Colombia: Modified tax Form 490 includes significant economic presence corporate income tax payments
Colombian tax authority (CTA) issued Resolution No. 4 modifying tax Form 490
The significant economic presence (SEP) regime came into effect on 1 January 2024. The Colombian tax authority (CTA) on 25 January 2024 issued Resolution No. 4 modifying tax Form 490 (“official payment voucher”) allowing the inclusion of the bimonthly SEP corporate income tax advance payments.
Overview
The Colombian Congress in 2022 enacted tax reform (Law 2277 of 2022) introducing the SEP rule as a new nexus criterion for corporate income tax purposes effective 1 January 2024. This rule applies to nonresident companies when engaged in the sale of goods and/or provision of “qualified digital services” to Colombian clients/users.
Pursuant to the SEP rule, nonresidents that fall within its regime may elect taxation by:
- A 10% withholding on the total amount paid (i.e., gross income); or
- A 3% rate over Colombian SEP originated gross income declared on an annual corporate income tax return (in this case the 10% withholding tax would not apply), and making bimonthly advance payments at a 2% over Colombian SEP originated gross income.
The CTA on 25 January 2024 issued Resolution No. 4, modifying Tax Form 490 to include the bimonthly SEP corporate income tax advance payments. The first payment will take place in March 2024.
For more information, contact a KPMG tax professional in Colombia:
Ricardo Ruiz | ricardoaruiz@kpmg.com
Juan C Urrego | jurrego@kpmg.com
Oscar Munevar | omunevar@kpmg.com