NEW UNIFIED TAX UNDER A SIMPLE TAX REGIME – SIMPLE
Introduction of new unified tax
The unified tax is introduced under a simple tax regime – SIMPLE (“Unified Tax”) to simplify tax compliance in Colombia, and replacing the monotributo as from January 1st 2019
The Unified Tax is an optional system that seeks to unify in one simple tax, the: (i) income tax; (ii) consumption tax; and (iii) industry and commerce tax.
Taxpayers subject to the Unified Tax shall be individuals or legal entities, and should comply with the following requirements:
- Individuals developing an enterprise or companies with individuals (Colombian or foreign) Colombian tax residents as shareholders;
- Gained ordinary or extraordinary gross income during the last taxable year equal to or greater than 1,400 UVT ($ 46,418,400) and less than 80,000 UVT ($2,652,480,000);
- If a shareholder has one or more enterprises or companies registered as taxpayers of the Unified Tax, to determine the threshold limit of gross income, the taxpayer should consider the consolidated gross income of all the enterprises or companies in the proportion of his/her participation;
- In the event that one of the shareholders owns more than 10% of a company not registered in the Unified Tax, the maximum limits of income will be checked on a consolidated manner and in proportion to the participation;
- If a shareholder is manager of other companies, the maximum income limit will be reviewed in a consolidated manner with the companies that the shareholder manages;
- The company must be (i) in compliance with its tax obligations and social security contributions; (ii) have its tax registry updated (RUT); and (iii) electronic signature and electronic invoice mechanisms;
- Foreigners or permanent establishments of foreign entities, factoring companies, asset management companies, financial advice providers, certain energy activities, among others, cannot apply to this regime.
The rate of the Unified Tax will depend on the annual gross income gained and the business activity, ranging between 2.6% and 13.6% on the gross ordinary and extraordinary income accrued during the taxable year
Additionally, taxpayers of the Unified Tax will be also responsible for VAT or the national consumption tax.
Taxpayers of the Unified Tax will not be subject to withholding income tax neither self-withholding, and shall not act as withholding agents.