The first thing would be to say that the written statement that was required before the reform is no longer required, currently all personal services provided by natural persons are subject to the application of the withholding table at the source of article 383 of the E.T.

This means that for the concepts of services such as fees, commissions, transport services, maintenance and all those where the provision of a personal service is remunerated, the rates of 11%, 10%, 6%, 4%, 1% will no longer apply, but will be settled as the withholding for work income established in article 383 of the tax statute is settled.

It is clear that this does not affect the obligation to verify the respective contributions to health and pension plans, for their deductibility.

For guidance, contact:

JUAN CARLOS ROLDAN O.  & HUMBERTO RODRIGUEZ G.
Chartered Public Accountants

For questions about Colombian taxes, please do not contact Finance Colombia! Instead, contact Rodriguez & Asoc. Bilingual tax specialists in Colombia at info@rodriguezasociados.co or click on the banner below.

This guest article is published as a courtesy to readers. Finance Colombia is a news publication and does not provide financial, legal, or tax advice. This information is provided as general news and the reader must consult is or her own counsel in order to make qualified, informed decisions. Information, rules, procedures, and laws may (and almost certainly will) change, and Finance Colombia assumes no responsibility for accuracy or timeliness of information.

Photo: Reims, Marne, Champagne, France At the Comptoir de l’Industrie from the Musée départemental Albert-Kahn

Minister of Commerce, Industry and Tourism, German Umaña Mendoza

The administration of Colombian President Gustavo Petro has issued Decree 2598 of December 23, 2022, extending a 40% tariff on imported garment and clothing products. The measure replaces Decree 414 of April 2021, and covers some garments that were previously exempted for free zone processing.

The previous Decree 414 applied a 40% tariff on goods valued at less than $10 USD per kilogram, and another tariff of 15% plus $1.50 per kilo for garments priced higher than $10. The new law removes the distinction, applying the 40% rate across the board.

“This is not only one of the promises of President Gustavo Petro, which we are fulfilling, but it was also necessary to promote a balance in international trade, a greater generation of added value, competitiveness, a boost to employment, especially for women, and the productivity of the national garment industry.” said the Minister of Commerce, Industry and Tourism, German Umaña Mendoza.

According to business and tax attorney Humberto Rodriguez, the only exceptions are for countries with goods covered by bilateral free trade agreements with Colombia, like the United States and South Korea.

Attorney and tax expert Humberto Rodriguez

“The trade agreement that the United States has with Colombia was signed in 2006 and is in force. This means that for textile products from the United States, this 40% tax would not apply,” said Rodriguez. “The garments that will have the tax of 40%, and will undoubtedly increase in price, are those that are mainly made of wool, cotton or synthetic fibers. In summary, the majority of garments such as: coats, jackets, pants, dresses, skirts, coveralls, shirts and baby clothes.”

“For countries that do not have trade agreements with Colombia such as Panama and China for example the tariff of 40% will be applied,” concluded Rodriguez.

It is important to always ask for an electronic invoice, as cash register or handwritten receipts are non-reimbursable.

Foreign tourists may request the refund of sales tax – VAT for the purchase of taxed movable property as long as the value of each sales invoice is equal to or greater than three (3) units of tax value – UVT (equivalent to $38,004 pesos in 2022 and $42,412 in 2023. The maximum refund is 200 tax value units, so in 2023 that would be $8,482,400, or over $1,700 USD as of publication.

Colombian residents are not eligible for VAT refunds. The goods purchased must be leaving the country with the foreign visitor, and the purchase must be supported by electronically traceable invoices. In other words, the retailer would have submitted the purchase to the DIAN electronically. Most major Colombian retailers do this automatically, as they are required to by law, for all retail transactions. Eligible invoices and receipts will have a CUFE code that starts with CUFE: Followed by a long string of letters and numbers. It is important to always ask for an electronic invoice, as cash register or handwritten receipts are non-reimbursable.

There are traveler service points for processing refunds located at major airports, seaports and land border crossings. Look for either DIAN offices, or self-service kiosks before security checkpoints that will be staffed by either DIAN officials, or Global Blue, their outsourcing contractor.

Based in Medellín, Humberto Rodriguez is bilingual, and accredited in Colombia as both a lawyer and accountant.

Allow yourself extra time when traveling to complete the refund application procedure at the airport or border crossing. You will need:

• The refund request form, available on-site
• Passport and/or other appropriate identification
• The actual products that you purchased and are taking with you out of Colombia
• The physical or emailed electronic invoices

The DIAN may take up to one month to process refunds, which in most cases will be returned via the credit card the traveler used to make the purchase. VAT refunds only apply to merchandise, not services.

For questions about VAT refunds, please do not contact Finance Colombia! Instead, contact Rodriguez & Asoc. Bilingual tax specialists in Colombia at info@rodriguezasociados.co or click on the banner below.

This guest article is published as a courtesy to readers. Finance Colombia is a news publication and does not provide financial, legal, or tax advice. This information is provided as general news and the reader must consult is or her own counsel in order to make qualified, informed decisions. Information, rules, procedures, and laws may (and almost certainly will) change, and Finance Colombia assumes no responsibility for accuracy or timeliness of information.

Headline image by Tracia from Pixabay

One of the aspects that the reform as presented would modify is the corporate tax sector since the general income tax rate will be increased to 35% from taxable year 2022, without specifying whether or not it will have a limit of application or its permanence. For financial institutions that generate a taxable income higher than 120,000 UVT, the rate will be increased by three points, raising the rate to 38%.

The UVT, or Tax Value Unit is a measure used in Colombia to calculate tax obligations. It is readjusted annually based on the consumer price index. For 2021 the UVT is $36,308 Pesos.

Another aspect is the normalization tax complementary to income tax. This 17% tax would be reincorporated with the purpose of normalizing omitted assets or nonexistent liabilities, and would be in force for the year 2022. During 2021 an advance payment of 50% must be made.

An incentive for the generation of new jobs is created, which will allow financing labor costs such as social security and parafiscal payments (mandatory employee benefits), and which will be aimed at employers that generate new jobs by hiring additional workers. In addition, in order to reactivate the economy and support companies affected by the national strike, the government will grant employers, legal entities, individuals, consortiums, temporary unions and autonomous patrimonies a state contribution to contribute to the payment of labor obligations for the months of May and June 2021.

Regarding the sales tax, the rules of the three days without VAT would be modified, but the ministry proposes to allow purchases with cash, taking into account that in the most recent days the benefit only applied to electronic purchases.

The novelty is that, in order to establish the commercial value of real estate, notaries will have at their disposal a system created by the DIAN (Colombia’s tax authority) where they will be able to geo-reference the property to establish its value.  The National Administrative Department of Statistics (DANE) has a new task. It will have five months to complete a study, together with the land registry (IGAC) Instituto Geográfico Agustín Codazzi starting November 1, 2021, to develop and publish the mentioned study required for the valuation of real estate for its commercialization.

Humberto Rodríguez G. is an accountant, lawyer, partner, and general manager of Rodríguez Asociados Abogados y Contadores SAS. The proven Medellín-based firm has experience providing advisory services on a broad range of matters, including general business, corporations, contracts, investments, employment, finance, and taxation. For more information, connect with Rodríguez through the firm’s website, Facebook, or email at mailto:info@rodriguezasociados.co.

Photo courtesy Minhacienda

In general terms, the statute is in force for those who are on Colombian territory in an irregular manner, as long as they prove that they were in Colombia as of January 31, 2021. Additionally, those who enter the Colombian territory in a regular manner during the first two years of the statute’s validity, that is, from May 29, 2021 to May 28, 2023. However, this condition will be subject to what is established by the Ministry of Health, in relation to the declaration of the Sanitary Emergency.

The implementation of the Temporary Status for Venezuelan Migrants will be done through the Single Registry of Venezuelan Migrants (RUMV), in addition to the application and issuance of the Temporary Protection Permit; with the objective of guaranteeing the rights of the populations of special protection through differential actions.

Resolution 0971 of 2021 applies to all Venezuelan migrants who wish to stay temporarily in the national territory and who meet one of the conditions set forth in the document, in accordance with the provisions of Article 4 of Decree 216 of 2021:

1. Be in Colombian territory on a regular basis as holders of an Entry and Stay Permit (PIP), Temporary Stay Permit (PTP) or a Special Stay Permit (PEP) in force, whatever its stage of issuance including the PEPFF.
2. Be in Colombian territory on a regular basis as holders of a SC-2 laissez-passer as part of the processing of an application for recognition of refugee status.
3. To be in Colombian territory in an irregular manner as of January 31, 2021.
4. To enter Colombian territory in a regular manner through the respective legally authorized Migration Control Post, complying with the requirements established in the immigration regulations, during the first two (2) years of validity of the statute, that is to say, from May 29, 2021 until May 28, 2023. Notwithstanding, this condition will be subject to what is established by the Ministry of Health, in relation to the declaration of the Sanitary Emergency.

Continuing with the above, the registration in the Single Registry of Venezuelan Migrants will be carried out in two stages: Virtual Pre-Registration and Face-to-Face Biometric Registration, in accordance with the provisions of Articles 7 and 12 of this Resolution. The Migration Authority may advance the development of the aforementioned stages by signing inter-institutional agreements.

Humberto Rodríguez G. is an accountant, lawyer, partner, and general manager of Rodríguez Asociados Abogados y Contadores SAS. The proven Medellín-based firm has experience providing advisory services on a broad range of matters, including general business, corporations, contracts, investments, employment, finance, and taxation. For more information, connect with Rodríguez through the firm’s website, Facebook, or email at mailto:info@rodriguezasociados.co.

Before the pandemic, digital nomads were already known but the coronavirus has caused the numbers of remote workers to increase considerably around the world, either by choice or by new business policies mandating work from home policies. These people will be able to provide services under this modality for a defined period or even permanently, without having to be physically present in a specific place as was previously customary for the vast majority of employees.

Some countries have implemented legislation related to remote work visas, such as Antigua and Barbuda, Barbados, Bermuda, Estonia, Georgia and Croatia, where they implement visas and residency programs for digital nomads who wish to temporarily relocate to these countries. Compared to traditional work visa options, these programs provide a more affordable option for those who are investing or starting a business in a new country.

Visas for digital nomads in Colombia will be easy to obtain, will require less paperwork than a normal work visa, and will allow legalizing the status of workers arriving in the country.

Visas for digital nomads in Colombia will be easy to obtain, will require less paperwork than a normal work visa, and will allow legalizing the status of workers arriving in the country, without necessarily being linked in a traditional way with a company, turning the country into a remote work center in the framework of the so-called “fourth industrial revolution” or era of digitization.

On the other hand, there must be a development from the fiscal, labor and social security point of view, since, for example, from the fiscal perspective, the time of stay, as well as the activities to be developed, will be relevant because they can generate tax residency in the country they visit and, therefore, obligations or payments for this concept must be fulfilled. For the remote worker or digital nomad visa holder, a bill is being finalized in congress and once it is voted in and receives the presidential signature, it will regulate remote work as a new work modality as considered in the entrepreneurship law.

Finally, there are a series of aspects that must also be considered, such as regulation and policies, including occupational health and safety, health insurance with international coverage in force during the stay in Colombia, delivery of work tools necessary to develop the work remotely, use of ICT and data, intellectual property, inclusion and anti-discrimination policies, use of company tools and codes of conduct, which can be challenging when implementing remote work from a nomadic visa.

Humberto Rodríguez G. is an accountant, lawyer, partner, and general manager of Rodríguez Asociados Abogados y Contadores SAS. The proven Medellín-based firm has experience providing advisory services on a broad range of matters, including general business, corporations, contracts, investments, employment, finance, and taxation. For more information, connect with Rodríguez through the firm’s website, Facebook, or email at mailto:info@rodriguezasociados.co.

Baru, Colombia photo credit: Loren Moss

Uber’s Statement: “From Uber Colombia SAS we respect the law and the decisions issued by the authorities. The company has not received notification of the first instance decision adopted by the Superintendence of Industry and Commerce, which is not firm. Once the company is notified of the decision, it will carry out the corresponding analysis in order to define the relevance of filing the resources of the case”

On October 13, 2019, officers of the Delegation for Protection of Competition attempted a visit of Uber’s Bogotá offices and were blocked from access by Uber personnel.  According to the Superintendence in resolution 34942 of 2019:

• There is a business policy within Uber Colombia SAS in which its officials are instructed on how to behave during visits of an administrative authority such as the Superintendence of Industry and Commerce. By virtue of such, there are institutional instructions not to provide authorities with information regarding the company’s business or grant access to the computers and other equipment of the company, such as during the visit carried out by Superintendence Authorities.
• The company presented an obstinate and obstructive attitude towards the requirements of the Delegation for Protection of Competition
• Uber ignored multiple orders to implement internal procedures for inspection of electronic documents and files that the Delegation ordered blocked.
• The company obstructed the delivery of different corporate documents such as statutes, assembly minutes, balance sheets, and others required by Delegation officials and deemed relevant to the visit. According to the Superintendence, “Thus and despite being within the reach of the company, it did not take the necessary steps so that said documents were submitted to the authority.”

In addition to the corporate fine of COP $2,128,258,120 Pesos, or approximately $620,000 USD, The Superintendence fined Uber Colombia legal advisor Natalia Patricia Caroprese Castro $14,906,088 Colombian Pesos ($4,337 USD), legal advisor to Uber Colombia, Felipe Alberto Sandoval Villamil $24,843,480 Colombian Pesos ($7,230 USD), and manager of Uber Colombia’s offices, Andrés Felipe Bedoya Sánchez $4,968,696 ($1,446 USD).

According to Colombian legal expert Humberto Rodriguez, managing partner of Rodriguez y Asociados, under Colombian law, judicial search warrants are not required in all cases when there are administrative investigations. For example, the DIAN (Colombian Tax Authorities) or Superintendence of Industry and Commerce have to send a letter saying that they are going to conduct an investigation and will inspect certain documents. There are exceptional cases when the DIAN or another administrative authority suspects fraud and they can use POLFA – Policia Fiscal y Aduanera without advance notice, but in that case they need a warrant from a judge or a prosecutor