Colombia’s Local Minimum Salary (SMMLV) Increase: What You Need to Know

By: Angela Zuluaga (COL).

Colombia has approved a substantial increase to its local minimum salary, known as the Salario Mínimo Mensual Legal Vigente (“SMMLV”). While annual adjustments to the SMMLV are expected, the magnitude of the 2025 increase is significant and is expected to have wide‑ranging legal, financial, and economic consequences for businesses, investors, and individuals operating in Colombia. 

WHAT IS THE SMMLV? 

The SMMLV is Colombia’s statutory minimum monthly salary and serves as a foundational reference point throughout the Colombian legal and regulatory system. 

In practice, the SMMLV is used to calculate, among other things: 

  • minimum wage obligations for employees; 
  • governmental and regulatory fees; 
  • fines, penalties, and sanctions; 
  • immigration and visa investment thresholds; and 
  • tax reporting and compliance thresholds. 

As a result, changes to the SMMLV have system‑wide implications that extend far beyond payroll considerations. 

BACKGROUND: HOW THE SMMLV IS SET 

At the end of each calendar year, the Colombian government engages in negotiations to determine the following year’s SMMLV. These negotiations involve the President, labor unions and worker representatives as well as business and industry representatives. The stated objective is to ensure that the annual increase reasonably reflects inflation and broader economic conditions. Historically, business representatives tend to advocate for more conservative adjustments, while labor groups push for higher increases. If no consensus is reached, Colombian law authorizes the President to set the SMMLV unilaterally by decree. 

WHAT HAPPENED IN 2025? 

In the most recent negotiation cycle, worker representatives advocated for an increase of approximately 10%, despite inflation for 2025 being significantly lower. Negotiations ultimately failed to reach an agreement and, as a result, President Gustavo Petro exercised his statutory authority and issued Decrees 1469 and 1470 approving a 23% increase to the SMMLV. This adjustment raised the SMMLV from COP $1,423,500 to COP $1,750,905. 

Most observers consider this decision to be largely political in nature, particularly in light of upcoming presidential elections. 

PRACTICAL IMPACT OF THE INCREASE 

The scale of this increase means its effects will be felt quickly and across multiple sectors of the economy.   

Here are some expected changes that will impact foreign investors and residents in Colombia during 2026:  

  1. Increased Business Expenses: Businesses operating in Colombia should anticipate a marked rise in fixed operating costs, particularly at the lower end of the labor market. In addition to higher minimum wage obligations, employers may face pressure to adjust salaries across the board. Finally, many third‑party service providers also calculate their fees based on the SMMLV, which is expected to result in increased service costs. 

  1. Higher Costs for Regulatory and Government Services: Numerous governmental and quasi‑governmental services calculate their fees using multiples of the SMMLV. As a result, businesses and individuals should expect higher costs when dealing with: 

  • notaries; 
  • registration offices; 
  • chambers of commerce; and 
  • other administrative and regulatory authorities. 

  1. Changes to Regulatory Thresholds: Many legal and regulatory thresholds are directly tied to the SMMLV. The increase will therefore trigger automatic adjustments across several regulatory regimes. This includes higher minimum investment requirements for certain immigration categories, such as Company Owner Visas and Investor Visas based on real estate investments.  Tax thresholds, reporting obligations, and penalty calculations administered by the Colombian tax authority are also expected to increase. 

  1. Inflationary Pressure: Finally, the SMMLV increase is expected to contribute to broader inflationary pressure throughout the Colombian economy. Higher labor costs typically translate into increased prices for goods and services, including real estate, education, professional services, and administrative costs. 

KEY TAKEAWAYS 

  • The 2025 increase to Colombia’s local minimum salary is unusually high by historical standards. 
  • Because the SMMLV is embedded throughout Colombia’s legal and regulatory framework, the impact of this increase extends well beyond wages and will affect compliance costs, regulatory thresholds, immigration planning, and overall operating expenses. 
  • Businesses, investors, and foreign nationals should reassess budgets, compliance strategies, and investment plans in light of these changes.