Colombia

In December 2022, Law 2277 was approved, introducing the following 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 (TU), 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 TU 1,340 annually (the prior cap was TU 5,040 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 from taxation up to TU 1,000.
• Occasional/capital gain tax rate was increased to 15% (previously 10%).
• Equity/wealth tax was introduced as a permanent tax for those equities exceeding TU 72,000. Said taxable base must consider the result of subtracting all debts from the individual's gross equity as of 1 January of each year.