COLOMBIA

The plenary of the Senate and the House of Representatives approved the conciliation report of the tax reform bill of the Executive Branch. The document was approved without any modification, so it will now pass to presidential sanction. Once sanctioned by President Iván Duque, the bill will become law. The initiative obtained 132 votes in favor and 22 against in the House of Representatives, and 70 votes in favor, against 8 negative in the Senate.

The bill includes in its articles the following points of interest:

• Corporate Income Tax (IR in Spanish). The general IR rate will be 35% for national companies and their assimilated companies, permanent establishments of foreign entities and foreign legal entities with or without residence in the country, obliged to file the annual IR and complementary tax return. It is in force as from the taxable year 2022.
• IR surtax on the financial sector. Apply an additional tax of 3% for financial institutions with a net taxable income over 120 thousand Tax Value Units (UVT in Spanish), which is equivalent to about 4.35 billion Colombian pesos (USD 1.13 million). Thus, between taxable years 2022 and 2025, the IR for such entities will be 38%.
• Fiscal normalization tax. It will be applied to taxpayers that have omitted assets or non-existent liabilities. The latter are understood as those assets that were not included in the national tax returns when there was a legal obligation to do so. It will be in force only in 2022 and its rate will be 17% of the value of the assets.
• Days without VAT. During 3 days per year, established by the government, the following will be exempt from sales tax (VAT), without the right to refund and/or compensation: household appliances, clothing, toys, sports equipment, school supplies and toys, among others. 
• International postal traffic under US$200 will continue to be exempt from paying taxes only for those purchases made to countries with which a free trade agreement has been signed, i.e., South Korea and the United States. 
• Solidarity Income Program. Extend this cash transfer program until June 2022.