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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

 

In general, the outbound payment of fees, royalties, personal service payments, is to be subject to a 15% withholding tax. This results in a reduction from the 33% rate that applied until December 31st 2016.

With regards to interest payments, the 15% withholding tax will apply regardless of the maturity period of the loan. Under the amended provision, withholding on outbound interests payments depended on the maturity of the loan, i.e. short-term (less than a year) was subject to 33% and long-term (more than a year) was subject to 14%.

The withholding tax rate applicable to consulting, technical services and technical assistance services rendered from abroad to a Colombian resident was increased 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. Previously, these payments were not subject to withholding tax when they were rendered in or from abroad.

The withholding tax for payments related to cinema exploitation was reduced to 15%.

The withholding tax for payments related to the exploitation of computer programs was maintained at 26.4%.

The withholding on items of income subject to long term capital gains treatment was lowered from 14% to 10%.

Lastly, the default rate for outbound payments was amended from 14% to 15%.

These changes were included in Articles 126, 127, 128 and 129 of Law 1819 of 2016.