Taxation in Colombia
Encyclopedia
- See Government of ColombiaGovernment of ColombiaThe government of Colombiais a republic with separation of powers into executive, judicial and legislative branches.Its legislature has a congress,its judiciary has a supreme court, andits executive branch has a president....
for a wider perspective of Colombian government.
Taxation in Colombia is determined by the Congress of Colombia
Congress of Colombia
The Congress of the Republic of Colombia is the name given to Colombia's bicameral national legislature.The Congress of Colombia consists of the 102-seat Senate , and the 166-seat Chamber of Representatives ...
, the Department of Colombia Assemblies
Departments of Colombia
Colombia is an unitary republic formed by thirty-two departments and a Capital District . Each department has a Governor and a Department Assembly , elected by popular vote for a four-year period. The governor cannot be re-elected in consecutive periods...
and the Municipalities of Colombia councils
Municipalities of Colombia
The Municipalities of Colombia are decentralized subdivisions of the Republic of Colombia. Municipalities make up most of the departments of Colombia with 1,119 municipalities...
, which determine what kind of taxes can be levied and which rates can be applied.
Colombia
Colombia
Colombia, officially the Republic of Colombia , is a unitary constitutional republic comprising thirty-two departments. The country is located in northwestern South America, bordered to the east by Venezuela and Brazil; to the south by Ecuador and Peru; to the north by the Caribbean Sea; to the...
inherited a harsh and diffused taxation policy from the Spanish Empire
Spanish Empire
The Spanish Empire comprised territories and colonies administered directly by Spain in Europe, in America, Africa, Asia and Oceania. It originated during the Age of Exploration and was therefore one of the first global empires. At the time of Habsburgs, Spain reached the peak of its world power....
, characterized by a heavy reliance on customs
Customs
Customs is an authority or agency in a country responsible for collecting and safeguarding customs duties and for controlling the flow of goods including animals, transports, personal effects and hazardous items in and out of a country...
, due to the relatively low capacity of local production of goods.
Both the national government and local governments' budgets run significant deficits.
National Taxes
National taxes are administered by the National Tax and Customs Direction (DIAN) . Some of these taxes include:IVA
The Value-added tax (IVA) is a variant of the sales tax. This tax charges 16% of the price of sale of all kind of merchandise, goods, and services, with some exceptions: public transportation services, Water supply and sanitationWater supply and sanitation in Colombia
Water supply and sanitation in Colombia has been improved in many ways over the past decades. Between 1990 and 2004, access to sanitation increased from 82% to 86%, but access to water increased only slightly from 92% to 93%.. In particular, coverage in rural areas lags behind. Furthermore, despite...
services, and the transportation of natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
and hydrocarbons. The Dian recognizes two separated categories (regimenes) of IVA responsibles: The common and the simplified. The first refers to business
Business
A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit...
es with estimated patrimony
Property
Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...
over 68 million Colombian peso
Colombian peso
The peso is the currency of Colombia. Its ISO 4217 code is COP and it is also informally abbreviated as COL$. However, the official peso symbol is $. As 20 July 2011, the exchange rate of the Colombian peso is 1750 Colombian pesos to 1 U.S. dollar.-History:The peso has been the currency of Colombia...
s (about 34,000 dollars), and the second refers to those with patrimony less than that. Although both are obligated to pay the same percentage, the simplified responsibles are not obligated to carry separated bookkeeping
Bookkeeping
Bookkeeping is the recording of financial transactions. Transactions include sales, purchases, income, receipts and payments by an individual or organization. Bookkeeping is usually performed by a bookkeeper. Bookkeeping should not be confused with accounting. The accounting process is usually...
s for the IVA or to generate sale bill
Bill (payment)
A bill or invoice is a document requesting payment for an order previously supplied. Presentation of a bill is common practice on the part of credit card companies, utilities, and other service providers...
s.
Stamp tax
The stamp tax (Spanish: "impuesto de timbre") is a contribution over the expedition of any official document, and over the validity of private documents, as is the case of any kind of contractContract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
or contractual modifications.
Financial transactions tax
This is a tax imposed over the years 1998-1999 that covers all of the financial transactions including banknotes, promissory notes, processing of payments by way of telegraphic transfer, EFTPOSEFTPOS
EFTPOS is the general term used for debit card based systems used for processing transactions through terminals at points of sale. In Australia and New Zealand it is also the brand name of the specific system used for such payments...
, internet banking or other means, bank drafts
Cheque
A cheque is a document/instrument See the negotiable cow—itself a fictional story—for discussions of cheques written on unusual surfaces. that orders a payment of money from a bank account...
and bank cheques
Cheque
A cheque is a document/instrument See the negotiable cow—itself a fictional story—for discussions of cheques written on unusual surfaces. that orders a payment of money from a bank account...
, money on term deposit, overdraft
Overdraft
An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero. In this situation the account is said to be "overdrawn". If there is a prior agreement with the account provider for an overdraft, and the amount overdrawn is within the authorized overdraft...
s, installment loans, documentary and standby letters of credit, guarantees, performance bond
Performance bond
A performance bond is a surety bond issued by an insurance company or a bank to guarantee satisfactory completion of a project by a contractor.A job requiring a payment & performance bond will usually require a bid bond, to bid the job...
s, securities underwriting commitments and other forms of off balance sheet exposures, safekeeping of documents and other items in safe deposit box
Safe deposit box
A safe deposit box or wrongly referred to as a safety deposit box is an individually-secured container, usually held within a larger safe or bank vault. Safe deposit boxes are generally located in banks, post offices or other institutions...
es, currency exchange, sale, distribution or brokerage, with or without advice, unit trusts and similar financial products.
In 1998-99 the tax rate was 0.2%.
Patrimony tax
This tax requires the annual payment of 0.3% of the total patrimony of those people with patrimony estimated over 3000 million pesos (about 1.5 million dollars). It is a temporary tax to help the military.Income tax
Corporations: Income tax (Spanish: "Impuesto a la renta y complementarios") must be paid by all local and foreign corporations operating in Colombia. They are subject to a corporate tax of 33%.Individuals: Colombian citizens and foreign individuals who have lived continuously or cumulatively in Colombia, for a total of 5 years are thereafter subject to individual income tax based on a system of graduated marginal tax rates. See table below:
| Income. Range in UVT | Tax Rate |
|---|---|
| 0 to 1090 | 0% |
| >1.090 to 1700 | 19% |
| >1.700 to 4100 | 28% |
| >4.100 | 33% |
Local order taxes
This group of taxes includes among others:- Impuesto a ganadores de loterías: Tax on lotteryLotteryA lottery is a form of gambling which involves the drawing of lots for a prize.Lottery is outlawed by some governments, while others endorse it to the extent of organizing a national or state lottery. It is common to find some degree of regulation of lottery by governments...
winnings - Impuesto a loterías foráneas: Tax to allow the sale of out-of-state lottery tickets
- Impuesto al consumo de cervezas, sifones y refajos: Tax on BeerBeerBeer is the world's most widely consumed andprobably oldest alcoholic beverage; it is the third most popular drink overall, after water and tea. It is produced by the brewing and fermentation of sugars, mainly derived from malted cereal grains, most commonly malted barley and malted wheat...
- Impuesto al consumo de licores, vinos, aperitivos y similares: Tax on Liquors
- Impuesto al consumo de cigarrillos: Tax on cigarettes
- Impuesto al consumo de gasolina: Tax on gasolineGasolineGasoline , or petrol , is a toxic, translucent, petroleum-derived liquid that is primarily used as a fuel in internal combustion engines. It consists mostly of organic compounds obtained by the fractional distillation of petroleum, enhanced with a variety of additives. Some gasolines also contain...
- Degüello de ganado mayor: Tax on slaughterhouseSlaughterhouseA slaughterhouse or abattoir is a facility where animals are killed for consumption as food products.Approximately 45-50% of the animal can be turned into edible products...
s - Impuesto de registro: Tax to register (academic degrees, patents, names, etc.)
- Impuesto sobre vehículos automotores: Tax on automobileAutomobileAn automobile, autocar, motor car or car is a wheeled motor vehicle used for transporting passengers, which also carries its own engine or motor...
s - Impuesto de industria y comercio: Tax to allow the opening of industrial or commercial establishments
- Impuesto de avisos y tableros: Tax on advertisingAdvertisingAdvertising is a form of communication used to persuade an audience to take some action with respect to products, ideas, or services. Most commonly, the desired result is to drive consumer behavior with respect to a commercial offering, although political and ideological advertising is also common...
- Impuesto predial: Real estateReal estateIn general use, esp. North American, 'real estate' is taken to mean "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; an item of real property; buildings or...
tax.