On 1 March 2017, the Colombian National Tax Authority (DIAN) issued Ruling 900479 of 2017 providing guidelines on the new rules on tax benefits applicable to small enterprises as from 1 January 2017.
Article 4 of Law 1429 of 2010 provided that new small enterprises could benefit from a reduced income tax rate that increased progressively during a 5-year period along with eligible to apply the reduced income tax rate were not subject to withholding income tax nor presumptive income tax. Article 376 of Law 1819 of 2016 eliminated article 4 of Law 1429 of 2010 removing the tax benefits for new small enterprises.
The key changes introduced by Law 1819 of 2016
As from 1 January 2017, Small enterprises, whether companies or individuals, benefiting from Law 1429 of 2010 will be subject to withholding income tax and presumptive income. Before 1 January 2017, article 240 of the TC provides a transitional regime for companies that qualified as small enterprises and applied the tax benefits provided by Law 1429 of 2010.
As of tax year 2017, qualified small enterprises must determine their income tax applying the adjusted rates provided by article 240 of the TC, as amended by Law 1819 of 2016, until the completion of the 5-year period and losses since their incorporation year can start to apply the new tax brackets provided by article 240 of the TC, as of the tax year when the qualified small enterprise obtains taxable income.
