Colombia: 2012 Tax Reform for Economic Growth and Tax Competitiveness
| Autor | Irma Mosquera Valderrama |
| Páginas | 107-116 |
107
Colombia: 2012 Tax Reform
for Economic Growth and Tax
Competitiveness
irmA mosquerA VALderrAmA*
Introduction
Colombia has recently approved a com-
prehensive tax reform (Law 1607 of 26 De-
cember 2012) that will substantially change
the international tax rules for individuals
and for companies carrying out business in
Colombia. This Law 1607 has entered into
force as of 1 January 2013, and it consists
of 198 articles that will amend or introdu-
ce new provisions to the Colombian Tax
Code.1
At domestic level, this tax reform aims to
increase the competitiveness of the compa-
nies, to tackle the informal (non-taxpaying)
economic activities , and to reduce tax rates
to encourage tax compliance. In respect of
income tax, in addition to the already exis-
ting wealth tax2, this tax reform introduces
an additional Income Tax (cree) for compa-
nies and set up two alternative minimum tax
systems for individuals i.e. self-employed
and employees (imas/iman). Furthermore,
the tax reform amends the current VAT ra-
tes3, and introduces a new chapter in the
Tax Code dealing with Mergers and Acqui-
sitions.4 Another important feature of Law
1607 is that it will repeal the use of Stability
Contracts. The only Stability contracts that
will be still valid are the Contracts that have
been already negotiated and the Contracts
that are in the process of being approved
before the Law entered into force (i.e. 1
January 2013).5
* Dr. Irma Mosquera Valderrama, Tax Consultant at Hamelink& Van den Tooren in The Hague
and Lecturer at the Hague University. The Netherlands. The author can be contacted at irma@
hamelinktooren.com
1 In Colombia all types of taxes are gathered in a single Tax Code (Estatuto Tributario) enacted
by the Decree 624 of 1989.
2 This wealth tax have been introduced since 2007, and by this means legal and natural persons
subjet to income tax and having as of 1 January 2007 assets with a value greater or equal to COP
3bn are subject to an additional tax being wealth tax. The percentage until 2010 has been 1.2%.
As of 2011, the percentage is 2,4% for assets between cop 3bn-5bn and 4,8% for assets exceeding
5 bn. This wealth tax has been remain unchanged with Law 1607.
3 The main objective to amend vat rates was to reduce the rates from 7 to 3 rates being 0%, 5% and
16%. For the sake of completeness, this overview of the tax reform focuses on the direct income
tax issues that are important for individuals and companies carrying out business in Colombia.
This overview does not deal with indirect income tax (i.e. vat).
4 Article 98 to 101 of Title iv Book I added to the Tax Code.
5 The Law of Stability (Law 963) provides Legal Stability Contracts to foreign investors with
investments exceeding $ 2.01 million approximately (7500 Minimum Monthly Legal Wages).
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