Colombia: Tax proposals in draft legislation include 15% minimum tax, surcharges, digital services tax

Draft tax reform legislation includes a number of tax proposals

Draft tax reform legislation includes a number of tax proposals

The Congress first debated (on 6 October 2022) draft tax reform legislation that includes the following tax proposals:

Corporate income tax

  • Minimum tax of 15%, including income arising from the provision of hotel services and ecotourism/agritourism parks
  • New or increased surcharges on financial institutions, natural resources exploitation and hydro energy generation companies 

Deductions, benefits, tax credits

  • Repeal of mega-investments and economic and social development zones regime (ZESE), and the “CERT” tax refund certificate for oil, gas and mining
  • Repeal of the 5-year straight-line amortization regime for the oil and mining industry
  • Repeal of exemption of income from certain activities such as:
    • Orange economy
    • Productivity benefits for the agricultural industry
    • New forestry plantations
    • River transportation services
  • Reduction in threshold for exempting profits arising from the sale of shares listed in the Colombian stock exchange to sales of shares that do not exceed 3% (currently 10%) of the entity´s outstanding shares
  • Increase in the tax rate applied to the reacquisition by an entity of its own shares, irrespective of the holding term of the respective shares, to the 35% corporate income tax rate (from current 10% rate provided shares have been held for two years or more) 

Capital gains tax

  • Increase in capital gains tax rate to 15% (from 10%) 

Dividends tax

  • Increase in withholding tax rate applicable to nonresidents on the distribution of dividends out of previously taxed income to 20% (from 10%)
  • Increase in withholding tax rate applicable among national companies on the distribution of dividends out of previously taxed income to 10% (from 7.5%)

Digital services tax

  • Introduction of digital services tax applicable to specified digital services
  • New significant economic presence test for sales of goods in Colombian market 

Value added tax (VAT)

  • Elimination of VAT-free days
  • Imposition of VA on transportation of valuables
  • Elimination of VAT exclusion for postal traffic goods under USD 200

Other taxes

  • Reenactment of national 1.5% stamp tax over immovable goods transactions valued in excess of USD 165,000
  • Introduction of a permanent wealth tax
  • Introduction of single-use plastic tax and ultra-processed beverages and food products tax

If enacted by 31 December 2022, the proposed measures would become effective in 2023.

Read an October 2022 report [PDF 308 KB] prepared by the KPMG member firm in Colombia


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