On 3 December 2019, the Colombia Congress has approved new tax reform bill 2019 (Law No. 1943 of 2018) in first debate. The Colombian Government submitted the new tax reform bill to Congress on 22 October 2019 due to procedural flaws as stated by Colombian Constitutional Court on 16 October 2019. Key amendments of the bill are as follows:
- increase the dividends tax rate from 7.5% to 10%, applicable to foreign nonresidents (individuals and companies);
- decrease the presumptive income tax rate from 1% to 0.5% for the year 2020 and from 2021 with a rate 0%;
- introduce a new normalization tax;
- introduce a deduction equivalent to 120% of salaries paid to employees for new employers conducting their first hiring of employees, provided certain conditions are met;
- decrease the statute of limitations from 6 years to 5 years with respect to income tax returns of taxpayers that were subject to the Transfer Pricing regime or tax returns where tax losses are originated or offset;
- increase in the statute of limitations from 2 years to 3 years regarding the amendment of tax returns resulting in additional liability;
- amendment to the criminal law provisions related to tax matters;
- established new provisions to generate new job;
- established simplified tax regime;
- VAT exemption on specific product.
