Tax reform: Approval in the House of Representatives

The tax reform bill or Economic Growth Law was approved in the early morning of Friday, December 20. It will now pass to presidential sanction.

Learn about the package of measures to which Colombians will have to pay attention as from January 1, 2020.

The law has 152 articles and from the Government’s point of view “will continue to promote economic development, investment and also creates the basis to significantly reduce inequality and inequity in the country”.

The House of Representatives approved the same articles that were approved by the Senate on Wednesday night, December 18.

The Minister of Finance, Alberto Carrasquilla, thanked the vote of confidence and said that in 2020 the new measures introduced to advance in reducing inequality will be felt. He added that with this reform those who “have more, will pay more”.

Measures included to reduce inequality

– VAT refund for the poorest 20% of Colombia’s population.

– Gradual reduction of the health contribution of pensioners from 12% to 4% of the minimum wage.

– Creation of additional incentives to those who generate employment for young people between 18 and 28 years of age.

– Creation of three days a year without VAT.

Other provisions established

–VAT for bicycles and “E” motorcycles goes from 19% to 5%, as long as the price exceeds $1,700,000. Those below this value will not pay.

– Articles 20, 21, 22, 23 and 24 (on special VAT exemption) are in force as from July 1, 2020 and until July 30, 2021. Once the year of application is completed, the government will be able to evaluate results and determine the continuity of the measure.

– The increase of the tax on dividends abroad was authorized, as well as the surtax on the financial system.

– The creation of the Tax Benefits Study Commissionwas approved.

–Approval for the tax normalization tax for Colombians who have properties abroad.

– A surtax on beach concessions throughout the countrywas created.

– An articlewas approved to pay small gasoline distributors a debt that remained when the new carbon tax was imposed, which generated a millionaire lawsuit against the State.

New income to declare income

The net income that Colombians must have to declare income will increase from $2.9 million to $3.2 million. “What we are going to do is to increase from 87 UVT to 95 UVT, which represents a decrease in the withholding tax, not an increase”, explained the director of the Dian, José Andrés Romero.

Budgeted collection through the tax reform

This law will have a net collection of $13.5 billion in 2020:

– Incometaxon higher-income individuals, surtax on the financial system, multiphase VAT on beer and soft drinks, and tax normalization: $5.3 trillion.

– Economicgrowth: $3.2 trillion.

–Lowerevasion and implementation of electronic invoicing: $5 billion.

Source: Actualícese