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Tax reform in Colombia


On 31 December 2009, Law 1370 of 2009 was issued. The law amended the Colombian Tax Code. The relevant modifications included in the Law are detailed by Gomez-Pinzon Zuleta, our Colombian member firm, in their latest newsletter.

Equity Tax
Law 1370 created for year 2011 the "equity tax". The mentioned tax is applicable to legal entities, individuals and "de facto corporations" who are income taxpayers and who have a net worth, as of January 1st, 2011, equal or higher than COP$ (Approximately USD$ 1.500.000)

The "equity tax" will be generated on 1 January 2011. There are different tax rates applicable depending on the amount of the taxpayer's net worth, as follows:

  • 2.4% for a net worth equal or higher than COP$ 3,000,000,000 without exceeding COP $5,000,000,000 (Approximately USD$ 2,500,000)
  • 4.8% for a net worth equal or higher than COP $5,000,000,000.

The equity tax must be paid in 8 equal installments during years 2011, 2012, 2013 and 2014 in accordance to the deadlines to be determined by the National Government.

Debts which are considered as equity of the Debtor
Law 1370 extended the scope of Article 287 of Colombian Tax Code with respect to debts that are considered as equity of the debtor for tax purposes. The law stated that the debts of the taxpayers with their foreign related parties described in article 260-1 (related parties for transfer pricing purposes) are deemed as equity for Income Tax purposes.

Real Productive Fixed Assets Deduction
Law 1370 amended paragraph 2 of Article 158-3 of the Tax Code reducing the percentage of the applicable deduction derived from the investment in productive fixed assets, from 40% to 30%. The reduction will be applicable to the investments made in productive fixed assets as of 1 January 2010.

Inapplicability of Article 158-3 of the Tax Code concurrently with the 15% special income tax rate - Users of Free Trade Zones

Law 1370 establishes that the users of Free Trade Zones are not allowed to apply the special deduction stated in article 158-3 of the Tax Code (Real Productive Fixed Assets Deduction) concurrently with the 15% income tax rate.

Your Taxand contact for further queries is:
Mauricio Pi?eros
T. +571 319 2900

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