After several days of discussions, the Congress finally approved the tax reform that will begin to run from 2017 and has several changes in tariffs and procedures of national taxes, that will allow the national government to cover the budget deficit.

Within the main modifications we can find:

– An increase of the VAT general rate to 19%, which applies from February 1st 2017 giving a month for any company to make the adaptations of ERP or the re-marcation of the products.

– List of taxed items: inclusion of new items such as bicycles valued in excess of $ 1.5 million, hygienic towels, diapers, tampons and toilet paper at a rate of 5%

– Evaders with debts in excess of $ 5,000 million pesos will be punished with jail, provided that the government will present an anti-evasion bill in March.

– The income tax for all companies will gradually decrease to 33% in 2019, the year in which their surtax will have disappeared altogether.

– The income tax for the CREE equity and the Equity tax will be paid for the last time in 2017, as they are eliminated for this term.

– The income tax to persons will follow the current regime, that is to say that rates are not varied nor does the base increase by lowering the lower cap to declare income.

– In addition, dividends received by residents in Colombia, who did not pay tax on the head of the company, first will pay the 35% rate on the dividends and then apply the rate of 5% or 10% that corresponds to them according to the value received.

These points are some of the changes that the national government has made to improve the current tax structure in the country, in which the low- and middle-income sectors appear much more affected and for which the companies need to carry out a tax planning that contemplates these new fiscal adjustments.