Colombia

Individual - Significant developments

Last reviewed - 15 February 2021

Law 2010 of 2019 reforms the income tax system for individuals. As of 1 January 2020, the new act establishes the following:

  • Two tax systems have been maintained for residents, ordinary and presumptive.
  • The presumptive income system has been modified: For fiscal year 2020, it is assumed that the taxable income of a taxpayer in any fiscal year cannot be less than 0.5% of the taxpayer’s tax equity on the last day of the immediately preceding taxable year. This assumption will become 0% as of 2021.
  • Three baskets of income have been implemented as the method of depuration for the ordinary system.
  • For fiscal residents, the applicable tax rate will be specific by type of income.
  • Exempt income and deductions combined maintain a threshold of 40% of the net income up to 5,040 tax value units (TVU) annually.
  • 35% remains as the tax rate for individuals qualified as non-tax residents.