On 10 September 2026, the Colombian government published Decree 1417 of 2026, establishing a special temporary modality of obras por impuestos (works for taxes) aimed at financing reconstruction efforts in regions affected by natural disasters and infrastructure deficits. This regime allows private companies to execute public infrastructure works in lieu of paying certain national taxes, such as income tax and complementary taxes, under a streamlined approval process. The decree specifies eligibility criteria for both projects and participating companies, defines the valuation methodology for works, and sets out the tax credit mechanism that allows firms to offset up to 100% of their tax liability with certified project expenditures. The measure is part of the broader “Plan de Reconstrucción Nacional” and is effective immediately, with a validity period of 24 months.
Key Takeaways
- Expanded Scope and Accelerated Approval: Unlike the ordinary works-for-taxes regime, this special modality covers a wider range of infrastructure categories, including housing, water supply, and rural connectivity. Project approval is centralized in the National Planning Department (DNP), reducing bureaucratic layers and cutting the typical timeline from 12 months to 90 days.
- Enhanced Tax Credit Flexibility: Companies can apply tax credits against income tax, VAT, and the financial transactions tax (GMF). Unused credits may be carried forward for up to five years or transferred to third parties, providing significant liquidity benefits for contractors and investors.
- Strict Compliance and Anti-Abuse Safeguards: The decree introduces rigorous technical and financial auditing requirements, including mandatory third-party certification of project completion and cost verification. Penalties for misuse include clawback of tax credits plus interest, and potential disqualification from future public contracts.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement