​Changes in tax laws
“A means by which governments finance their expenditure by imposing charges on citizens and corporate entities. Governments use taxation to encourage or discourage certain economic decisions.” (businessdictionary.com)
There is a new legislation in Colombia:
The legislation includes significant changes to certain corporate income tax and individual income tax provisions, including rate reductions and the repeal of certain corporate-level taxes.
The legislation also aims to raise tax revenue mostly by increasing the rate of the value added tax (VAT) to 19% (up from 16%) and through a variety of excise taxes.
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Most of the tax provisions are effective 1 January 2017.
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The legislation is viewed as the most ambitious tax reform in decades, and it includes complex structural changes aimed at:
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Addressing tax evasion
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Providing tax relief to corporations and simplifying the corporate tax regime
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Simplifying and increasing the progressivity of the tax regime for individuals
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Simplifying the tax regime for small enterprises
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Raising revenue by increasing indirect taxation
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Imposing “green” taxes on fuels
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Increasing the taxation on cigarettes (to reduce consumption)
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Strengthening municipal taxation
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Corporate income tax changes
The legislation also includes the following provisions that are intended to simplify the corporate income tax system by:
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Eliminating the “CREE” tax on corporations and the CREE surtax (CREE is the Spanish acronym for the “fairness tax”)
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Repealing certain deductions, tax credits, and exemptions for corporations
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Introducing a temporary income surtax of 6% for 2017 and 4% for 2018
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Accordingly, with this tax reform, the corporate income tax will have the following rate schedule (applied beyond a limited profit threshold):
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40% in 2017 (34% income tax plus 6% income surtax)
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37% in 2018 (33% income tax plus 4% income surtax)
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33% in 2019
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Companies operating under the free zone regime will be subject to a 20% rate of corporate income tax.
There is an increase in the tax rate on deemed income relating to increases in a taxpayer’s net worth (i.e., the increase in the value of a taxpayer’s assets); the rate is increased from 3% to 3.5%.
There is a huge change inside the colombian economy because of the high taxes that the government decided to charge. This gives the companies a new way of acting, the organizations have to be up to date in every single legal term.
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