Colombia implements special tax mechanism for earthquake reconstruction

The Colombian government has officially issued Legislative Decree 1389, establishing a temporary and special modality for the ‘Obras por Impuestos’ (Works for Taxes) mechanism. This measure aims to accelerate the comprehensive reconstruction of municipalities and districts declared in emergency status following the earthquake on August 10 and its subsequent aftershocks.

Under this regulation, private sector taxpayers can allocate a portion of their income tax obligations to directly finance and execute public interest projects in affected territories. The scope of intervention includes critical sectors such as housing, education, health, potable water, sanitation, energy, roads, bridges, airports, transport, connectivity, productive development, sports facilities, and risk management.

The statute explicitly prohibits the use of these funds for private goods or works that provide particular benefits to any company. Instead, resources are strictly limited to the restoration of public assets, the recovery of essential services, and the improvement of living conditions for impacted communities.

To manage these projects, a ‘Banco de Proyectos de Obras por Impuestos para la Reconstrucción’ (Project Bank for Reconstruction Works for Taxes) will be created. This tool will be administered by the Agencia de Renovación del Territorio (ART) in coordination with the Departamento Nacional de Planeación (DNP) and relevant sectoral entities.