In brief
The District Administration filed Draft Agreement No. 724 of 2026 with the Bogota City Council, “establishing tax incentives for competitiveness, investment and job creation in Bogota DC, optimizing the collection of district taxes and adopting other provisions.” The bill implements Articles 230 and 276 of District Agreement 927 of 2024 (the District Development Plan) and comprises 44 articles across six chapters.
The bill pairs investment and employment incentives with revenue-optimization measures: new exemptions and credits under the turnover tax (ICA), the unified real property tax and the urban development (delineación urbana) tax; a temporary relief on interest and penalties; a public lighting surcharge on the real property tax; a comprehensive overhaul of real property and ICA rates; changes to the withholding regime and to filing frequency; and the repeal of the outdoor advertising tax and the unified gambling and entertainment tax.
This is a bill pending before the Bogota City Council. Its text may be amended during the legislative debate and has no effect until approved, enacted and published.
Key highlights
Investment and employment incentives (Chapter 1)
- Progressive ICA exemption for large new investments (Art. 1): for up to ten years, at rates decreasing with the amount invested — from 88,073 UVT (Approx USD 1,400,000) — available to parties that were not previously ICA taxpayers in the District and that carry out one of the manufacturing or service activities listed in the bill. All requirements must be met by 31 December 2035.
- ICA credit for new investments (Art. 2): 60% or 80% of the incremental tax reported, available to taxpayers already registered in the district tax registry (RIT) that invest in productive fixed assets and whose tax liability grows by at least Consumer Price Index (CPI) plus five percentage points. The investment project must be filed before 31 December 2027.
- Fontibón and Engativá Airport Districts (Art. 3): ICA exemption for up to ten years, conditioned on the investment amount and on creating and maintaining direct employment — at least 30 or 200 jobs depending on the bracket — together with a real property tax exemption and a 100% exemption from the urban development tax, subject to sustainable construction certification.
- Urban renewal and build-to-rent projects (Arts. 4 and 5): 10-year real property tax exemption for owners contributing real estate to housing projects under urban renewal or Urban Renewal Projects for Sustainable Mobility (PRUMS) treatment, and for build-to-rent projects of at least fifty units, in both cases subject to sustainable construction certification.
- Urban development tax in heritage management areas (Art. 6): 100% exemption for five years for refurbishment, expansion, alteration or structural reinforcement works in Bogota’s Historic Center and in Teusaquillo.
Relief for outstanding tax liabilities (Art. 7)
Taxpayers with district tax liabilities outstanding as of the publication date of the agreement would be able to write off 50% of accrued interest and penalties, provided that, no later than 18 December 2026, they pay in a single instalment 100% of the principal owed and 50% of accrued interest and penalties. The relief entails withdrawing from the dispute at both the administrative and judicial levels, and does not apply to ICA withholding agents or to acts under judicial review in annulment and reinstatement proceedings.
Public lighting surcharge (Arts. 10 to 19)
The bill adopts a surcharge on the unified real property tax earmarked for public lighting. Real property taxpayers would be the taxable persons; the tax base would mirror that of the real property tax, and rates would range from 0 to 1 per thousand depending on the property category — one per thousand for commercial, financial and industrial property — subject to annual caps of 600 UVT (Approx USD 9,500) for residential property and 1,200 UVT (Approx USD 19,000) for all other property. Implementing regulations must be issued by 31 December 2026.
New real property and ICA rates (Arts. 20 to 24)
- Unified real property tax: the rate table of District Agreement 105 of 2003 would be replaced, with residential rates between 5.5 and 13.9 per thousand, 16 per thousand for financial property, 10 per thousand for industrial property and up to 33 per thousand for developable but undeveloped land. Brackets would be adjusted annually by the urban and rural real estate valuation index (IVIUR).
- Turnover tax (ICA): a new rate table by activity, between four and 21 per thousand, effective 1 January 2027 for annual filers and from the two-month period following approval for bimonthly filers. The bill also sets the fire-brigade surcharge threshold at 43,498 UVT (Approx USD 690,000) of net income and establishes consolidated ICA rates for taxpayers under the Simple taxation regime (“SIMPLE”) as from 2027.
Procedure and other provisions (Arts. 25 to 44)
- ICA withholding on payments received through payment instruments — credit and debit cards — with a floor of 1,933 UVT (Approx USD 30,600) of gross income obtained in Bogota in the prior year.
- New ordinary and preferential ICA regimes as from 1 January 2027, based on a 391 UVT (Approx USD 6,000) threshold of tax liability for the immediately preceding year.
- Electronic service of process, a revised penalty regime for failure to file information returns, and codification of the principles of harmfulness, proportionality, gradualness and favorability.
- Binding effect, for district officials, of the rulings issued by the Legal Tax Subdirectorate of the District Tax Directorate (Art. 32).
- A compensatory payment for land value increases arising from district planning rules, as an elective alternative to the betterment levy (participación en plusvalía) (Art. 41).
- Repeal, as from 1 January 2027, of the outdoor advertising tax and the unified gambling and entertainment tax (Art. 37).
Conclusions
If enacted, Draft Agreement No. 724 of 2026 would structurally reshape unified real property tax and turnover tax rates in Bogota and introduce a new public lighting surcharge on the real property tax, while opening a significant window of exemptions and credits for investment projects.
Companies with operations or assets in Bogota should begin modeling the combined effect of the new ICA and real property tax rates and of the public lighting surcharge on their tax burden as from 2027, and assess whether their investment plans can be structured to qualify for the proposed incentives — bearing in mind that several of them require filing the project with the district body within set deadlines (31 December 2027 for the Article 2 credit and 30 June 2030 for the Article 1 and Article 3 exemptions).
Taxpayers with outstanding or disputed district liabilities should assess the relief under Article 7, which is proposed to expire on 18 December 2026, requires payment in a single instalment and entails withdrawing from administrative and judicial proceedings.
At Baker McKenzie, we are monitoring the bill’s progress before the Bogota City Council and are available to assist clients in quantifying the impact, structuring eligible investment projects and evaluating the proposed relief and benefits.
Download the Spanish version of Colombia: Draft Agreement Reforming the District Tax System.