On 20 July 2021, the Colombian Executive branch has submitted a new tax reform bill (the Social Investment Act) to Congress. The Bill modifies corporate income tax (CIT), value-added tax (VAT), and tax evasion measures. The main tax measures of the Tax Reform Bill are as follows:
Corporate Income Tax (CIT)
The Bill proposes to increase the CIT rate to 35% from where currently the corporate income tax rate is 31% for 2021 and decreases to 30% for 2022. The bill proposes to impose a 3% surtax on income from 2022 to 2025 (for a total income tax rate of 38%) for financial institutions with taxable income of more than 120,000 tax units.
The taxpayers may claim 50% as a corporate income tax credit, and 100 percent in income tax from 2022.
Normalization tax
The bill would introduce a new normalization tax at a rate of 17% from 1 January 2021.
Other measures
The Bill also makes some changes on value-added tax (VAT), establishes incentives for the creation of new jobs, and changes to the definition of the beneficial owner as well.
