Colombian congress approves Bill establishing 'equity tax' on wealth

Wednesday, 07 December 2022
The Colombian legislature has approved the government's tax reform Bill creating a permanent equity tax to be levied annually on individuals with a net worth above about USD611,000.
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Colombian-resident individuals will be taxed on their worldwide net worth and non-resident individuals will be taxed only on their Colombian assets. Such assets could include real estate, artwork, yachts, boats and planes, but will not include shares in Colombian companies, accounts receivable from Colombian debtors, certain portfolio investments and financial lease agreements.

The equity tax, which will be levied on 1 January of each year, will apply on a sliding scale of 0.5 to 1.5 percent. The maximum rate of 1.5 percent will apply only until 2026: from 2027 onwards, the maximum rate will be capped at 1 percent.

The tax reform Bill also makes changes to capital gains tax (CGT) and withholding tax on dividends. CGT will increase from 10 to 15 percent for resident and non-resident companies and Colombian-resident individuals.

The current 10 percent withholding tax on dividends paid to non-resident entities out of profits subject to corporation tax will increase to 20 percent. For dividend distributions between Colombian entities, the current 7.5 percent withholding tax rate will increase to 10 percent.

The Bill will now be signed by the President of Colombia before being published in the Official Gazette, thereby entering into force.

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