Colombia

Individual - Significant developments

Last reviewed - 08 August 2022

In December 13 2022, Law 2277 was approved introducing significant changes to individuals' income taxation:

  • Two tax systems have been maintained for residents, ordinary and presumptive.
  • The presumptive income system remains at 0% since 2021.
  • The ordinary system is made up of three baskets of income. Nevertheless, the sum of all three baskets (dividends included) will determine the applicable tax rate for tax residents.
  • New tax reliefs have been introduced for individuals such as 1% of purchases up to 240 tax units made through the year regardless of its connection with the individual’s activity.
  • Exempt income and deductions combined maintain a threshold of 40% of the net income. Nevertheless, said threshold cannot exceed 1.340 tax units annually (the prior cap was 5.040 tax units annually).
  • 35% remains as the tax rate for individuals qualified as non-tax residents.
  • Independent workers can choose to be treated as employees for income tax withholding proposes (procedure and tax reliefs).
  • Cost and deductions applicable for independent workers shall be deemed 60% of their gross income.
  • Foreign pension income is exempt of taxation up to 1.000 TU.
  • Occasional/capital gain tax rate was increased to 15% (previously 10%).
  • Equity/Wealth tax was introduced as a permanent tax for those equities exceeding 72,000 TU. Said taxable base must consider the result of subtracting all debts from the individual's gross equity as of January 1st of each year.