Withholding Tax 2025: Lower Thresholds, Higher Self-Withholding Rates

As of June 1, 2025, Decree 572 of 2025 came into effect, bringing important changes for legal entities in Colombia.
In short? It’s now easier to become subject to withholding tax, and self-withholding rates have increased for many sectors.

Below, we explain in simple terms what changed and how it could impact you.

What changed with the withholding tax?

One of the main modifications in the decree is the reduction of the minimum thresholds for applying withholding tax.
This means that withholding must now be applied to lower amounts. This applies, for example:

• Services: the previous threshold was $199,000 and is now $100,000 COP. Rate: 4%
• General purchases: previous threshold: $1,345,000 → now: $498,000 COP. Rate: 2.5%
• Real estate for residential use: previous threshold: $995,980,000 → now: $497,990,000 COP. Rate: 1% or 2.5%

For purchases of parchment or cherry coffee, the new threshold is 70 UVT (equivalent to $3,294,550 COP in 2025).

Rates were also adjusted for the purchase of gold, real estate, and other sensitive sectors, among others.

What does this mean?

More transactions will be subject to withholding, which may affect your cash flow if you don’t plan properly.

And what happened with self-withholding?

If you’re a self-withholder (meaning you apply withholding on yourself as an advance on income tax), this decree affects you too.
New self-withholding rates were established by economic activity, grouped under what the decree calls “rate groups.”

Some of the main impacted activities are:

• Agriculture, livestock, fishing, and mining
• Manufacturing and industrial activities
• Wholesale and retail trade
• Professional, technical, financial, and consulting services
• Construction, transportation, hospitality, and tourism

In many cases, the rates increased because the government found that the previous self-withholding amounts weren’t covering the actual tax liability.
That is, companies were paying less throughout the year and leaving large balances for the fiscal year-end, which affected the government’s tax collection.

With this measure, the goal is for taxpayers to pay proportionally to their real monthly income, avoiding year-end tax accumulations.

Why are they doing this?

This adjustment is no coincidence. The government is aiming to:

• Improve tax collection efficiency (ensuring taxes are paid as income is generated, not a year later)
• Reduce evasion and abuse through rate arbitrage
• Ensure that high-performing sectors, like agriculture or exports, contribute proportionally more
• Make the system fairer among similar activities by grouping them under the same rate

What effects could this have on your company?

• More withholding on invoices: If your clients didn’t withhold before because you didn’t exceed the threshold, they probably will now
• More cash flow committed: As a self-withholder, you may find yourself paying more each month than you did before
• Possible tax refunds: If you end up overpaying, you can request a refund or compensation as outlined in Articles 850 and following of the Tax Code
• Increased tax oversight: There will be stricter data cross-checking between what you withhold and what you actually declare

So… what should you do?

👉 Review your registered economic activity in the RUT and compare it with the official rate list
👉 Adjust your 2025 budgets to reflect the new rates
👉 Do tax planning: it can save you headaches during the 2025 fiscal close and 2026 advance payment

At Nexo Legal, we help you:

✅ Review your current economic classification
✅ Determine whether your self-withholding rate has changed
✅ Adjust your invoicing and accounting practices
✅ Prepare for the impact of this decree on your cash flow and tax filings

📩 If you have questions or need personalized support, message us.
We’re ready to help you comply — with no surprises — and optimize your tax burden.