On January 25, 2024, Colombia’s tax authority released Resolution No. 4, which amends the tax Form 490 to include bimonthly advance payments for significant economic presence (SEP) corporate income tax. The initial payment is scheduled for March 2024.
In 2022, the Colombian Congress passed tax reform, Law 2277 of 2022, which introduced the SEP rule as a requirement for corporate income tax. The legislation went into force on 1 January 2024.
This rule impacts non-resident companies involved in selling goods and/or offering “qualified digital services” to Colombian customers. Under the SEP rule, non-residents falling within this framework can choose taxation through:
- A 10% withholding on the total payment (gross income); or
- A 3% rate on Colombian SEP-derived gross income declared in their annual corporate tax return (here, the 10% withholding tax will not be applicable), with bimonthly advance payments set at 2% over Colombian SEP-derived gross income.
