Decree 2201 of December 30th, 2016 regulated several of the changes introduced with Law 1819 of December 29th, 2016. According to the decree, from January 1st, 2017 all national and foreign companies that are taxpayers declaring income tax must answer for The new “special self-retention as income tax and complementary”, which replaces “self-retention under the CREE.”

Changes of the 1819 Law of 2016

Article 376 of Law 1819 of 2016 repealed the CREE as of the taxable year 2017. Therefore, the respective CREE self-retentions established with Decree 1828 of August 2013 are also repealed.

Similarly, article 65 of Law 1819 of 2016 added to the ET article 114-1, which establishes that the companies and legal and assimilated persons taxpayers of the income tax will enjoy the exemption of contributions to SENA, ICBF and EPS On the salaries of those workers who earn less than 10 monthly minimum wages.
Likewise, Articles 100 and 101 of Law 1819 of 2016, when amending articles 240 and 240-1 of the ET, raised the rate with which the great majority of legal entities of the ordinary regime will calculate their income tax from the year Taxable 2017. In this way, the majority suffered an increase from 25% to 33% or from 15% to 20%, while others were reduced from 25% to 9%.

Therefore, since the income tax rate of legal entities will rise from the taxable year 2017 in most cases, article 125 of Law 1819 of 2016 amended article 365 of the ET, establishing in the Paragraph 2 of the new version that: “The national government shall establish a system of self-retention at the source for income and supplementary taxes, which does not exclude the possibility of self-contractors being subject to withholding tax.”

Consequently, through this “special self-retention as income tax and complementary” legal entities could suffer a greater withholding throughout the fiscal year, since they must settle a higher income tax at the end of it.

“Taxpayers subject to the new” special self-retention as income tax and complementary “would continue to be subject to withholding”
In addition, according to the previous paragraph, taxpayers subject to the new “special income tax withholding and supplementary tax” would, at the same time, be subject to withholdings carried out by other taxpayers withholding agents who make payments or Allowances in account.

This means that such special self-retention is a new system that would coexist with traditional income withholding at the same time. Also, with the normal self-retentions as income that some taxpayers are already allowed to practice.