On 6 October 2022, the Colombian Congress approved Tax Reform Bill in the first debate. The Bill was presented to Congress on 8 August 2022. After the final approval of the Bill, the changes will become effective as of 1 January 2023. The main tax measures of the Tax Reform Bill are as follows:
Corporate Income Tax (CIT)
Although the general CIT rate (35%) is not modified, the financial institutions will be subject to surtax at the rate of 5% for a period of 5 years from the fiscal year 2023 to 2027, natural resources exploitation sector 10% for 2023, 7.5% for 2024 and 5% onwards, and hydro energy generation sector 3% from the fiscal year 2024 to 2026.
The Bill also introduces a minimum tax rate of 15% in line with OECD Pillar 2. Moreover, hotel services and ecotourism and agrotourism parks will be subject to a special rate of 15% after meeting certain conditions.
The tax rate for the industrial users of the free trade zones (FTZs) will be 20% whose net income derived from transactions carried out in the national customs territory does not exceed 40% in the fiscal year 2024, 30% in the fiscal year 2025 and 20% in the fiscal year 2026 onwards.
The capital gains tax rate would be increased from 10% to 15%. Dividends paid to nonresident entities would be subject to a 20% withholding tax rate. For dividend distributions between resident companies, the withholding tax rate would be increased from 7.5% to 10%.
Digital Service Tax (DST)
The Tax Reform Bill introduces digital service tax applicable to specific services provided by non-residents to Colombian users.
