Colombia creates temporary tax-for-works route after earthquake

Colombia has created an exceptional, temporary works-for-taxes mechanism for municipalities and districts affected by the 10 August earthquake and its aftershocks. Decree Legislative 1389 allows companies and other taxpayers to direct part of their tax contributions to approved public projects, while keeping project selection, fiscal limits and technical controls within the public system.

A tax obligation becomes a public project

The mechanism allows participating companies and other taxpayers to turn part of their tax obligations into works in territories damaged by the earthquake. Rather than creating a general-purpose funding stream, the decree limits the arrangement to public-interest interventions directly connected with the emergency. The stated aim is to combine private-sector execution capacity with public planning to restore essential services. Eligible areas include housing, schools, health centres, water systems, sanitation, energy networks, roads, bridges, airports, transport and connectivity, alongside productive infrastructure, sports facilities and disaster-risk management works. Private goods and projects intended for a particular company’s benefit are excluded.

Projects must show a direct link to the damage

The decree provides for recovery, rehabilitation, reconstruction, replacement, reinforcement and improvement projects, but does not make every proposed investment eligible. Initiatives must have a direct relationship with damage caused by the earthquake, which the executive described as magnitude 7.4. Selection will consider the scale of the damage, the number of residents who would benefit, the importance of affected assets and the prospect of restoring basic services. The authorities will also assess each proposal’s technical progress and contribution to economic and social recovery. That framework gives bidders and public bodies a clear distinction between an emergency-linked public project and an unrelated investment.

A public project bank will manage the pipeline

Decree Legislative 1389 orders the creation of a Bank of Works-for-Taxes Projects for Reconstruction, administered by the Agency for Territorial Renewal. The agency will work with the National Planning Department and the relevant sector authorities. Proposals must satisfy technical, budgetary, environmental and sustainability requirements before receiving viability opinions. The decree reduces review times without removing those requirements: once applicants have supplied the required documentation, competent entities will have a maximum of 15 working days to issue their viability opinions. The arrangement therefore changes the route and timetable for review, not the need for project formulation and approval controls.

Fiscal capacity and local access remain constraints

The scheme does not, according to the government, automatically increase public spending or immediately expand fiscal room. The annual quota and its distribution will be decided by the Superior Council of Fiscal Policy, or Confis, in line with the Medium-Term Fiscal Framework. That quota will determine how much can be delivered through the mechanism. At least 35% must go to projects in affected municipalities in categories five and six, which generally have fewer fiscal, technical and institutional capacities. The priority is intended to prevent reconstruction from concentrating in places best able to structure or execute proposals, although the available financial scope will only become clear after Confis sets the annual quota.

Reported from infobae.com, 2026-09-14. The Tender Wire is published by Otnox.