New tax provisions were introduced in Colombia beginning in 2019.
Among the measures in the new tax law—enacted in late December 2018 and effective 1 January 2019—are provisions that reduce the corporate income tax rate from 33% to 30% and that offer certain tax incentives to promote investment, economic growth, and employment.
The legislation modifies the value added tax (VAT) rules that apply for non-residents by appointing financial institutions as VAT collecting agents for electronic, digital, and royalty payments.
In addition, VAT paid on capital goods is now creditable for income tax purposes.
The new tax law includes a gradual reduction of the corporate income tax rate from 33% to 30% by 2022. It also introduces a new 7.5% withholding tax on dividend distributions among Colombian entities.
The “presumptive net worth” income tax is repealed by 2021—a major change towards applying what is viewed as a more transparent taxation of profits.
The tax legislation also introduces changes to Colombia’s international tax rules concerning among other items:
The tax legislation reflects measures concerning:
The tax legislation also amends and/or introduce certain incentives for: (1) lower income tax rates, accelerated depreciation, and dividend withholding tax exemptions for “mega investments;” (those of approximately U.S. $320 million): (2) tax credits for private investors involved in public works projects in “conflict zones;” (3) a five-year “tax holiday” for high-tech investments and 10-year tax holiday for agri-business investment; and (4) a 9% income tax rate, applicable for 20 years, for new or “significantly remodeled” hotels.
For more information, contact a tax professional with KPMG’s Latin America Markets practice or with the KPMG member firm in Colombia:
Alfonso A-Pallete | +1 (212) 954-3852 | firstname.lastname@example.org
Zulay Perez | +57 (1) 618 8000, ex. 1386 | email@example.com
Eric Thompson | +57 (1) 618 8000, ex. 1322 | firstname.lastname@example.org
Read a January 2019 report (Spanish) [PDF 3.12 MB] prepared by the KPMG member firm in Colombia
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