Taxation in Colombia


Taxation in Colombia is determined by the Congress of Colombia, every Department Assembly and every City Council, 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.

National taxes

National taxes are administered by the National Directorate of Taxes and Customs. Some of these taxes include:

VAT

The value-added tax is the main indirect tax. This rose to 19 percent in 2017; up to the end of 2016 the tax was 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 of VAT: common and simplified. The first refers to businesses with estimated patrimony over 68 million Colombian pesos, 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 VAT or to generate invoices.

[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 1% of the total patrimony of people with patrimony estimated over 5 thousand million pesos.

[Income tax]

  • Corporations: Income tax must be paid by all local and foreign corporations operating in Colombia, who are subject to a corporate tax of 30%.
  • Individuals: Colombian citizens and foreign nationals who have lived in Colombia for more than 183 days total in any 365 day period not necessarily a calendar year, are considered to be tax residents and 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, in which 1 UVT = $33,156 COP for 2018. See UVT.

Income declaration

In Colombia the natural persons who must present income declaration are classified on the next table.
For 2019 are:
See UVT.

Payroll taxes

Both the employer and the employee are subject to monthly payroll taxes from the employee's gross salary, as follows:
  • Employer:
  • * Health plan - 8.5%
  • * Occupational risk - 0.348% - 8.7%
  • * ICFB - 3%
  • * CAJA - 4%
  • * SENA - 2%
  • * Pension fund - 12%
  • * Vacation - 4.17%
  • Employee:
  • * Health plan - 4%
  • * Pension fund - 4%

Local taxes

The local taxes are fixed by Local Councils through Acuerdos. This group of taxes includes:Impuesto a ganadores de loterías: Tax on lottery winningsImpuesto a loterías foráneas: Tax on out-of-state lottery ticketsImpuesto al consumo de cervezas, sifones y refajos: Tax on beerImpuesto al consumo de licores, vinos, aperitivos y similares: Tax on liquorImpuesto al consumo de cigarrillos: Tax on cigarettesImpuesto al consumo de gasolina: Tax on gasolineDegüello de ganado mayor: Tax on slaughterhousesImpuesto de registro: Tax to register academic degrees, patents, names, etc.Impuesto sobre vehículos automotores: Tax on automobilesImpuesto de industria y comercio: Tax on industrial, services or commercial establishments
The local council on each city fix the rate between this parameters:
  • From 2 up to 7 per mil for industrial activities
  • From 2 up to 10 per mil for commercial and services.Impuesto de avisos y tableros: Tax on advertisingImpuesto predial: Property Tax

Tax Value Unit

UVT means Tax Value Unit. Instead of setting a range in Colombian pesos, DIAN has the UVT value which represents a variable amount of pesos, and is updated at least every year. The next table shows the variation of this index in Colombia per year.