On 8 August 2022, the new Government of Colombia presented a Tax Reform Bill to Congress. Although the general income tax rate (35%) is not modified, the Bill includes changes in corporate income tax (CIT), and personal income tax. The main tax measures of the Tax Reform Bill are as follows:
- the transitory 3% income tax surcharge for certain financial entities becomes permanent, which means these companies will pay 38% to CIT;
- the capital gains tax rate would increase from 10% to 30% for Colombian resident companies, nonresident companies, and individuals;
- the value of nontaxable income, special deductions, exempt income, and tax discounts may not exceed 3% of net taxable income;
- withholding tax rate on dividends would be increased from 10% to 20% for payments paid by resident companies to non-resident companies;
- Single-company in Free Trade Zone would be subject to the 35% (which is generally 20%) CIT rate.
- the CIT rate for the hotel industry is increased from 9% to 35%;
- the possibility of taking 50% of the industry and commerce tax as a tax discount is eliminated with the tax reform, where it is treated 100% as a tax deduction;
- payments for affiliations to clubs and other payments such as support for employees for housing or expenses that correspond to personal expenses of the partners, participants, shareholders, clients, and/or their relatives would not be deductible, and would consider as income of the recipient;
- it is proposed to tax the first sale or import of industrially ultra-processed food products with a high content of added sugars and/or sweeteners at a rate of 10%.
The Bill also contains measures related to Wealth tax, Oil and gas and mining sectors tax, and Value-added tax (VAT). Congress will review the Bill to be approved before the end of this year. If approved, the changes become effective as of 1 January 2023.
