The Constitutional Court of Colombia has released a press statement detailing its latest rulings on 21 November, which upholds the nation’s newly implemented 15% minimum tax.
Colombia introduced a new minimum tax, “Tax Reform for Equality and Social Justice,” under Law 2277 on 1 January 2023.
The plaintiff claimed utilising UC (adjusted profit) to determine minimum tax is unconstitutional, as it may include unrealised or estimated income and ignore taxpayers’ ability to pay. They also argued that applying the minimum tax to companies with consolidated financial statements creates unfair treatment compared to non-consolidated companies.
The minimum tax includes:
- Calculating the adjusted tax rate (TTD), which is equal to the adjusted tax (ID), by dividing the adjusted profit (UD), where both are determined through specific formulas. The key factor in calculating the UD is the accounting or financial profit before taxes (UC).
- A tax adjustment ensures a minimum 15% rate for taxpayers in cases with TTD below 15%, with additional steps for those with consolidated financial statements.
