Colombia ranked 37th out of 38 countries in the Organization for Economic Cooperation and Development (OECD) in the 2026 International Tax Competitiveness Index. This index analyzes the competitiveness and neutrality of these countries’ tax systems based on aspects such as corporate, individual, consumption, and property taxes, as well as international tax rules.
The Index is published every year by the US-based Tax Foundation. The 2026 edition compares the tax systems of the 38 OECD countries based on 43 variables grouped into five dimensions: corporate, individual, consumption, and property taxes, and the rules that apply to income crossing borders.
The variables measure both tax rates and the structure of taxes: the period over which investment can be deducted, the taxes that exist in addition to the main ones, and the breadth of the tax base on which they are levied.
Colombia’s Tax Design Makes Investment More Expensive
According to an analysis of the results conducted by the Hernan Echavarria Olozaga Institute of Political Science (ICP), Colombia’s main weakness is the way it taxes investment and capital: high rates, multiple taxes on the same capital, and rules that make it difficult to recover the cost of investments.
For the ICP, Colombia’s tax design makes investment and reinvestment more expensive, imposes greater barriers on new and small businesses, and limits the conditions for increasing productivity, generating employment, and sustaining economic growth.
This is a deterioration that has accumulated under several governments, in a context of successive tax reforms and public spending growth. Improving tax competitiveness requires correcting these distortions, simplifying the tax system, broadening tax bases, and guaranteeing regulatory stability, the ICP recommends.
These measures must be accompanied by a review of public spending that makes it possible to finance the State without increasing the burden on investment.
Colombia Moved Up From Last Place Because France’s Position Worsened
The ICP highlights several findings, including that Colombia has the second least competitive tax system in the OECD, mainly because of taxes on capital. It ranks 37th out of 38 countries in the 2026 International Tax Competitiveness Index.
Its worst results are in corporate taxes (37th place), property taxes (37th place), and international tax rules (35th place), while it ranks 25th in individual taxes and 16th in consumption taxes. The gap is concentrated in the tax conditions for investing, accumulating capital, and mobilizing it.
One aspect highlighted by the ICP is that Colombia moved up from last place in the index because France’s position worsened, not because it had corrected its tax system. After ranking last between 2022 and 2024, Colombia rose to 37th place in 2025 because France increased its corporate tax rate from 25.8% to 36.1%. Colombia did not modify the rules evaluated by the index and maintained its position in 2026. The change in the ranking does not represent an improvement in its tax design.
Third, Colombia has the second-highest corporate income tax rate in the OECD and penalizes investment through slow deductions. Companies face a rate of 35%, compared with the organization’s average of 24.2%. In addition, the tax system allows companies to recover, in present value terms, only 74% of the cost of machinery and 31% of the cost of buildings, compared with 86% and 50%, respectively, across the OECD. These conditions reduce the attractiveness of investing and reinvesting in the country.
Accumulation of Tax Burdens Makes Investment More Expensive
Finally, the same capital in Colombia may be taxed several times, even when it generates no returns. Taxes on profits are compounded by levies on dividends, wealth, inheritances, financial transactions, and other operations.
Colombia is one of only four OECD countries that maintain an annual net wealth tax, the ICP warns. This accumulation of tax burdens makes investment more expensive and represents a greater barrier for new and small businesses, which have fewer resources to cope with it.
In 2014, Colombia ranked 27th in the International Tax Competitiveness Index. However, it fell to 34th place in 2015, to 37th in 2017, and to last place between 2022 and 2024. For the ICP, the deterioration spans reforms approved under three governments, pointing to a structural failure of the Colombian State.
A State with significant shortcomings in its functioning tends to expand its spending, while an inertial budget, which largely replicates the appropriations from the previous year, leaves little room to redirect programs according to their results, the ICP explains.