General Taxes in Colombia
Information on the different taxes for Colombian residents; property taxes, VAT, wealth tax and stamp duty. Who has to pay and how to go about paying these taxes...
Taxes in Colombia are levied at both national and regional level. National taxes are paid at the same rates and conditions throughout the country, and regional taxes vary according to the city or region. However, all regional taxes are charged within a range established by national law.
Every resident of Colombia is required to pay taxes. A person is considered resident for tax purposes if they have lived in the country for 183 consecutive or non-consecutive days, during any 365 day period.
Wealth tax (Impuesto al Patrimonio)
Since 2009, residents who declare and pay income tax are liable for wealth tax when their assets exceed an annual stipulated amount.
The tax is calculated on the net worth of the assets of a person or business as follows:
- More than $1,000,000,000 COP = 1%
- = or > $2,000,000,000 COP = 1.4%
- = or > $3,000,000,000 COP = 3%
- = or > $5,000,000,000 COP = 6%
Value Added Tax (IVA)
Sales tax/VAT (Impuesto sobre Valor Agregado – IVA) is an indirect tax on the provision of services and the sale and import of goods. Depending on the type of goods or services, VAT rates are either 0%, 5% or 16% of the price:
- 0% - Certain food products, utilities, health services and some internet and technological products
- 5% - Basic food products such as corn, rice, oil and sugar
- 16% - All other products and services
The recent changes in VAT rates should be reflected in the final price the consumer pays for these items.
VAT is paid at the time of purchase. However, tourists who do not reside in the country and who make purchases with a foreign credit card may apply for a refund at the airport before leaving the country, provided they have proper identification, receipts and the total value of purchases is sufficient. Requests for refunds are made at the DIAN office (Dirección de Impuestas y Aduanas Nacionales) at the airport.
Consumption Tax (Impuesto Nacional al Consumo – INC)
Consumption tax is levied on vehicles, telecommunications, and food and beverages. Mobile telephone services pay a rate of 4%; restaurants, bars, clubs and any establishments that serve as bars or restaurants (for example hotels or clubs) are taxed at a rate of 8%; and assets such as boats, certain vehicles and motorcycles are taxed at a rate of between 8% and 16% of the total value.
The tax is included and charged when the invoice is produced.
By law, prices in restaurants and bars must clearly state the full price of each item, including all relevant taxes. These taxes apply to products and services that are not covered by IVA, so the two taxes are mutually exclusive.
Stamp Duty (Impuesto de Timbre)
Stamp duty is a tax on official documents, and for validating private documents that will be used in Colombia. It is withheld by public notaries, public entities, and diplomatic agents when abroad. The rate of stamp duty is 1.5% of the total value of the contract, and has been reduced yearly to the point of 0 percent since 2010.
A few exceptions to this law remain, and stamp duty is still charged for documents such as checks that must be paid in Colombia, registered and bearer bonds, certificates of deposit, and visas and most documents provided out of the country by embassies and consulates.
Financial Transaction Tax (Gravamen a los Movimientos Financieros – GMF)
The financial transaction tax is levied on the transfer of funds between bank accounts, or when writing cashier checks. Movements of funds between bank accounts belonging to the same person are exempt from this tax. The rate of tax is 0.4% of the value of the operation.
Paying National Taxes
National taxes must be declared and paid to the tax office (DIAN). Income tax returns can be filed online or by filling in a tax return in writing. In order to file a tax return, the person must meet the following requirements:
- Be registered in the RUT: the RUT is the unified tax registry in Colombia. It is possible to register online on the tax authority's website or in person at their offices
- Be within the legal yearly established income brackets that determine the responsibility to pay and the amount
- Be an individual, legal representative, or accountant of the person or company declaring taxes.