On 31 December 2019, the Colombian Ministry of Finance and Public Credit (MinHacienda) has published Decree 2371 of 27 December 2019 on its website which amends the dividend income tax. The Decree regulates the tax and withholding tax on dividends and participation for purposes of the income tax declaration for the taxable year 2019 of the shareholders or partners. The main measures of the Decree are as follows:
- The income tax rate corresponding to dividends or participations, received by companies or other foreign entities without main domicile in the country, by natural persons without residence in Colombia and by illiquid successions of causers who were not residents in Colombia will be 7.5%,
- When dividends or participations correspond to taxable profits, in accordance with the provisions of paragraph 2 of article 49 of the Tax Code, from projects classified as mega-investment and that meet the requirements provided in article 235-3 of the Tax Statute, they will be subject to the 27% income tax rate, in accordance with the provisions of number 4 of article 235-3 of the Tax Code,
- Implementation of beneficial ownership rules,
- Companies under the Colombian Holding Company (CHC) income tax regime, including decentralized public entities, are not subject to withholding tax on dividends distributed by companies in Colombia,
- Clarifies the treatment of dividends and participation of income taxpayers who are partners or shareholders of companies that opted for the unified tax under the Simple Tax Regime – SIMPLE.
