Expatriate Taxation - Colombia _ AIR INC

2014

EXPAT TAX SUMMARY Colombia

Expat Tax Summary Disclaimer

Extreme care is taken in compiling the details of this publication. However, AIRINC makes no representation nor gives any warranty (either express or implied) as to the completeness or accuracy of this publication. AIRINC will not be liable for any direct or consequential damages arising from the use of the information contained in this publication. Any tax advice included in this written or electronic communication was not intended or written to be used, and it cannot be used for the purpose of avoiding any penalties that may be imposed by any governmental taxing authority or agency.

COLOMBIA

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EXPAT TAX SUMMARY Colombia

Expat Tax Summary COLOMBIA

Tax year beginning: January 1, 2014

Introduction This Tax Summary is based upon the latest information available to

AIRINC as of the above date. This summary provides generalized tax

information pertaining to individual taxation of wages and compensation,

and is based on the tax law applicable for income received during the 2014 tax year declared on tax returns submitted during 2015. This tax summary

provides an explanation of the general features of the tax system in Colombia and will not necessarily reflect any customized tax positions or assumptions utilized by a company’s tax equalization policy.

Recent Tax Developments and Net Effect There has been significant tax reform in Colombia. Foremost is the implementation of an alternative minimum tax (IMAN), which calculates tax

Disclaimer Extreme care is taken in compiling the details of this publication. However, AIRINC makes no representation nor gives any warranty (either express or implied) as to the completeness or accuracy of this publication. AIRINC will not be liable for any direct or consequential damages arising from the use of the information contained in this publication. Any tax advice included in this written or electronic communication was not intended or written to be used, and it cannot be used for the purpose of avoiding any penalties that may be imposed by any governmental taxing authority or agency.

on a different basis and the taxpayer pays the higher of the tax amount

calculated under the ordinary and IMAN systems. There is also a new flat deduction of COP 10,554,240 for taxpayers with dependents.

The value of the Colombian tax unit for 2014 has increased to COP

27,485, resulting in inflation adjustments to tax rates, tax exemption

amounts, and deductible mortgage interest. The rate of social security

employee contributions has remained unchanged but the maximum social security contribution has also increased.

Effective tax year 2014, the AIRINC Standard model segments the social

security contributions between the health contribution (4%), pension con-

tribution (4%), and pension solidarity fund contribution (2%), as the latter does not have a maximum contribution.

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EXPAT TAX SUMMARY Colombia

Due to the complex changes in tax year 2014, the net effect is difficult to summarize. In general, middle to high-level incomes will see an increase

in social security. Taxpayers may see an increase or decrease in income tax depending on eligible deductions and the new IMAN tax schedule.

Taxes Imposed By the National government.

Method of Collection Via payroll withholding

Tax Concessions An individual is resident for tax purposes if present in Colombia for more than 6 months in the tax year, or despite the individual being outside

Colombia, the individual’s family is in Colombia (this does not apply to foreigners). Resident individuals are taxed on worldwide income while nonresidents are only taxed on Colombia-source income.

Distinctive Features of the Tax System Nonresidents earning Colombian source income from which income tax

has been withheld do not need to file a tax return. The taxes withheld are considered the final tax.

Disclaimer Extreme care is taken in compiling the details of this publication. However, AIRINC makes no representation nor gives any warranty (either express or implied) as to the completeness or accuracy of this publication. AIRINC will not be liable for any direct or consequential damages arising from the use of the information contained in this publication. Any tax advice included in this written or electronic communication was not intended or written to be used, and it cannot be used for the purpose of avoiding any penalties that may be imposed by any governmental taxing authority or agency.

Recent tax reform added an Alternative Minimum Tax (IMAN), calculated with limited deductions, ranging from 0% to 27%.

Social Security Programs; Family Allowances Social security contributions are required of employed individuals, as follows:

- Health Insurance 4%, up to COP 7,392,000 - General pension scheme (old age, disability survivorship’s pension, administrative expenses) - 4% up to COP 7,392,000 The World’s Trusted Source for Workforce Globalization

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EXPAT TAX SUMMARY Colombia

- Pension solidarity fund - 2%, no maximum contribution.

The total contribution is deductible against taxable income for ordinary and IMAN tax purposes.

Deductions; Personal Allowances; Tax Credits Deductions The following deductions are allowed: - Business expenses to the extent that they relate to the production of income

- Mortgage interest, to up COP 32,982,000 - Gifts (provided they meet certain requirements) There is also a tax-exempt amount of 25% of salary, up to COP 79,156,800.

Credits Foreign tax credits are allowed with respect to income earned outside of Colombia.

Gross Employment Income Gross employment income includes salaries, wages, bonuses, commission

Disclaimer Extreme care is taken in compiling the details of this publication. However, AIRINC makes no representation nor gives any warranty (either express or implied) as to the completeness or accuracy of this publication. AIRINC will not be liable for any direct or consequential damages arising from the use of the information contained in this publication. Any tax advice included in this written or electronic communication was not intended or written to be used, and it cannot be used for the purpose of avoiding any penalties that may be imposed by any governmental taxing authority or agency.

payments, benefits in kind, and cash allowances.

Impact of Marital Status and Family Size Marital status has no impact on tax assessed for an individual. Taxpayers with dependents are allowed a deduction for ordinary tax purposes

of COP 10,554,240. The deduction is the same amount regardless of the number of dependents.

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EXPAT TAX SUMMARY Colombia

Income Tax Rates Colombia Tax Schedule

TAXABLE INCOME

FROM

TAX PAYABLE

TO

AMOUNT

PLUS%

0

29,958,650

0

0

29,958,650

46,724,500

0

19

46,724,500

112,688,500

3,185,512

28

112,688,500

& OVER

21,655,432

33

Colombia Alternative Minimum Tax (In Tax Units)

SALARY

MULTIPLIER

1,548

1.05

1,588

1.08

1,629

1.11

1,670

1.14

1,710

1.16

1,751

2.38

1,792

2.43

1,833

2.49

Disclaimer

1,873

4.76

Extreme care is taken in compiling the details of this publication. However, AIRINC makes no representation nor gives any warranty (either express or implied) as to the completeness or accuracy of this publication. AIRINC will not be liable for any direct or consequential damages arising from the use of the information contained in this publication. Any tax advice included in this written or electronic communication was not intended or written to be used, and it cannot be used for the purpose of avoiding any penalties that may be imposed by any governmental taxing authority or agency.

1,914

4.86

1,955

4.96

1,996

8.43

2,036

8.71

2,118

13.74

2,199

14.26

2,281

19.81

2,362

25.70

2,443

26.57

2,525

35.56

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EXPAT TAX SUMMARY Colombia

Disclaimer Extreme care is taken in compiling the details of this publication. However, AIRINC makes no representation nor gives any warranty (either express or implied) as to the completeness or accuracy of this publication. AIRINC will not be liable for any direct or consequential damages arising from the use of the information contained in this publication. Any tax advice included in this written or electronic communication was not intended or written to be used, and it cannot be used for the purpose of avoiding any penalties that may be imposed by any governmental taxing authority or agency.

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2,606

45.05

2,688

46.43

2,769

55.58

2,851

60.70

2,932

66.02

3,014

71.54

3,095

77.24

3,177

83.14

3,339

95.51

3,421

101.98

3,502

108.64

3,584

115.49

3,665

122.54

3,747

129.76

3,828

137.18

3,910

144.78

3,991

152.58

4,072

168.71

4,276

189.92

4,480

212.27

4,683

235.75

4,887

260.34

5,091

286.03

5,294

312.81

5,498

340.66

5,701

369.57

5,905

399.52

6,109

430.49

6,312

462.46

6,516

495.43

6,720

529.36

6,923

564.23

7,127

600.04

7,330

636.75

7,534

674.35

7,738

712.80

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EXPAT TAX SUMMARY Colombia

Disclaimer Extreme care is taken in compiling the details of this publication. However, AIRINC makes no representation nor gives any warranty (either express or implied) as to the completeness or accuracy of this publication. AIRINC will not be liable for any direct or consequential damages arising from the use of the information contained in this publication. Any tax advice included in this written or electronic communication was not intended or written to be used, and it cannot be used for the purpose of avoiding any penalties that may be imposed by any governmental taxing authority or agency.

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7,941

752.10

8,145

792.22

8,349

833.12

8,552

874.79

8,756

917.21

8,959

960.34

9,163

1,004.16

9,367

1,048.64

9,570

1,093.75

9,774

1,139.48

9,978

1,185.78

10,181

1,232.62

10,385

1,279.99

10,588

1,327.85

10,792

1,376.16

10,996

1,424.90

11,199

1,474.04

11,403

1,523.54

11,607

1,573.37

11,810

1,623.49

12,014

1,673.89

12,217

1,724.51

12,421

1,775.33

12,625

1,826.31

12,828

1,877.42

13,032

1,928.63

13,236

1,979.89

13,439

2,031.18

Income > 13,643 27% * Income - 1,622

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EXPAT TAX SUMMARY Colombia

Š2014, Associates for International Research, Inc. All rights reserved.

Commercially reasonable care was taken in compiling this publication to ensure that the information it contained was correct at the time compiled; however, the publishers make no express or implied warranties with respect to the information provided and accept no liability for any inaccuracies.

AIRINC will not be liable for any direct or consequential damages arising from the use of the information contained in this publication. This publication provides general information only and cannot be considered tax advice. This information cannot be used for the purpose of avoiding any penalties that may be imposed by any governmental taxing authority or agency.

AIRINC does not grant any license or other permission for the content contained within this publication to be (a) reproduced, disseminated, or otherwise used by any person or entity other than the purchasing company or organization without AIRINC’s express written consent, or (b) used for commercial purposes at any time.

Disclaimer Extreme care is taken in compiling the details of this publication. However, AIRINC makes no representation nor gives any warranty (either express or implied) as to the completeness or accuracy of this publication. AIRINC will not be liable for any direct or consequential damages arising from the use of the information contained in this publication. Any tax advice included in this written or electronic communication was not intended or written to be used, and it cannot be used for the purpose of avoiding any penalties that may be imposed by any governmental taxing authority or agency.

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