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Taxation in Colombia is determined by the Congress of Colombia, every Department Assembly and every City Council, which determine what kind of taxes can be levied and which rates can be applied. The country inherited a harsh and diffused taxation policy from the Spanish Empire characterized by a heavy reliance on customs duties.
National taxes are administered by the National Directorate of Taxes and Customs (Spanish: Dirección de Impuestos y Aduanas Nacionales, DIAN). Some of these taxes include:
The value-added tax (VAT) is the main indirect tax. This rose to 19 percent in 2017; up to the end of 2016 the tax was 16 percent of the price of merchandise, goods and services with some exceptions: public transportation, water supply and sanitation and the transportation of natural gas and hydrocarbons. The DIAN recognizes two separate categories (regimenes) of VAT: common and simplified. The first refers to businesses with estimated patrimony over 68 million Colombian pesos (about 34,000 USD), and the second refers to those with patrimony less than that. Although both are obligated to pay the same percentage, the simplified taxpayers are not obligated to conduct separate bookkeeping for the VAT or to generate invoices.
A 0.4% tax rate is imposed on all financial transactions, including withdraw money from ATM, promissory notes, wire transfers, internet banking, bank drafts and bank checks, money on term deposit, overdrafts, installment loans, securities underwriting commitments and other forms of off-balance sheet exposures, safekeeping of documents and other items in safe deposit boxes, currency exchange or unit trusts.
This tax requires the annual payment of 1% of the total patrimony of people with patrimony estimated over 5 thousand million pesos (about 1,4 million USD as of February 2021).
The table below shows the tax rate in units of UVT (Unidad de Valor Tributario), in which 1 UVT = $33,156 COP for 2018. See UVT.
|Income Range in UVT||Tax Rate|
|0 to 1,400||0%|
|>1,400 to 1,700||19%|
|>1,700 to 4,100||28%|
In Colombia the natural persons who must present income declaration are classified on the next table.
For 2019 are:
Both the employer and the employee are subject to monthly payroll taxes from the employee's gross salary, as follows:
The local taxes are fixed by Local Councils through Acuerdos. This group of taxes includes:
The local council on each city fix the rate between this parameters:
UVT (Unidad de Valor Tributario) means Tax Value Unit. Instead of setting a range in Colombian pesos, DIAN has the UVT value which represents a variable amount of pesos, and is updated at least every year. The next table shows the variation of this index in Colombia per year.