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DIVIDENDS RECEIVED BY INDIVIDUAL MAY BE SUBJECT TO INDUSTRY AND TRADE TAX

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DIVIDENDS RECEIVED BY INDIVIDUAL MAY BE SUBJECT TO INDUSTRY AND TRADE TAX

Industry and Trade Tax

The Secretary of Finance of Bogotá established the case in which dividends received by an individual are subject to industry and trade tax

 

Historically, the Secretary of Finance of Bogotá has pretended to consider the distribution of dividends to individuals as an activity subject to industry and trade tax. For this reason, there are several on-going procedures before the courts.

With the aim of clarifying the cases in which dividends distributed to individuals are taxed with industry and trade tax, the Secretary of Finance of Bogotá issued the Revenue Ruling No. 1 of 2018.

By means of said Revenue Ruling, the municipal authority concluded that since dividends received by individuals are not expressly exempted, they should be deemed as an item of income subject to industry and trade tax, as long as the individual is consider as a trader.

Although the position of the Secretary of Finance could affect only individuals in Bogotá, other municipalities could adopt this Revenue Ruling as an auxiliary interpretation criterion to taxed dividends received by individuals.