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Taxation in Colombia

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Taxation in Colombia

See Government of Colombia for a broader perspective of Colombian government.

Taxation in Colombia is determined by the Congress of Colombia, the Department of Colombia Assemblies and the Municipalities of Colombia councils, which determine what kind of taxes can be levied and which rates can be applied. The country inherited a harsh and diffused taxation policy from the Spanish Empire characterized by a heavy reliance on customs duties, due to the relatively low capacity for local production of goods. Both the national and local governments' budgets run significant deficits.

National taxes

National taxes are administered by the National Tax and Customs Direction (DIAN).[1] Some of these taxes include:

IVA

The value-added tax (IVA) is a variant of the sales tax. This tax is 16 percent 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 (regimenes) 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

This was a tax imposed during 1998-1999 which covered all financial transactions, including banknotes, promissory notes, wire transfers, EFTPOS, internet banking, bank drafts and bank cheques, money on term deposit, overdrafts, installment loans, documentary and standby letters of credit, guarantees, performance bonds, securities underwriting commitments and other forms of off-balance sheet exposures, safekeeping of documents and other items in safe deposit boxes, currency exchange, sale, distribution or brokerage (with or without advice), unit trusts and similar financial products. The tax rate was 0.2%.[2]

Patrimony tax

This tax requires the annual payment of 0.3% of the total patrimony of people with patrimony estimated over 3000 million pesos (about 1.5 million USD). It is a temporary tax to help the military.

Income tax
  • Corporations: Income tax (Spanish: Impuesto a la renta y complementarios) must be paid by all local and foreign corporations operating in Colombia, who are subject to a corporate tax of 33%.[3]
  • Individuals: Colombian citizens and foreign nationals who have lived continuously (or cumulatively) in Colombia for a total of five years are thereafter subject to individual income tax based on a system of graduated marginal tax rates.

The table below shows the tax rate in units of UVT (Unidad de Valor Tributario), where 1 UVT = $26.049 in 2012.[4]

Income Range in UVT[5] Tax Rate
0 to 1,090[6] 0%
>1,090 to 1,700 19%
>1,700 to 4,100 28%
>4,100 33%

Local taxes

This group of taxes includes:

  • Impuesto a ganadores de loterías: Tax on lottery winnings
  • Impuesto a loterías foráneas: Tax on out-of-state lottery tickets
  • Impuesto al consumo de cervezas, sifones y refajos: Tax on beer
  • Impuesto al consumo de licores, vinos, aperitivos y similares: Tax on liquor
  • Impuesto al consumo de cigarrillos: Tax on cigarettes
  • Impuesto al consumo de gasolina: Tax on gasoline
  • Degüello de ganado mayor: Tax on slaughterhouses
  • Impuesto de registro: Tax to register academic degrees, patents, names, etc.
  • Impuesto sobre vehículos automotores: Tax on automobiles
  • Impuesto de industria y comercio: Tax on industrial or commercial establishments
  • Impuesto de avisos y tableros: Tax on advertising
  • Impuesto predial: Real estate tax

References

  1. ^ DIAN National Tax and Customs Direction
  2. ^ "TOWARDS MULTIBANKING IN COLOMBIA: FROM ‘PATCHWORK’ TO FINANCIAL HOLDINGS". p. 7. 
  3. ^ Estatuto Tributario colombiano. Art. 240, Estatuto Tributario Nacional
  4. ^ "Colombia Tax Rates", taxrates.cc, 2010, webpage: TR: states: "Unidad de Valor Tributario (UVT) in 2012 equals $26.049".
  5. ^ UVT means "Unidad de Valor Tributario" - Tax Value Unit. Instead of setting a range in Colombian pesos, DIAN has a UVT value that is updated at least every year. As of 2012, one UVT is equal to COP $26.049
  6. ^ Estatuto Tributario colombiano. Art. 241, Estatuto Tributario Nacional

External links

  • Taxes in Colombia Official Investment Portal
  • DIAN official taxes services DIAN, Dirección Impuestos y Aduanas Nacionales
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