Tax Statute (Estatuto Tributario)

Article amended by article 10 of Law 2277 of 2022. The new text is as follows: The general rate of income tax applicable to domestic companies and their assimilated entities, permanent establishments of foreign entities, and foreign legal entities with or without tax residence in the country, required to file the annual income tax and complementary taxes return, shall be thirty-five percent (35%).

PARAGRAPH 1. Taxable at the rate of nine percent (9%) shall be the income obtained by state-owned industrial and commercial enterprises and mixed-economy companies of the departmental, municipal, and district level in which the State's participation exceeds ninety percent (90%), that operate monopolies on games of chance and on liquors and alcohols.

PARAGRAPH 2. Financial institutions, [insurance and reinsurance entities, securities brokerage firms, agricultural commodities brokerage firms, agricultural and agroindustrial goods and products exchanges or other commodities exchanges, and securities market infrastructure providers] must pay five (5) additional points on the income tax and complementary taxes during taxable years 2023, 2024, 2025, 2026, and 2027, for a total rate of forty percent (40%).

The additional points referred to in this paragraph apply only to legal entities that, in the corresponding taxable year, have taxable income equal to or greater than one hundred twenty thousand (120,000) UVT.

The surtax referred to in this paragraph is subject to an advance payment of one hundred percent (100%) of its value, calculated on the taxable base of the income tax and complementary taxes on which the taxpayer paid said tax for the immediately preceding taxable year. The advance payment of the income tax and complementary taxes surtax must be paid in two equal annual installments on the dates set by regulation.

In order to contribute to general welfare and the improvement of the population's quality of life, three (3) points of the collection from the surtax referred to in this paragraph shall be allocated to financing roads of the Tertiary Road Network. The national government shall determine the conditions and form of allocation of the collected resources as well as the mechanism for their execution, giving priority in all cases to road projects in PDET municipalities.

PARAGRAPH 3. Domestic companies and their assimilated entities, permanent establishments of foreign entities, and foreign legal entities with or without tax residence in the country, must add additional points to the general income tax rate when they engage in any one or more of the following economic activities, as follows:

1. Extraction of hard coal (stone coal) ISIC - 0510 and extraction of lignite coal ISIC - 0520 as follows:

The prices in the above table for the economic activities extraction of hard coal (stone coal) ISIC - 0510 and extraction of lignite coal ISIC - 0520, shall correspond to the international average price of API2 reference coal, minus the value of the BCI7 freight (API2 - BCI7) USD/Ton, deflated by the Consumer Price Index for all urban consumers of the United States of America, published by the Bureau of Labor Statistics of that country.

2. Extraction of crude petroleum ISIC - 0610, as follows:

The average prices in the above table for the economic activity extraction of crude petroleum ISIC - 0610 shall correspond to the international average price of Brent reference crude oil USD/Barrel, deflated by the Consumer Price Index for all urban consumers of the United States of America published by the Bureau of Labor Statistics of that country.

For the application of the additional points, the Mining and Energy Planning Unit, in the case of the activities of extraction of hard coal (stone coal) ISIC - 0510 and extraction of lignite coal ISIC - 0520, and the National Hydrocarbons Agency for the case of the economic activity of extraction of crude petroleum ISIC - 0610, shall publish no later than the last business day of January of each year, by resolution, the information corresponding to the average prices of the immediately preceding taxable year, as well as the table of average monthly price percentiles including at least:

1. The average price of crude oil that is at the thirtieth (30th) percentile of the average monthly prices of the last one hundred twenty (120) months, not including the price of the months elapsed in the year of the return.

2. The average price of crude oil that is at the forty-fifth (45th) percentile of the average monthly prices of the last one hundred twenty (120) months, not including the price of the months elapsed in the year of the return.

3. The average price of crude oil that is at the sixtieth (60th) percentile of the average monthly prices of the last one hundred twenty (120) months, not including the price of the months elapsed in the year of the return.

4. The average price of coal that is at the sixty-fifth (65th) percentile of the average monthly prices of the last one hundred twenty (120) months, not including the price of the months elapsed in the year of the return.

5. The average price of coal that is at the seventy-fifth (75th) percentile of the average monthly prices of the last one hundred twenty (120) months, not including the price of the months elapsed in the year of the return.

These additional points on the income tax rate apply only to the taxpayers referred to in this paragraph that, in the corresponding taxable year, have taxable income equal to or greater than fifty thousand (50,000) UVT. The above threshold shall be calculated on an aggregate basis for activities carried out by related persons according to the relatedness criteria provided in article 260-1 of this Statute.

When the same taxpayer has income from the different economic activities subject to the provisions herein, the additional points shall be determined by the activity that generates the highest tax income for the taxpayer.

When taxpayers obtain income from the sale of natural gas, the additional points that must be added to the general income tax rate shall be determined by multiplying the additional points determined in accordance with the provisions of the preceding paragraphs of this paragraph, by the proportion resulting from dividing the total gross income other than from the sale of natural gas by the total gross income.

PARAGRAPH 4. Paragraph CONDITIONALLY constitutional Taxpayers whose principal economic activity is the generation of electric power through water resources must pay three (3) additional points on the income tax and complementary taxes during taxable years 2023, 2024, 2025, and 2026, for a total rate of thirty-eight percent (38%).

The additional points referred to in this paragraph apply only to legal entities that, in the corresponding taxable year, have taxable income equal to or greater than thirty thousand (30,000) UVT. The above threshold shall be calculated on an aggregate basis for activities carried out by related persons according to the relatedness criteria provided in article 260-1 of this Statute.

The surtax referred to in this paragraph is subject to an advance payment of one hundred percent (100%) of its value, calculated on the taxable base of the income tax and complementary taxes on which the taxpayer paid said tax for the immediately preceding taxable year. The advance payment of the income tax and complementary taxes surtax must be paid in two (2) equal annual installments on the dates set by regulation.

The provisions of this paragraph do not apply to Small Hydroelectric Plants whose installed capacity is equal to or less than one thousand Kilowatts (1,000 Kw).

The surtax established in this paragraph may not be passed on to the end user, considering the competition regime defined for each stage of the value chain of the provision of electric power service. The Energy and Gas Regulatory Commission - CREG shall regulate the matter and the Superintendence of Public Utilities shall carry out inspection and oversight in accordance with their powers.

PARAGRAPH 5. Domestic companies and their assimilated entities, permanent establishments of foreign entities, and foreign legal entities with or without tax residence in the country shall have a rate of fifteen percent (15%) on income received from the provision of hotel services, theme parks, ecotourism, and/or agrotourism, for a term of ten (10) years, counted from the commencement of the provision of the respective service carried out in:

1. New hotel projects, theme parks, ecotourism, and/or agrotourism that are constructed, or

2. Hotels, theme parks, ecotourism, and/or agrotourism that are remodeled and/or expanded provided that the value of the remodeling and/or expansion is not less than fifty percent (50%) of the acquisition value of the remodeled and/or expanded property, in accordance with the rules of article 90 of this Statute.

For purposes of the provisions of this paragraph, the following requirements must be met:

1. That the construction, expansion, and/or remodeling be carried out in:

1.1. Municipalities of up to two hundred thousand (200,000) inhabitants, as certified by the National Administrative Department of Statistics - DANE as of December 31, 2022, and/or

1.2. Municipalities listed in the development programs with territorial focus - PDET.

2. That in the case of the new hotel project, theme park, ecotourism, and/or agrotourism, it has the construction license issued by the competent authority in which the respective approval of the new construction is recorded.

3. That in the case of the expansion and/or remodeling of the hotel, theme park, ecotourism, and/or agrotourism, it has the prior approval of the project by the Urban Curator or, failing that, by the Municipal Mayor's Office of the domicile of the remodeled and/or expanded property.

4. That the hotel, theme park, ecotourism, and/or agrotourism has the authorization of the national tourism registry, at the time of commencement of the services subject to the tax benefit.

5. That the construction, expansion, and/or remodeling be carried out in its entirety within the five (5) years following the entry into force of this law and that the provision of the ecotourism and/or agrotourism service commence in this period.

The Ministry of Commerce, Industry and Tourism shall certify the provision of the service by domestic companies and their assimilated entities, permanent establishments of foreign entities, and foreign legal entities with or without tax residence in the country, on new construction, remodeling, and/or expansion projects of hotels, theme parks, ecotourism, and/or agrotourism that meet the requirements and conditions established in this paragraph and its regulations.

The income tax rate of fifteen percent (15%) referred to in this paragraph may be applied by the operators of hotels, theme parks, ecotourism, and/or agrotourism, provided that the new construction, remodeling, and/or expansion projects have been delivered for the development of the operation and the income comes directly from the provision of said services without there being a guaranteed return.

The provisions of this paragraph shall not apply to motels and residences.

PARAGRAPH 6. This paragraph establishes a minimum tax rate for taxpayers of the income tax referred to in this article and article 240-1 of the Tax Statute, except for foreign legal entities without tax residence in the country, which shall be calculated from the adjusted financial profit. This minimum rate shall be called the Adjusted Tax Rate (TTD) which may not be less than fifteen percent (15%) and shall be the result of dividing the Adjusted Tax (ID) by the Adjusted Profit (UD), as follows:

For its part, the Adjusted Tax (ID) and the Adjusted Profit (UD) shall be calculated as follows:

ID = INR + DTC - JRP

ID: Adjusted Tax.

INR: Net income tax.

DTC: Tax discounts or tax credits for application of treaties to avoid double taxation and that established in article 254 of the Tax Statute.

IRP: Income tax on passive income from controlled foreign entities. It shall be calculated by multiplying the passive net income by the general rate of article 240 of the Tax Statute (passive net income x general rate).

UD = UC + DPARL - INCRNGO - VIMPP - VNGO - RE - C

UD: Adjusted Profit.

UC: Accounting or financial profit before taxes.

DPARL: Permanent differences established by law that increase net income.

INCRNGO: Income not constituting income or occasional gain, that affects the accounting or financial profit.

VIMPP: Value of income from equity method of the respective taxable year.

VNGO: Net value of income from occasional gain that affects the accounting or financial profit.

RE: Exempt income from application of treaties to avoid double taxation - CAN, those received under the Colombian holding companies regime - CHC, and the foreign income referred to in subparagraphs a) and b) of numeral 4 and numeral 7 of article 235-2 of the Tax Statute.

C: Compensation of tax losses or excess presumptive income taken in the taxable year and that did not affect the accounting profit of the period.

When the Adjusted Tax Rate (TTD) is less than fifteen percent (15%), the value of the Tax to be Added (IA) must be determined to reach the rate of fifteen percent (15%), as follows:

1. For taxpayers subject to this article and article 240-1 of the Tax Statute, whose financial statements are not subject to consolidation, the positive difference between the Adjusted Profit (UD) multiplied by fifteen percent (15%) and the Adjusted Tax (ID), shall be an additional amount of income tax, which must be added to the income tax (IA).

IA = (UD * 15%) - ID

2. Taxpayers who are tax residents in Colombia whose financial statements are subject to consolidation in Colombia, must perform the following procedure:

2.1. Calculate the Group Adjusted Tax Rate (TTDG) by dividing the sum of the Adjusted Taxes (ΣID) of each taxpayer who is a tax resident in Colombia subject to consolidation by the sum of the Adjusted Profit (ΣUD) of each taxpayer who is a tax resident in Colombia whose financial statements are subject to consolidation, as follows:

2.2. If the result is less than fifteen percent (15%), the Tax to be Added by the Group (IAG) must be calculated from the difference between the sum of the Adjusted Profit (ΣUD) multiplied by fifteen percent (15%) minus the sum of the Adjusted Tax (ΣID) of each taxpayer, whose financial statements are consolidated, as follows:

2.3. To calculate the Tax to be Added (IA) of each taxpayer who is a tax resident in Colombia, the Tax to be Added by the Group (IAG) must be multiplied by the percentage resulting from dividing the Adjusted Profit of each taxpayer with adjusted profit greater than zero (UD>0) by the sum of the Adjusted Profits of taxpayers with Adjusted Profits greater than zero ΣUD>0, as follows:

The provisions of this paragraph do not apply to:

a) Companies that were constituted as Special Economic and Social Zones - ZESE during the period that their income tax rate is zero percent (0%), companies that apply the tax incentive of the zones most affected by the armed conflict - ZOMAC, companies referred to in paragraphs 5 and 7 of this article, provided they are not required to file the country-by-country report in accordance with the provisions of article 260-5 of the Tax Statute.

b) Companies referred to in paragraph 1 of this article.

Likewise, the provisions of this paragraph do not apply to those taxpayers whose financial statements are not subject to consolidation and their Adjusted Profit (UD) is equal to or less than zero (0) or to taxpayers whose financial statements are subject to consolidation and the sum of the Adjusted Profit (ΣUD) is equal to or less than zero (0).

c) Those governed by the provisions of article 32 of this Statute.

PARAGRAPH 7. The income tax rate applicable to publishing companies incorporated in Colombia as legal entities, whose economic activity and corporate purpose is exclusively the publication of books under the terms of Law 98 of 1993, shall be fifteen percent (15%).