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Colombian Finance Minister Alberto Carrasquilla has presented Financing Law Bill (Tax Reform) to congress on October 31, 2018: a Bill that would raise COP14 trillion for the 2019 budget, but which has divided lawmakers in the country.

The Bill proposes fundamental changes to individual taxation, as well as that of foreign investors, and amendments cover, among others:

corporate income tax;

individuals income tax;

equity tax and a voluntary disclosure program;

VAT;

taxation of foreign investments; and

tax procedure.

Measures would include the increase of income tax for middle and upper earners to 37 percent (a five percent increase), while individuals whose net equity is greater than COP3 billion as of January 1, 2019 will be subject to a new equity tax. The Bill also proposes to introduce a voluntary disclosure programme in September 2019.

Companies would benefit from a decreased corporate tax, from 35 percent to 30 percent, and a preferential tax regime for Colombian companies whose main purpose is to invest or hold shares in foreign companies.

When presenting the Bill last week, Carrasquilla said, “This is a progressive law that means those Colombians who have more income will contribute at a higher rate for state financing and the redistribution of wealth.”

For the Financing Law Bill to take effect in 2019, the Congress of Colombia must approve it by the end of 2018.

The opinions expressed do not constitute investment advice and specialist advice should be sought about your specific circumstances.

Published on our website on Wednesday, 7 November, 2018