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Colombia

Financial Year – 1 January to 31 December
Currency – Colombian peso

Corporate Tax Summary

Residence – Private and public companies are taxed on their income and occasional earnings from national sources, and also on those originating from sources outside of Colombia.

Foreign companies and entities are taxed only on their income and occasional earnings from national source.

Basis of Taxation – In Colombia, taxes for fiscal residents are caused by their worldwide income. For non-fiscal residents, the tax is caused by income earned in Colombia.

Reference
Corporate Income Tax Rate (%) 32% According with the last modification of Law 2010 of 2019 the rates are reduced as follows: 32% by 2020, 31% by 2021 and 30% by 2022.
Branch Tax Rate (%) 32% In Colombia, branches of foreign companies pay the same amount to companies established under the laws of the country. The only difference is that it is done through the mechanism of attribution of income and occasional gains.
Withholding Tax Rate:
Dividends – Franked 10% The withholding tax on dividends granted to non-fiscal residents is 10%, and for national companies 7.5%
Dividends – Unfranked 10%
Dividends – Conduit Foreign Income 10% Although the branch offices are an “extended arm” of the main company, the Colombian regulations establish that the profits drawn by a permanent establishment to its principal, will have the same legal effects as dividends when they are held as equity interests; which is why the 10% withholding would also be applied.
Interest 15% Payments or credits in account for financial returns, made to non-residents or not domiciled in the country, originated in credits obtained abroad for an equal term or greater than one year, for interest or financial costs of the lease fee originated in leasing contracts that are concluded directly or through leasing companies with foreign companies without domicile in Colombia, are subject to withholding tax at the rate of 15% on the value of the payment or credit account corresponding to interest or financial cost.
Royalties from Intellectual Property 20% The payments for interest, commissions, fees, royalties, leases, compensation for personal services, or exploitation of all kinds of industrial property or know-how, provision of services, benefits or royalties from the literary, artistic and scientific property, cinematographic films exploitation and software exploitation, the retention rate will be 20% of the nominal value of the payment or credit account.
Fund Payments from Managed Investment Trusts
Branch Remittance Tax 10% Although the branch offices are an “extended arm” of the main company, the Colombian regulations establish that the profits drawn by a permanent establishment to its principal, will have the same legal effects as dividends when they are held as equity interests; which is why the 10% withholding would also be applied.
Net Operating Losses (Years)
Carry-back
Carry-forward

Individual Tax Summary

Residence – Individuals who meet any of the following conditions are considered residents in Coombia for tax purposes:

  1. National or foreigns who remain continuosly or discontinuosly in the country for more than 183 calendar days including days of entry and exit of the country, during any period of 365 consecutive calendar days, when the continuous or discontinous stay in the country falls on more than one year or taxable period, the person will be considered as a resident from the second year or taxable period.
  2. Nationals, while still living outside the country, have more than 50% of their assets or their income from a national source. Except for a few exceptions.

Basis of Taxation – Natural persons, nationals or foreigners, residents of the country and illiquid inheritance of causes with residence in the country at the time of their death, are subject to income tax and complementary in relation to their income and occasional gains, both from a national source or from a foreign source, and to its assets owned inside and outside the country.

Natural persons, nationals or foreigners, who do not have residence in the country and illiquid successions of causes without residence in the country at the time of their death, are only subject to income tax and complementary to their income and occasional gains of national source and with respect to its patrimony owned in the country.

Personal Income Tax Rates

Taxable Income Tax Payable – Residents Tax Payable – Non Residents
up to $ 47,978,000 per year 0% 35% fixed rate
higher than $ 47,978,000 per year from 19% to 39% progressive* 35% fixed rate

*For people residing in Colombia, there is a chart for determining the tax and it is not a fixed rate. It varies according to the type of income (work, income, dividends) and is subject to a differential rate.

Goods and Services Tax (GST)

Rate 19%
Taxable Transactions The sales tax will be applied on:
a) The sale of movable and immovable property, with the exception of those expressly excluded.
b) The sale or transfer of rights over intangible assets, only associated with industrial property.
c) The provision of services in the national territory, or from abroad, with the exception of those expressly excluded.
d) The importation of body goods that have not been expressly excluded.
Registration The registration tax is only paid for the procedures before a Notary, Chamber of Commerce and the Office of Public Instruments, and they are approximately 0.3% to 2% of the value of the procedure.
Filing and Payment

Other Taxes Payable

Tax Reference
Payroll Tax There is no payroll tax, but yes payments and contributions to social security and parafiscal in Colombia that are around 60% of the value of the stipulated salary.
Stamp Duty (Transfer Tax) Registration is only paid for the procedures in Notary, Chamber of Commerce and in the Public Instruments Office, and they are over 0.3% to 2% of the value of the procedure.
Land Tax The Unified Property Tax rate will be set by the respective councils (territorial entities) and will range between 1 per thousand and 16 per thousand of the respective real estate appraisal.

Last updated: 4 March 2020