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19 % VAT proposal would raise electric car prices in Colombia

The Fiscal Rescue Law proposes raising VAT on electric and hybrid vehicles from 5 % to 19 % from 2028.

--- The context --- Colombia has seen strong growth in its market for electric and hybrid vehicles, low-emission technologies that currently receive reduced tax treatment. That growth turns any change to the tax into a decision with direct effects on buyers' wallets and on the energy transition. --- The facts --- The Fiscal Rescue Law of the government of Abelardo De La Espriella proposes raising VAT from 5 % to 19 % for certain goods and services, a change that would affect the tax treatment of the electric and hybrid vehicles included in the measure. The bill was filed in Congress on October 29, 2026, must complete the corresponding legislative process and, according to the description of the proposal, would apply from 2028. It has not been approved and is not in force. The published prices are illustrative calculations based on today's values, under the assumption that the pre-tax price stays the same and that each vehicle is effectively covered by the change. The Tesla Model Y would rise from 120.990.000 to 137.122.000, a difference of 16.132.000, and the Tesla Model 3 from 118.400.000 to 134.187.000, with a difference of 15.787.000. At the lower end of the range, the BYD Seagull would rise from 84.990.000 to 96.322.000, a difference of 11.332.000; the BYD Dolphin would move from 89.990.000 to 101.989.000, with a difference of 11.999.000, and the BYD Yuan Up would go from 105.000.000 to 119.000.000, with a difference of 14.000.000. --- The positions --- Former Transport Minister Mafe Rojas questioned the proposal and argued that raising VAT on electric and hybrid vehicles could slow the progress of sustainable mobility in Colombia. In her view, the measure would be a remedy worse than the disease, because it could keep the country more dependent on gasoline and on its imports. Rojas also highlighted that, according to the figures she cited, registrations of electric vehicles rose by 235% and those of hybrids by 74% during the first half of 2026. According to those same figures, of every 10 newly registered vehicles, 4 are already electric. For the former minister, raising the burden in the middle of that expansion could discourage purchases of these vehicles. --- What remains unknown --- The real impact will depend on the rate Congress finally approves, on the models included and on how brands pass the change on to their prices. The final text of the process is not yet known either, so no estimated price can be read as final. --- Unanswered questions --- What rate will Congress finally approve for electric and hybrid vehicles? Which models would effectively be included in the measure if the bill advances? Will brands pass the entire tax increase on to the price paid by the buyer? --- EPM analysis --- The debate pits two goals against each other that Congress will have to weigh: the search for resources under the fiscal rescue and the continuity of the incentives that have accompanied the expansion of low-emission technologies. The estimated differences exceed eleven million even in the cheapest models in the exercise. 📌 EPM Take: In EPM's view, Congress should handle this proposal under a clear rule: no increase should be approved without first measuring its effect on a market that has been growing at three-digit rates. If the final rate stays at 19 %, the country runs the risk of making more expensive the very technology it says it wants to expand. The legislative debate still allows models, timelines and scope to be adjusted, and using that room with data on the table would be the most responsible way to protect public finances.
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