Wealth tax for 2021

Individuals and legal entities that paid the 2020 wealth tax are also liable for the tax in 2021.

The base will be the taxable liquid patrimony they own on January 1, 2021, but limited by a special comparison with respect to the 2020 base.

Articles 43 to 49 of Law 2010 of December 2019 modified articles 292-2 through 292-8 of the Tax Statute -ET- to establish the wealth tax to be liquidated between 2020 and 2021.

“the same taxpayers who were obliged to liquidate the 2020 wealth tax are those who will also be obliged to liquidate the 2021 tax.”

In this regard, it should be understood that the same taxpayers who were obliged to pay the 2020 wealth tax are those who will also be obliged to pay the 2021 tax. Among these taxpayers are, mainly, individuals and unliquidated successions, residents or non-residents, of the ordinary or SIMPLE regime (see article 292-2 of the ET).

The foregoing is so because article 294-2 of the ET established as the generating event of the wealth tax the following:

“Article 294-2. Generating event. The equity tax is generated by the possession of the same as of January 1, 2020, whose value is equal to or greater than five thousand ($5,000) million pesos. For purposes of this tax, the concept of equity is equivalent to the liquid equity, calculated by taking the total gross equity of the taxpayer natural person owned on the same date minus the debts payable by the taxpayer in force on that date”.

Therefore, only those taxpayers expressly mentioned in Article 292-2 of the ET, and that as of January 1, 2020 had fiscal liquid assets reportable to the Colombian Government equal or higher than $5,000,000,000, are the only ones that were obliged to liquidate the equity tax for the years 2020 and 2021.

The above implies that those who did not have that level of net worth on January 1, 2020 will not be obliged to pay the tax for the year 2021, even if they have reached it after that date.

In any case, if, for example, a natural person who on January 1, 2020 had a net worth of more than $5,000,000,000,000 died during 2020 and its respective illiquid succession is settled before January 1, 2021, in such case he/she will not be liable for the 2021 tax.

This is so since article 297-2 of the ET states that the tax is “caused” only on January 1, 2021 and, of course, only if the taxpayer on whom the tax is levied still legally exists on that date.

Additionally, if any of the taxpayers that paid the 2020 wealth tax made during 2020, and before January 1, 2021, any investment that qualifies as a mega-investment (see articles 235-3 and 235-4 of the ET, regulated by Decree 1157 of August 21, 2020), they would also be exempted from paying the wealth tax for the year 2021.

Taxable base will be the taxable net worth of 2021, but limited with a special comparison.

Those who must liquidate the equity tax for the year 2021 must take the taxable liquid equity reportable to the Colombian Government that they own on January 1, 2021 and decrease it, first, with the net equity values of the assets mentioned in Article 295-2 of the ET.

However, according to paragraph 2 of the mentioned article, the value obtained up to that point must be compared with the taxable net worth that was calculated for the year 2020, so that the increase or decrease that occurs between both values will be subject to a special limit with which the final taxable base of the tax for the year 2021 will be defined.

The rule in question states:

“Article 295-2, paragraph 2. In the event that the taxable base of the wealth tax determined in the taxable year 2021 is higher than that determined in the year 2020, the taxable base for the year 2021 shall be the lower between the taxable base determined in the year 2020 increased by twenty-five percent (25%) of the inflation certified by the National Department of Statistics (Dane) for the year immediately prior to the one declared and the taxable base determined in the year in which it is declared. If the taxable base of the wealth tax determined in the year 2021, is lower than that determined in the year 2020, the taxable base for the year 2021 shall be the greater between the taxable base determined in the year 2020 decreased by twenty-five percent (25%) of the inflation certified by the National Department of Statistics (Dane) for the year immediately prior to that declared and the taxable base determined in the year in which it is declared.”

Source: Actualize