X

Legal Bulletin

taxbulletin

REDUCTION OF CORPORATE INCOME TAX RATE

Corporate income tax 

As from 2020 the corporate income tax rate would be 30%  

PROGRESSIVE REDUCTION OF THE ALTERNATIVE MINIMUM TAX BASE

Corporate income tax 

The tax base of the alternative minimum tax will be reduced down to 0% as from taxable year 2021

DIVIDENDS TAX FOR PROFITS DISTRIBUTED TO COLOMBIAN COMPANIES

Corporate Income Tax 

Dividends distributed to Colombian companies out of profits that were taxed at the corporate level, will be subject to a dividend tax of 5% (before it was 0%)

TAX REGIME FOR MEGA INVESTMENTS AND STABILITY CONTRACTS

Mega Investments and Stability Contracts

Taxpayers that make Mega Investments in Colombia will have an income tax rate of 27%, and other tax benefits. To ensure this regime for a period of 20 years, taxpayers may enter into tax stability contracts with the Colombian Government

 

INDIRECT SALE OF ASSETS LOCATED IN COLOMBIA

International taxation

The bill proposes to tax the indirect disposal of assets located in Colombia

NEW COLOMBIAN HOLDING COMPANY REGIME

International taxation

The tax reform bill proposes a preferential tax treatment for Colombian companies, whose main purpose is to invest or hold shares in foreign companies

PERMANENT ESTABLISHMENTS WOULD BE SUBJECT TO TAX IN COLOMBIA ON ATTRIBUTABLE WORLDWIDE INCOME

International taxation

Following some recommendations from the OECD, the bill proposes to broader the taxable income attributable to permanent establishments in Colombia

CONCLUSIVE PRESUMPTION OF LAW IN THE CONTROL FOREIGN CORPORATIONS REGIME

International taxation

The proposed bill states well-defined conclusive presumptions of law to determine the passive or active nature of the items of income derived by a Control Foreign Corporation (“CFC”)

TAXATION OF OUTBOUND PAYMENTS

International taxation

Some withholding tax rates for outbound payments would increase from 15% up to 20%

MODIFICATION TO THE DETERMINATION OF ASSETS PRICE OF SALE

Corporate income

Tax Adoption of anti-abuse rules and rules to determine the price for transferring assets

MODIFICATIONS TO EXEMPT INCOME

Corporate income tax 

New exempted profits are created for companies that develop technology and rural areas in Colombia. Some exempted profits are upheld and others are eliminated  

TAXATION OF PRIVATE EQUITY FUNDS AND COLLECTIVE INVESTMENT FUNDS

Private Equity Funds

Tax Rules for realization of benefits from Private Equity or Collective Investments Funds, would be modified  

INCOME TAX RATE OF 9% FOR HOTELS

Income tax for the hotel sector

The income tax rate of 9% would apply for 20 years for new hotels and for 10 years for hotels restored or expanded

TAXES, STAMP TAXES AND CONTRIBUTIONS PAID WOULD BE TAX DEDUCTIBLE

Corporate income tax 

As general rule, taxes, stamp taxes and contributions paid by the taxpayer will compute as tax deductible. 50% of the financial transaction tax (“GMF”), as well as the industry and commerce payroll tax would be considered as tax credit for income tax purposes 

VAT PAID IN THE ACQUISITION OF FIXED ASSETS WILL BE TREATED AS A TAX

Corporate income tax 

The VAT paid in the importation, formation, building or acquisition of fixed assets would be treated as a tax credit for income tax purposes

CHANGES IN THE TAX CREDIT FOR TAXES PAID ABROAD

Corporate income tax purposes

New requirements in order to offset  the tax credit for taxes paid abroad on worldwide-source income

PAYMENT OF INCOME TAX WITH CONSTRUCTION PROJECTS

Corporate income tax

Adjustments to the requirements in order to pay the income tax with projects associated with Zones Affected by the Internal Conflict (“ZOMAC”)

SCHEDULAR ITEMS OF INCOME AND AN INCREASE IN THE INCOME TAX RATE FOR INDIVIDUALS

Equity tax and voluntary disclosure program

A general schedule would be established for individuals. It would include any item of labor income, pensions, capital income and non-labor income and would be progressively taxed up to a maximum rate of 37% that would be applicable to individuals whose income exceeds COP$434,343,600 (approx. US$135.000)

CHANGES IN THE PRESUMPTIVE INCOME TAX BASE FOR INDIVIDUALS

Equity tax and voluntary disclosure program

The presumptive income tax would be gradually reduced and its base would only be compared with the taxable income of the general schedule

INCREASE OF THE MARGINAL AND PROGRESSIVE RATE OF THE WITHHOLDING INCOME TAX FOR LABOR AND PENSION PAYMENTS

Equity tax and voluntary disclosure program

The withholdings applicable to payments of labor and pension nature would range between 0% and 37%

GOVERNMENT INTENDS TO IMPLEMENT AN EQUITY TAX FOR INDIVIDUALS IN YEARS 2019 AND 2020

Equity tax and voluntary disclosure program 

Individuals whose net equity is greater than COP$3,000,000,000 (approx. US$937.000) as of January 1st 2019 would be subject to the new tax

NEW VOLUNTARY DISCLOSURE PROGRAM FOR 2019

Equity tax and voluntary disclosure program 

Those who wish to benefit from this assets regularization should file the corresponding return on September 25th 2019. No amendments or late filing would be accepted

POSSIBILITY TO REGULARIZE THE TAX BASIS OF FOREIGN ASSETS

Equity tax and voluntary disclosure program 

Assets other than inventories with a value lower than the fair market value could be regularized   

CHANGES ON EXCLUDED AND EXEMPTED ASSETS

VAT

Some goods currently exempted or excluded would be subject to VAT

CHANGES ON EXCLUDED AND EXEMPTED SERVICES

VAT

Cloud computing services and land suitability may be taxed with VAT

CHANGES ON VAT RATES

VAT

The general VAT rate would be progressively reduced

VAT ON CAPITAL ASSETS

VAT

Benefit for the acquisition of capital assets

ELECTRONIC INVOICING

VAT

Regulation for technology providers

PENALTIES CAUSED BY RECURRENT INFRACTION OF THE ELECTRONIC INVOICE REGIME

VAT

New tax penalties would be included in Colombia’s tax law for electronic invoice authorized suppliers

TAX PAYERS WOULD BE GRANTED A TRANSITIONAL REGIMEN FOR THE IMPLEMENTATION OF THE ELECTRONIC INVOICING REGIMEN

VAT

For the 2019 taxable year, no sanctions will be imposed on taxpayers that legitimately fail to comply with their obligation to implement electronic invoicing

ELIMINATION OF THE SIMPLIFIED VAT REGIME

VAT

Simplified VAT Regime would be eliminated

GOVERNMENT CONTROL OVER VAT WOULD BE ENHANCED

VAT

VAT refund, for population with low income

GOVERNMENT CONTROL OVER THE NATIONAL CONSUMPTION TAX WOULD BE ENHANCED

VAT

Changes on responsibilities for National Consumption Tax payers

WITHHOLDING TAX RETURN PARTIALLY DISBURSED WOULD BECOME AN INSTRUMENT SUBJECT TO BE COLLECTED

Tax procedure

According to the tax reform, the Tax Administration could coercively collect the tax debt derived of a partially disbursed withholding tax return

NOTIFICATION OF ADMINISTRATIVE ACTS VIA E-MAIL

Tax procedure

As of July 1th 2019, the current methods of notification would become subsidiary to the notification via email

EFFECTS DERIVED OF THE AMENDMENT OF A TAX RETURN DURING AN ADMINISTRATIVE PROCEDURE

Tax procedure

Amendment of tax returns during the conduction of an administrative procedure would trigger statutory interests plus 2 points instead of statutory interests

REPEAL OF THE TAX PROCEDURE LAW

Tax procedure

The repeal of the liability of financial entities for failing to comply with seizures, the possibility to disregard the tax appeal and challenge the Official Assessment before a judge and the extemporary notification as a cause of nullity of an Official Assessment are the main repeals proposed by the Government

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

MODIFICATION TO THE TERM TO REQUEST THE QUALIFICATION IN THE SPECIAL TAX REGIME FOR THOSE WHO HAVE BEEN EXCLUDED

Special Tax Regime

Entities excluded from the special tax regime will be able to submit the qualification request in the following tax year