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Legal Bulletin

taxbulletin

BOOK-TAX CONFORMITY FOR INCOME TAX PURPOSES USING IFRS AS A STARTING POINT

The recognition of income, costs and expenses as well as the determination of the value of assets and liabilities shall be made under IFRS

NEW CORPORATE INCOME TAX RATE APPLIES SINCE JANUARY 1, 2017

A surcharge to the income tax rate will apply for years 2017 and 2018. As from 2018 the corporate income tax rate would be 33%

DISTRIBUTION OF DIVIDENDS IS TAXED IN ALL CASES

The dividends tax rate is lower for foreign investors

NEW REGIME FOR THE TAX DEPRECIATION AND AMORTIZATION OF ASSETS

The procedure for computing the depreciation and amortization of assets was modified

TRANSITIONAL REGIME FOR THE DEPRECIATION AND AMORTIZATION OF ASSETS

A transitional regime was established in connection with the outstanding depreciation balances

NEW INCOME TAX RATE FOR FREE TRADE ZONE (FTZ) USERS

The income tax rate applicable in FTZ increases from January 1st 2017

CHANGES IN THE RULES FOR THE CARRY FORWARD OF NET OPERATING LOSSES (NOL’S)

A transitional regime was included in Law 1819 allowing the carry forward of NOL’s accrued before December 31st of 2016 without temporary or percentage limitations

NEW NOMINAL INCOME TAX RATES FOR INDIVIDUALS

New income tax rates for individuals depend on the category of income they receive: labor and pension income, non-labor income and income from dividends and shares

THE GENERAL RATE OF VAT INCREASES TO 19%

From January 1st 2017 the general rate of VAT will increase to 19%, partly destined for the financing of health and education programs. A transitional regime for the sale of goods and services to the public is established

SALE OF INTANGIBLE ASSETS IN CONNECTION WITH INTELLECTUAL PROPERTY IS SUBJECT TO VAT

The sale of intangible assets associated with industrial property will be taxed at a rate of 19%

VAT WITHHOLDING ON E-COMMERCE SERVICES RENDERED FROM ABROAD

A VAT withholding system for electronic or digital services rendered from abroad was implemented

SALE OF NEW RESIDENTIAL REAL ESTATE IS SUBJECT TO VAT

The first sale of new residential real estate will be subject to 5% VAT

CHANGES IN THE TAXABLE PERIOD OF VAT

The reform reduces the different VAT taxable periods to two: bi-monthly and quarterly

CHANGES IN WITHHOLDING TAX SCHEDULES FOR OUTBOUND PAYMENTS

The approved tax reform unifies withholding tax rates, creates a new withholding tax rate for capital gains, and subjects new outbound payments to taxation

COLOMBIA IMPLEMENTS CONTROLLED FOREIGN CORPORATION RULES TAXING PASSIVE INCOME

Passive income obtained through foreign investment vehicles is now subject to taxation in Colombia in head of the Colombian controller

DIAN IS AUTHORIZED TO ISSUE A SPECIAL NOTICE OF DEFICIENCY TO ASSESS AND SETTLE TAXES AND PENALTIES

Introduction of a new Special Notice of Deficiency

CHANGES IN THE STATUTE OF LIMITATIONS FOR ASSESSMENT AND COLLECTION OF TAX RETURNS

The Tax Administration now has broader terms to exercise its audit powers over taxpayers

A NEW METHOD FOR COMPUTING INTERESTS ON LATE PAYMENTS WAS INTRODUCED WITH THE NEW REGULATION

The new method to calculate the interest in arrears will depend on the rate certified by the Financial Superintendence for consumer credit

DIAN IS NOW ABLE TO REACH COURT SETTLEMENTS WITH TAXPAYERS

The preferential treatment will apply until the 30th of September of 2017

DIAN IS NOW ABLE TO TERMINATE ADMINISTRATIVE PROCEEDINGS AGAINST TAXPAYERS

The preferential treatment will apply until the 30th of September of 2017

THE EMPLOYMENT AND PAY-ROLL TAX ADMINISTRATION (UGPP) WILL BE ABLE TO MAKE COURT SETTLEMENTS WITH THE PAYERS OF MANDATORY CONTRIBUTIONS TO THE SYSTEM

The payroll taxpayers will be able to make court settlements to terminate judicial processes

THE EMPLOYMENT AND PAY-ROLL TAX ADMINISTRATION (UGPP) IS NOW ABLE TO TERMINATE ADMINISTRATIVE PROCEEDINGS

The UGPP will be able to terminate administrative proceedings that are currently in progress regarding contributions, penalties, interests on late payments, and price-level restatements

A NEW TAX AMNESTY PROGRAM WAS INTRODUCED REGARDING INVALID VALUE ADDED TAX (VAT) AND WITHHOLDING RETURNS

This benefit applies until the 30th of November of 2016

TAX BENEFITS FOR TAXPAYERS THAT INCREASE THEIR INVESTMENTS ON HYDROCARBONS AND MINING EXPLORATION

A Tax Reimbursement Certificate (CERT) will be granted to these taxpayers

TWO NEW CRIMINAL OFFENSES WERE INTRODUCED IN CONNECTION WITH TAX EVASION

The criminal offenses are related with the failure to report assets or the inclusion of non-existent liabilities and the failure to pay withheld taxes

A NEW NATIONAL REGISTRY WILL BE CREATED FOR ENTITIES WISHING TO ACCESS TO THE SPECIAL TAX REGIME OF NON-FOR-PROFIT ORGANIZATIONS

Entities should seek to qualify before DIAN in order to apply the special tax regime, and also must fulfill new reporting obligations online and before the Chamber of Commerce

ALTERNATIVE METHOD TO DETERMINE UNJUSTIFIED EQUITY INCREASES OF QUALIFIED ENTITIES BELONGING TO THE SPECIAL TAX REGIME

Entities that are part of the special tax regime will be subject of the income tax determination mechanism by equity comparison

CONTRACTS WITH INDIVIDUALS RELATED DIRECTLY OR INDIRECTLY TO THE NON-FOR-PROFIT ENTITY SHALL BE REGISTERED BEFORE DIAN

Contracts with founders, managers, donors, family members among others, which own more than 30% of the entity, shall be registered

NEW ACTIVITIES WILL BE ESTABLISHED FOR BELONGING TO THE SPECIAL TAX REGIME OF NON-FOR-PROFIT ENTITIES

The list of activities subject to the special tax regime is extended to new activities

TIME LIMIT FOR THE INVESTMENT IN PERMANENT ASSIGNMENTS OF NON-FOR-PROFIT ENTITIES

A limit of 5 years applies. New assets can be acquired with these assignments, as long as they are destined to the development of the meritorious activity

CREATION OF THE SINGLE TAX FOR SMALL RETAIL BUSINESS

The single tax for small retail business was created in order to promote formal business and facilitate the compliance with the tax obligations

NEW TAXATION FOR THE CONSUMPTION OF PLASTIC BAGS

From the 1st of July of 2017, the use of plastic bags to carry items that were purchased in stores or other retail business will be subject to this new tax

NEW CARBON TAX

The new carbon tax was adopted

ARBITRATION AWARDS AND COURT RULINGS WILL BE TAXED IF THEY HAVE AN ECONOMIC CONTENT

This tax is applicable for all individuals, corporations and trusts

CHANGES TO THE INDUSTRY AND COMMERCE TAX (ICA)

The new regulation included a description of the service activities subject to the tax