The Court informed that the reason to declare that the law is unconstitutional lies in certain procedural mistakes during the discussions that led to its approval by Congress. 
As a consequence, President Ivan Duque has informed that he has instructed the Minister of Finance to prepare and submit to Congress a new bill that contains substantially all the changes and additions that were introduced by the Finance Law (Law 1943), with the purpose of being enacted before December 31, 2019. Please bear in mind that it will be necessary to follow up on the specific text that will be proposed, as well as the potential modifications that could be introduced in the course of legislative discussions.
If the bill to be submitted by the Government in the oncoming weeks is not approved by Congress before December 31, 2019, tax rules that applied before the Finance Law was enacted will apply as of January 1, 2020, as follows:

Income Tax 

• Corporate Income Tax: The corporate income tax rate applicable before the Finance Law was enacted was 33%. In this sense, the gradual reduction established by the Finance Law (2020: 32%; 2021: 31% and from 2022: 30%) will not apply in the upcoming years.
• Financial entities: The 3% surcharge for financial entities will not be applicable in 2020.
• Presumptive Income: The reduction of the presumptive income rate set forth in the Finance Law (1,5% for 2020, and 0% as from 2020) will not be applicable anymore. Hence, presumptive income will be 3,5% in 2020 and onwards.•    Fixed assets: VAT paid on the acquisition, creation or construction of real productive fixed assets will not be treated as a credit for income tax purposes as from 2020 and onwards. However, the old benefits that allowed taxpayers to take as deductible the VAT paid in relation to these assets, as well as the VAT paid on the importation of heavy machinery from the basic industry, will apply.
• Dividends: Dividend distributions to foreign companies and non-residents individuals would be taxed at a 5% rate (not at a 7.5% rate). The dividends tax rate for resident individuals will be 0% or 10%, depending on the amount of the distribution (not 0% or 15%). Moreover, this tax will not apply to dividends distributed to Colombian entities anymore (under the Finance Law the dividends tax was extended to Colombian companies, except in the case of Colombian companies that were part of a registered economic group or to distributions to Colombian entities qualifying for the new CHC regime). 
• Indirect sales / transfers of Colombian assets: Under the Finance Law, profits derived from indirect transfer of shares in Colombian entities and rights or assets located in Colombia through the transfer of shares, participations or rights of foreign entities were taxed in Colombia as if the underlying Colombian asset had been directly transferred. Hence, such indirect transfer regime will not apply as from 2020.
• Resident individuals: Five different income schedules will apply to individuals as from 2020 (not three baskets, as was determined in the Finance Law). The highest bracket rate applicable to the labor income basket will be 33% and the highest bracket rate applicable to capital and non-labor baskets will be 35%. This also will have an effect with respect to withholdings taxes.
• Thin capitalization rules: A 3:1 debt-to-equity ratio will be the thin capitalization limit and will apply to debt between related and/or unrelated parties.
• Deductible taxes: The possibility of deducting (for income tax purposes) 100% of the taxes, fees and contributions effectively paid will be eliminated, as well as the possibility of taking as a tax credit 50% of the industry and commerce tax effectively paid.
• Withholding tax for payments to non-residents: Payments for technical assistance services, assistance services, consulting services and other services rendered from abroad will be subject to a 15% withholding tax rate (not to the current 20% rate).
• Private equity funds and collective investment funds: Rules and limits for the realization of income introduced by the Finance Law will not apply anymore.
• Orange Economy: This exempt income regime would be eliminated, and such income will be taxed as of 2020. In any case, it would be important to perform a case-by-case analysis of the companies that have already made investments to access to such regime, in order to determine the possibility of considering that there is a consolidated legal situation (which would eventually allow them to benefit from the regime).
• Value Added Tax (VAT)    
• VAT responsible taxpayers: The classification between “VAT responsible” and “VAT non-responsible” will not apply anymore. Hence, the simplified VAT regimen (applicable before the Finance Law) will apply again.
• The general VAT rate was not modified by the Finance Law. Hence, VAT rate will continue to be 19%.
• There are goods and services that were excluded or exempted by the Finance Law. Hence, those goods and services will return to the “tax classification” that was applicable before the Finance Law.
• Taxpayers who carry out food and beverage activities (services) under a franchise agreement will be subject to the Consumption Tax.
• National Consumption Tax – Real Estate disposal
• As of 2020, the transfer (or disposal) of real estate whose value is higher than 29,800 Tax Assessment Units (COP$918.436.000 for 2019) will not be subject to the National Consumption Tax (which currently accrues at a 2% rate). However, VAT would be accrued again on sales of new housing whose value exceeds 26,800 Tax Assessment Units.

Value Added Tax (VAT) 

• VAT responsible taxpayers: The classification between “VAT responsible” and “VAT non-responsible” will not apply anymore. Hence, the simplified VAT regimen (applicable before the Finance Law) will apply again.
• The general VAT rate was not modified by the Finance Law. Hence, VAT rate will continue to be 19%.
• There are goods and services that were excluded or exempted by the Finance Law. Hence, those goods and services will return to the “tax classification” that was applicable before the Finance Law.
• Taxpayers who carry out food and beverage activities (services) under a franchise agreement will be subject to the Consumption Tax.

National Consumption Tax – Real Estate disposal  

• As of 2020, the transfer (or disposal) of real estate whose value is higher than 29,800 Tax Assessment Units (COP$918.436.000 for 2019) will not be subject to the National Consumption Tax (which currently accrues at a 2% rate). However, VAT would be accrued again on sales of new housing whose value exceeds 26,800 Tax Assessment Units.

Equity Tax

• As from 2020, the Equity Tax will not apply. 

Procedural issues    

• Terminations by mutual agreement and settlements executed until October 31, will not be affected by the Court's decision.
• The reduction of interests and the possibility of paying reduced penalties will be eliminated. 
• The new system of automatic VAT refunds will not have a legal basis.

Normalization Tax

• To the extent that the Court´s decision will be effective as of January 1, 2020, the normalization tax will not be affected.

Colombian Company Regime (CHC) 

• The CHC regime would be eliminated.

Mega investments    

• As from 2020, this regime will not apply. 

SIMPLE Tax Regime 

•   The SIMPLE regime would be eliminated. 

Notwithstanding the above, please note that if the bill proposed by the Government is approved by the Congress before the end of the year, it is expected that the content of the new law will be substantially similar to what was initially included in the Finance Law. 

We will be constantly monitoring the bill in order to identify its development and main impacts and will keep you timely informed.