DISTRIBUTION OF DIVIDENDS IS TAXED IN ALL CASES
The dividends tax rate is lower for foreign investors
From January 1st 2017, dividends distributed to Colombian individual tax residents will be subject to taxation when they exceed approximately USD 6.000, at a progressive rate that varies from 5% to 10%, if those dividends come from profits that were taxed at the corporate level.
When dividends out of profits that were taxed at the corporate level are distributed to both non-resident individuals and corporate entities, they will be subject to dividends tax withholding at a rate of 5%.
The dividends distributed out of profits that were not taxed at the corporate level and that are distributed to individuals tax residents in Colombia, will be subject to a progressive income tax rate from 35% to 41.5%, depending on the value of the dividends. When distributed to Colombian companies, these dividends will be subject to the general corporate income tax.
Finally, the distribution of dividends to foreign entities and individuals, out of profits that were not taxed at the corporate level, will be subject to an income tax rate of 38.25% from January 1st 2017.
These changes were included in Article 7 of Law 1819 of 2016.