Essentially, there are two types of taxes in Colombia, National Taxes and Local Taxes, with the collection and enforcement of National Taxes being undertaken by the Colombian Tax Authority (DIAN). The primary National Taxes are Value-Added Tax (VAT), Financial Transactions Tax, Stamp Tax, Income Tax and Wealth Tax.
VAT – Colombian VAT is known also as IVA, is the country’s principal indirect tax and is levied as 16% on most goods and services in Colombia, with water supply, sanitation and public transport all exempt. There are two categories of the value-added tax, common IVA and simplified IVA. The common category applies to business valued at US$34,000 and over while the simplified category applied to smaller business. Nevertheless regardless of the category, the amount remains the same, however, from an accounting perspective simplified IVA is easier to manage and does not need to be treated separately.
Financial Transaction Taxes in Colombia
This is levied on money transacted from banks. The rates are set at 0.4% of the amount transacted. The transactions that are liable for taxation include promissory notes, ATM withdrawals, internet banking, wire transfer, bank checks, bank drafts, overdrafts, money held on term deposit, several forms of off-balance sheet coverage like commitments made on security underwriting, documents in safe custody, items kept in bank safe deposit boxes, unit trusts as well as currency exchange.
Stamp Tax in Colombia
This tax refers to the amount levied on processes of expediting official documents and contracts.
Income Tax in Colombia
Colombian Income Tax is levied either as corporate or individual. All local or foreign corporations are subject to this tax pay at a rate of 33% of their annual revenue. Whereas Colombian citizens, foreign nationals working in Colombia or foreign nationals that have resided in Colombia for more than five years are liable to pay the individual income tax, with the tax rate being dependent on the individuals annual income.
Wealth Tax in Colombia
This tax is levied on Colombians who have properties worth an equivalent of US$1.5 Million or more and is set at 0.3% of the value of the property and it is paid annually.
If you want to find out more about taxes in Colombia, contact our Biz Latin Hub team for help. Our group specialises in the provision of Market Entry and Back Office services. Our experienced team of lawyers, accountants can give you advice and legal support. Feel free to contact Craig at [email protected]