Colombian Income Tax

Dan says on Jul 30, 2005, 10:23:

What I'm thinking of probably refers to property where I saw something about $80,000,000 pesos or more. But Off hand, i don't remember anything about income.

God Bless America!

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ColombiaBoard says on Jul 30, 2005, 17:28:

Taxes in Colombia In Colombia if you´re an employee and your yearly salary is 60 million pesos or within a year or you own a total of 80 million pesos or more (cash, properties, etc.) you have to file your income tax return. If you work independently and make 25 million pesos or more you also have to file an income tax return.
But even if you you´re an employee the employer witholds what it´s called "source tax" (retencion en la fuente), that´s about 3.5% of your monthly salary.
As you can see, you get screwed anyway....

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2retirensa says on Jul 30, 2005, 17:34:

Thanks, CB I'm guessing they don't get tax refunds.
Thanks for the info.
Maureen

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ColombiaBoard says on Jul 30, 2005, 17:39:

Tax refunds If you file tax returns you can get a tax refund if your accountant or whomever does the income tax return determines that you paid more taxes during the year than you owe to the government.
The ones who really get screwed are the employees who pay the "source tax" but don´t earn enough or own enough stuff to file an income return tax form and therefore can´t ask for a tax refund.

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2retirensa says on Jul 31, 2005, 05:52:

???????3.5%???????? What 3.5% rate? The tax site says 35% with a surcharge for 2004-2006 of 10% making the effective rate 38.5% on taxable liquid income. Am I be misunderstanding something here?
Maureen

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juanalejo says on Jul 31, 2005, 07:52:

Taxes It is a progressive tax curve, which starts at around about 1.800.000 per month and reaches 8.000.000 or so at 35%. As Colombiaboard explained there is a minimum where you have to file a tax form, but you can if you think you are entitled to a tax return file a form regardless. But most of the deductibles such as mortgage, schooling and health insurances can be presented directly to your employeer and he is entitled with the appropiate back up to lower your tax base accordingly. Hence very seldom lower salaries would be entitled to returns and most tax payers actually pay extra at the end of the fiscal year.

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aztec says on Jul 31, 2005, 07:53:

Pension If you become a Colombian resident (reside in country more than 180 days) will the Colombian Government tax your U.S. taxable pension?

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2retirensa says on Jul 31, 2005, 09:07:

This makes more sense, Juanalejo So they must be posting the maximum tax rate. The way they word the explanation "on all liquid taxable income" made it sound like a flat rate to me instead of progressive. Thanks again.
Maureen

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ColombiaBoard says on Jul 31, 2005, 12:43:

Getting screwed... I think they get screwed because they can´t ask for a tax refund but richer folks usually aks for tax refunds so they wind up paying less taxes.
But hey, this doesn´t just happen in Colombia, it happens everywhere, the richest people wind up paying less taxes than the poor and middle classes because they have accountants and tax experts working for them.

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BAQ says on Jul 31, 2005, 17:49:

AMERICANS Yea, I am curious about the same question that AZTEC asked, if you are an american living here, do they tax your pension money? Same question goes for my house. Last year I paid 1/2 million pesos in PROPERTY TAX, got the bill in the mail, so are you saying since my house is worth 150 million pesos, I am going to have to also file an income tax return?

Any help on this subject would be appreciated.

Semper Fidelis !

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2retirensa says on Jul 31, 2005, 18:30:

BAQ You pay property tax on real estate within the city limits, each municipality setting their own rate.
This site posted a while back has tax info. Click on "taxes" on the left column.
I couldn't find anything refering to pensions--good question.

http://www.coinvertir.org/html/i_portals/index.php

Maureen

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platano says on Jul 31, 2005, 18:46:

In defense of taxes.. and the benefits they provide in Colombia I once cut my head open "en el campo" and was taken to the public hospital in Piéndamo, Cauca--to the emergency room. (This was on the weekend). I had the wound cleaned by a nurse, stitches sewn by a doctor, and was given medication for pain. I was charged COP$2,500 (The equivalent at the time of USD$2.50 (that's two dollars and fifty cents).

I challenge anyone of you in the USA to go to an emergency room, receive immediate and professional medical attention plus painkillers, and only pay two dollars and fifty cents. The painkillers alone in the USA will be more than that!

I will never complain about Colombian taxes because in spite of what many people say the money is being well-managed and the poorest people in the countryside are receiving benefits. I have heard Colombians say they don't mind paying taxes in the USA because "se ven" (you see the benefits)--well, in Colombia the taxes also "se ven"... if you look. I don't wish anyone to have their head gashed open, but if you do the Colombian medical system is top notch--and I'm talking public rural hospitals not private, strata 6, urban hospitals.

My hat is off to the dedicated, very well-educated medical professionals I have experienced in Colombia working in public tax-supported institutions in both urban and rural settings--I will gladly pay taxes to support those public services.

Plátano, el banano verde
Oxigeno Verde ¡Libertad por Ingrid y los demás!

plátano

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rjstuff says on Jul 31, 2005, 19:56:

Well you can end up paying nothing here! Of course you have socialized medicine and we don't (USA.) However I can drive to my doctor with a head wound, he can stitch it up and give me his samples thereby me avoiding the payment for medicines and he can choose to not charge me the co-pay! (Some doctors who know my sister (also a doctor) have refused to accept any co-pay from me in the past!) But I agree, socialized medicine - Canada, Costa Rica etc., is great with well trained doctors and minimal costs to the citizens. Some day we will have it too - damn pharmaceutical companies!

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tomtom33 says on Aug 1, 2005, 06:05:

BAQ and Aztec My Bogota law firm has told me that, in the event that I stay in Colombia for more than 180 days in a calendar year, the Colombian government will have some claim on taxing ALL of my income whether or not it came from Colombian sources. I will fall into that category for the first time in 2005.

In January of next year I will start to sort that stuff out and will post what I discover. Some of the CPAs on this board will know better than I, but I believe that the US gives foreign tax credits. Thus some or all of any income taxes I pay to Colombia will be credited toward my US income tax due.

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aztec says on Aug 1, 2005, 06:28:

Taxes Will someone please help with this explanation.

If you are a resident or stay in Colombia 180 days or more, it appears you are required to report for tax purposes if either of the following is applicable.

"gross patrimony (total assets) at the end of the fiscal period (31 of December) is greater than Col$ 84,880,000 or your income is superior to Col$ 63,660,000 in the case of wage-earning)."

An example as explained to me:

"Value patrimony (value of property in this example) Col$ 600,000,000 Less exception investment (a deduction I don't yet understand)of 233,832,000 the remaining value patrimony is net Col$ 366,168,000 the presumptive Rent(tax) 6% Col$ 21,970,000 imposed amount of tax to pay year 2004 is Col$ 300,000." This is not the local property tax that most everyone understands. It is apparently a National Income Tax imposed on a persons total wealth or assets in Colombia.

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juanalejo says on Aug 1, 2005, 07:01:

taxes Your example is only if you declare you earn nothing or very little, the government asumes if you have a house worth xx you must have a minimum income to live there: renta presuntiva=assumed rent. If will vary once you declare your income as if it is superior to the assumed rent then it ceases to matter. It does not add to your income for tax purposes.

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Mr. Hollywood says on Aug 1, 2005, 07:08:

About the 3.5% I agree with Tinto that the 3.5% minimum sounds like a bargain, especially when you compare it to the fact that every US employee is having 15% witheld from dollar 1 on their income (as Social Security, etc.)

What's truly regressive in Colombia, I think, is the 15% sales tax. I've been told people under a certain income can file for it to be returned, but I can't imagine most low-income people doing the bookeeping that would involve.

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juanalejo says on Aug 1, 2005, 07:15:

Mr H There is no flat 3.5% income tax, it was a mistake there. It starts at nearly zero and quickly moves up to 35%. Nobody that earns under 1.800.000 pays income tax and nobody over 8.000.000 pays less than 35%. VAT or sales tax is 16% and products that are considered for basic living like certain foods, basic construction items and some home products are excempt to that, precisely with low income people in mind. There is not VAT return form for them.

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Mr. Hollywood says on Aug 1, 2005, 07:27:

thanks Juan You're always a beacon of knowledge in a sea of speculation.

So there's no basic social security type of withholding?

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juanalejo says on Aug 1, 2005, 07:48:

Social Security Yes there is a withholding for that, and nobody is exempt on that. I will have to check on how much it is but it is somewhere around 12% including the deduction for pension, healthcare and compensation centers (colsubsidio, compensar, etc which are subsidized sport clubs, hotels, and extracurricular education especially for the elder).

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BAQ says on Aug 1, 2005, 10:52:

Am I correct? So if I am reading these posts correctly, since the value of my house is UNDER the 233.832.000 exemption and my yearly U.S. Federal pension is UNDER the 63.660.000 pesos and I am not working, I don;t need to worry about filing a return in Colombia? Am I correct or am I all screwed up again?????????????????

Semper Fidelis !

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mrxcol says on Aug 2, 2005, 09:55:

BAQ: Yes, you're screwed up again In Colombia everybody pays income tax if:

- You're an employee AND
( Your assets (houses, cars, money in the bank, investments, etc) are over COP$ 80.000.000) OR Your income is beyond COP$ 60'000.000 )

But, foreigners should not worry. Foreigners in Colombia are only taxed after their fifth year living in Colombia. They're taxed only their income (from USA) as long at it pays source taxes (more exactly remesas taxes). Clearly, if foreigners get a job here they will get taxed following the indications before (as normal).

If you own a house. You must pay "Predial" tax to the city you're living in. It's based in the price of the house and it's a percentage of it.

If you own a car you must pay taxes to the local transit authority. It's based also in the price of the cars and varies between 1.5% and 3.5% that price. If you own a motorcycle you only pay taxes if beyond 125 cc (not included 125).

All companies must present the DIAN's income tax declaration. Alll companies must pay except for the first year. After that, they must pay based at least in the "Renta presuntiva" (assumed rent) which is 6% the assets (i'm not sure about his percentage).

When declaring, natural people are allowed to reduce based in:
- Donations
- Interests on loans for buying house.
- Voluntary contributions to pension (which shouldn't be used until 5 years from the date the contribution was made or will be taxed)
- Special bonus (employ generation, tax free zones, taxes paid in other countries, etc).

Hope this helps.

Julian

http://www.actualicese.com/editorial/2005/05030.htm
http://www.impuestosdecolombia.com.co/faqs.php

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aztec says on Aug 2, 2005, 14:01:

Taxes Mrxcol, thanks for the clarification.

Does your statement "Foreigners in Colombia are only taxed after their fifth year living in Colombia. They're taxed only their income (from USA) as long at it pays source taxes (more exactly remesas taxes)." mean that I will be taxed by Colombia on my taxable US pension after fifth year living in Colombia?

To follow up on your example, what would be the National income tax if assets totaled over Col$600.000.00?

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