On 27 November 2023, the Colombian Ministry of Finance issued Decree No. 2039, through which Colombia implements comprehensive regulatory framework for taxation of significant economic presence (SEP) rule as a part of Law 2277 of 2022 (tax reform law). The SEP rule was introduced in the context of digital services taxation. The SEP rules will take effect from 1 January 2024.
Non-resident individuals or entities have a taxable SEP in Colombia if they engage deliberately and systematically with Colombian customers or users. This is met if they interact with 300,000 or more Colombian users or enable pricing/payment in Colombian Pesos. Additionally, if their gross income from Colombian transactions is 31,300 UVT or more, they fall under these rules. Such non-residents can choose a 3% tax rate on gross income or face a 10% withholding tax or another applicable rate.
Among other things, the draft decree provides the following measures:
- Define the concepts of “digital customer, user, interface and service”.
- Establish when the sale of goods and/or provision of services is configured in favor of clients and/or users located in national territory for the purposes of taxation by SEP in Colombia.
- Establish the minimum content of the form for the presentation of the income tax return and complementary taxpayers with SEP in Colombia.
- Determine the deadlines for the presentation of the respective declaration and payment of the income tax and its complementary ones, as well as its anticipated collection mechanisms.
- Specify aspects related to the registration, updating and cancellation of the Single Tax Registry (RUT), which are applicable to non-residents or entities not domiciled in the country with SEP in Colombia who choose to declare and pay income tax and complementary through the form prescribed for this purpose.
