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Legal Bulletin

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The reform bill includes the unification of withholding tax rates, creation of a new withholding tax rate for capital gains, and new tax rates for outbound payments.

In general, the outbound payment of fees, royalties, personal service payments, will be subject to a 15% withholding tax. This results in a reduction from the 33% rate that applies to date.  

Under current law, withholding on outbound interests payments depend on the maturity of the loan, i.e. short-term (less than a year) subject to 33% and long-term (more than a year) subject to 14%.  

Withholding tax rate applicable to consulting, technical services and technical assistance services rendered from abroad to a Colombian resident increses from 10% to 15%.

A 15% withholding tax rate is established for payments made to foreign parent companies for administrative or direction services, regardless of whether the income derived is domestic or foreign-sourced income. These payments are currently not taxable when they are rendered in or from abroad.

The withholding tax for payments related to computer programs or cinema exploitation will be reduced to 15%.

Another proposed change is lowering from 14% to 10% the withholding on items of income subject to LTCG treatment. Lastly, the default rate for outbound payments will change from 14% to 15%.