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Colombia Tax Rate for 2016-2017, 2015-2016, 2014-2015

Colombia Income Tax for 2016

Income Range in UVT

Tax Rate %

 

0 - 1,400

 

0%

 

1,400 - 1,700

 

19%

 

1,700 - 4,100

 

28%

 

4,100 above

 

33%

 

 

The table above shows the tax rate in units of UVT (Unidad de Valor Tributario), in which 1 UVT = $29,753 COP for 2016.

Corporations: Income tax  must be paid by all local and foreign corporations operating in Colombia, who are subject to a corporate tax of 25%.

Individuals: Colombian citizens and foreign nationals who have lived continuously in Colombia for a total of 183 days, are thereafter subject to individual Income tax based on a system of graduated marginal tax rates.

 

IVA (The Value Added Tax)

The value-added tax (IVA) is the main indirect tax. This tax is 16% of the price of merchandise, goods and services with some exceptions: public transportation, water supply and sanitation and the transportation of natural gas and hydrocarbons. The DIAN recognizes two separate categories (regimens) of IVA: common and simplified. The first refers to businesses with estimated patrimony over 68 million Colombian pesos (about 34,000 USD), and the second refers to those with patrimony less than that. Although both are obligated to pay the same percentage, the simplified taxpayers are not obligated to conduct separate bookkeeping for the IVA or to generate invoices.

 

Stamp tax

The stamp tax (Spanish: impuesto de timbre) is a tax on the expedition of an official document (or on the validity of private documents), such as a contract or contractual modification.

 

Financial transactions tax

A 0.4% tax rate is imposed on all financial transactions, including withdraw money from ATM, promissory notes, wire transfers, internet banking, bank drafts and bank checks, money on term deposit, overdrafts, installment loans, securities underwriting commitments and other forms of off-balance sheet exposures, safekeeping of documents and other items in safe deposit boxes, currency exchange or unit trusts.

 

Patrimony tax

This tax requires the annual payment of 0.3% of the total patrimony of people with patrimony estimated over 3 billion pesos (about 1.5 million USD).

 

Colombia Income Tax Rates 2014 and Deductions

Colombia Income Tax Rate for Individual Tax Payers

Lowest Individual Tax Rate is 19% and Highest Rate is 33%

Income Range in UVT

Tax Rate %

 

0 - 1,090

 

0%

 

1,090 - 1,700

 

19%

 

1,700 - 4,100

 

28%

 

4,100 above

 

33%

 

The ordinary tax system rates for fiscal residents (nationals or foreign) are contained in the table below. Non-residents (nationals or foreign) are subject to a 33% flat income tax rate.

The concept of fiscal residency defines the nature of the source that the person has to declare as follows:

- Fiscal residents (nationals or foreign) are taxed on worldwide income and should report equity owned in Colombia and abroad.

- Non-residents (nationals or foreign) are taxed only on Colombian-sourced income and should report only the equity owned in Colombia.

In December 2006, the Colombian government approved a reform of the Colombian tax system. Such reform incorporated the tax unit value (Unidad de Valor Tributario or UVT) to measure the different limits and thresholds originally set in absolute numbers, adjusted every year by decree. The value of each tax unit is equivalent to 26,841 Colombian pesos (COP) for fiscal year (FY) 2013 and to COP 27,485 for FY 2014

 

Corporate Tax Rates in Colombia

National companies (i.e. incorporated in Colombia under Colombian law) are taxed on worldwide income. Foreign non-resident companies and local branches of foreign companies are taxed on their Colombian-source income only. The current general corporate income tax (CIT) rate is 25%, which is applied on taxable income.

Taxable income is generally defined as the excess of all operating and non-operating revenue over deductible costs and expenses. The customary costs and expenses of a business are generally acceptable as deductible expenditure for CIT purposes, provided they are necessary, reasonable, and have been realised during the relevant tax year under the accrual or cash method of accounting, as the case may be.

 

The current general capital gains tax rate is 10%.

Qualifying businesses located in free trade zones (FTZs) enjoy a reduced rate of 15% (while subject to capital gain tax at 10% where applicable).

 

Value Added Tax

The Colombian VAT taxes the sale in the country of any items of tangible personal property that are not fixed assets and are not covered by an exemption, the provision of services within the national territory (certain services supplied outside Colombia but imported also attract VAT), and the importation of tangible personal property that is not covered by an exemption.

The Colombian VAT is based on a credit-debit system throughout the entire chain of a business. However, certain products are only taxed at the manufacturer level (one-phase VAT). For purposes of VAT calculation, the VAT payer may credit the VAT (input) paid to vendors (certain limitations apply) against any VAT (output) collected from customers.

The general VAT rate is 16%. However, certain services and goods are taxed at 5% and 0%.

Withholding Tax Rate in Colombia

Type of payment WHT rate (%)
Dividends (if paid out of untaxed earnings) 33
Taxable interest 14 or 33
Royalties 33
Royalties on software licences 26.4
Technical assistance, consulting, and technical services 10
Other types of payments 14

 

Withholding VAT

VAT withholding on the purchase of goods and services for most domestic transactions is 15.

A non-resident supplier of VAT-subject services does not require VAT registration. Rather, it is the locally-based recipient that must apply a reverse-charge (100% of the VAT). No VAT fiscal representation is allowed.

 

Capital Gains Tax in Colombia

The current general capital gains tax rate is 10%.

Qualifying businesses located in free trade zones (FTZs) enjoy a reduced rate of 15% (while subject to capital gain tax at 10% where applicable).

 

Colombia Due Dates for filing Returns / Reporting and Payment

The filing date for tax returns is generally between August and September, after the end of the tax year (31 December).

The tax authorities publish a schedule each year setting out the filing dates. The filing date for an individual is based on the last two digits of the individual's tax identification number (NIT). Foreign nationals are required to obtain an NIT to be used in all their tax affairs.

In general, an individual who have received income and/or own property after 31 December in any tax year must submit a tax return if the income/value of their property is above a certain amount. Failure to do so will result in a monthly penalty payable in arrears, equal to 5 percent of the outstanding tax, capped at 100 percent of the amount payable.

 

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