COLOMBIA Law and Practice Contributed by: Jaime Trujillo, Juan David Velasco, Natalia Ponce de León and Angelica Navarro, Baker McKenzie S.A.S.
payment, may credit the withheld taxes in their annual CIT return. The WHT rates vary depend - ing on the nature of the payment. The general WHT rate on payments made to foreign non- residents is 20%. Value Added Tax (VAT) The standard VAT rate in Colombia is 19% of the invoiced amount. This tax is applicable to: • the sale of movable assets; • the provision of services in Colombia or from abroad (if the beneficiary is located in Colom - bia); and • the importation of assets or goods that have not been expressly excluded – certain ser - vices are exempt from VAT, such as medical services, educational services, internet con - nectivity, and in some cases energy, gas and water utilities. Industry and Commerce Tax This is a municipal tax applicable to all indi - viduals, legal entities and de facto companies who carry out industrial, commercial or service activities within the jurisdiction of the relevant municipality. The rates vary from 0.2% to 0.7% calculated over the gross income for industrial activities and 0.2% to 1.6% calculated over the gross income for commercial and services activities. National Stamp Tax This is an indirect levy triggered by the execu - tion of certain legal acts, documents and con - tracts that generate legal effects in the country. As a general rule, any private agreement may be subject to this tax, even if does not require the involvement of a notary or public authority. Dormant since 2010 (when its rate was reduced to 0%), the tax was temporarily reactivated by the government at a 1% rate by Decree 175 of
14 February 2025, issued pursuant to temporary exceptional state powers of national commotion. This amendment of the Colombian tax code will apply until 31 December 2025. According to recent doctrine by the DIAN and consistent with jurisprudence of the Council of State, for contracts with an indetermined amount, the triggering events are the signing, granting or acceptance of the document, while the taxable base is defined by each payment or credit made under the contract. Therefore, payments made before 22 February 2025 – the effective date of the Decree – are subject to a 0% rate while those made from that date through the end of the year will be taxed at 1%. Starting 1 January 2026, the rate should revert to 0%. 5.3 Available Tax Credits/Incentives Colombia offers the following tax incentives to local and foreign companies. Double Taxation Treaties Colombia has entered into an extensive network of double taxation treaties. Foreign Tax Credit Applicable to all Colombian Companies Foreign income taxes may be credited by Colombian companies against their local CIT liability, subject to certain limitations. Corporate Income Tax Exemptions The following income generated locally by a Colombian company is exempt from CIT: • income obtained from eco-tourism services; • income related to the sale of social interest or priority housing, provided that the taxpayer obtains the corresponding governmental permit; and
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