CREE self-withholding is eliminated, but is replaced with income tax self-withholding

From January 1st 2017 the self-withholding mechanism is implemented on income tax


Through a press statement released on January 26th of 2017, the Colombian Tax Authority –DIAN- clarified some concerns regarding the elimination of the self-withholding in CREE and the implementation of this procedure in income tax.

DIAN established that, starting from January 1st 2017, national and foreign taxpayers or permanent establishments, which are exempt from the payment of social security contributions in connection with their employees who earn wages lower than ten (10) statutory monthly minimum wages, should carry out a self-withholding on income tax. This replaces the CREE tax self-withholding, which was eliminated through Law 1819 of 2016.

Three (3) self-withholding rates of 0.40%, 0.80% and 1.60% were established. The rate depends on the economic activity carried out by the taxpayer. These rates will be applied to payments made to the taxpayer.

For the month of January, this self-withholding should be included in DIAN’s Form No. 350, the “Monthly Withholding Tax Return”. However, DIAN may implement a different form in the future.

The due dates for filing and paying Form No. 305 start the second week of February. For the following months, DIAN may issue new tax filing deadlines for the income tax self-withholding.