effect of the latest decision on income tax prepayments and whether any balance in favor may be claimed as a refund.
- Cash flow impact. Companies with activities affected by higher rates — particularly in sectors such as primary industries, agriculture, coal mining, construction and services — should reassess their self-withholding projections against their estimated income tax, taking into account the possibility of generating balance in favor and the impact on operating cash flow.
| * * * * * * * * * * | | Contact Information | For additional information concerning this Alert, please contact: Ernst & Young S.A.S. Bogota Latin American Business Center, New York | | Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor |
Document ID: 2026-1187 |
