Colombia: Final regulations on new significant economic presence rule
Final regulations on new significant economic presence rule enacted as part of tax reform in Colombia in 2022
Final regulations on new significant economic presence rule
The Ministry of Finance on 27 November 2023 issued Decree 2039 providing final regulations on the new significant economic presence rule enacted as part of tax reform in Colombia in 2022 (Law 2277 of 2022).
The new significant economic presence rule—applicable from 1 January 2024—establishes a new nexus criterion for tax liability in Colombia applicable to nonresident companies if the nonresident is engaged in the sale of goods to Colombian clients and/or the nonresident is engaged in the provision of “qualified digital services” to Colombian clients/users.
A nonresident that falls within the scope of application of the rule may elect taxation under one of two mechanisms:
- 10% withholding on the total amount paid (i.e., gross income)
- 3% rate over the gross income declared on a tax return (in this case the 10% withholding tax would not apply)
Read a December 2023 report [PDF 499 KB] prepared by the KPMG member firm in Colombia that provides a summary of the final regulations
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