2024-08-27 01:39:35
Income tax discounts in Colombia represent a key tool for tax optimization for both individuals and legal entities. These benefits, established in the tax statute, allow for a direct reduction in the value of the tax paid, positively impacting the taxpayers’ economy by reducing the balance to be paid or even generating a balance in their favor.
HUILA DAILY, TAX CONSULTATION
By: José Hilario Araque Cárdenas, tax advisor and consultant
Juan Diego Araque Durán, lawyer specializing in tax law
Income tax discounts in Colombia are tax benefits expressly established in the tax statute, which can be used by taxpayers who declare income tax, natural persons and legal entities, which are directly subtracted from the tax settled on taxable net income, decreasing the amount to be paid, resulting in a net income tax from which the withholding taxes that were practiced on us for the income realized in the taxable year are subtracted, the possible balance in favor declared in the previous year is subtracted and the new advance payment of income tax is added, resulting in a balance to be paid or a balance in favor.
Sotax breaks They are characterized because their application decreases the value of the income tax settled and due to this characteristic, their economic effect or tax benefit is different from the effect produced in the income tax declaration by general deductions or special deductions, exempt income.
The following assumption shows the tax benefit reflected in the income tax return for the 2023 tax year of a natural person required to keep accounting records who carried out a commercial activity and who acquired new machinery and equipment as a real productive fixed asset whose VAT paid was for the sum of $20 million.
You may be interested in: There is no shortage of tax news
| Taxable income general tax year 2023 | Basic income tax value | Less: Tax discount for VAT paid on real productive fixed assets | Net Income Tax Value |
| $300 million | $34 m | $20 m | $14 m |
THE FOLLOWING ARE THE TAX DISCOUNTS
- Art. 254 ET: For taxes paid abroad.
Natural persons resident in the country and national companies and entities that are taxpayers of income and complementary taxes and that receive income from foreign sources subject to income tax in the country of origin, have the right to deduct from the amount of Colombian income and complementary tax, the tax paid abroad, whatever its name, settled on those same incomes, provided that the discount does not exceed the amount of tax that the taxpayer must pay in Colombia for those same incomes.
- Art. 254-1 ET: Discount from the net income for dividends and shares received during the year 2023.
Natural persons resident in the country who have received income from dividends and/or shares may deduct from their income tax, in that same period, the value determined in accordance with the following table:
| Net Income Dividends and Participations from (UVT) | Net Income Dividends and Shares Up to (UVT) | ||
| >0 | 1.090 | 0% | 0 |
| >1.090 | From now on | 19% | (Net income from dividends and participations in UVT less 1,090 UVT) x 19% |
- Art. 255 ET: Decree 2205 of 2017. For investments made in control, conservation and improvement of the environment.
Legal entities that directly make investments in environmental control, conservation and improvement shall be entitled to deduct 25% of the investments they have made in the respective taxable year from their income tax, subject to accreditation by the respective environmental authority, which shall take into account the direct environmental benefits associated with said investments. Investments made by order of an environmental authority to mitigate the environmental impact produced by the work or activity subject to an environmental license do not grant the right to a discount.
- Art. 256 ET: By investments made in research, technological development or innovation.
Individuals who make investments in projects classified by the National Council of Tax Benefits in Science and Technology in Innovation as research, technological development or innovation, in accordance with the criteria and conditions defined by said Council, will have the right to deduct from their income tax payable 30% of the value invested in said projects in the taxable period in which the investment was made.
- Art. 256-1 ET: Decree 1011 of 2020. Tax credit for investments in research, technological development and innovation projects, or the linkage of high-level human capital.
Investments made by Micro, Small and Medium Enterprises in projects classified as Research, Technological Development and Innovation, may access a tax credit for a value of 50% of the investment made and certified by the CNBT, applicable for the offset of national taxes.
- Art. 257 ET: For donations to non-profit entities of the special regime and to non-taxpayers.
A discount equivalent to 25% of the value donated in the taxable year or period. The donations referred to in art. 125 of the ET will also give rise to this tax discount.
- Art. 257-1 ET: Decree 985 of 2022. Disciplinary in Tax Scholarships.
Natural persons or legal entities that pay income tax and complementary taxes and enter into agreements with the Ministry of Sport to allocate scholarships and maintenance grants to talented athletes or sports reserves will receive in exchange negotiable securities representing the tax discount on scholarships for taxes to be credited in income tax and complementary tax returns.
The purchasers of the negotiable title representing the tax discount on tax scholarships may only take as a tax discount up to an amount that does not exceed 30% of the total value of the income tax due, in the respective taxable period in which the corresponding discount is taken.
- Art. 258-1 E.T.: Discount on VAT paid on the import, formation, construction or acquisition of real productive fixed assets.
Those liable and non-liable for VAT may deduct 100% of the VAT paid in the year or in any of the following taxable periods, in the acquisition, construction or formation and importation of real productive fixed assets, including that associated with the services necessary to put them in a condition of use.
Opinions are the responsibility of the partners of Araque Asociados Tax and Legal Consultants. We rely on an understanding of current regulations and knowledge of tax law, which may not be shared by the tax authorities. Contact us at www.araqueasociados.com Questions and suggestions at the following email: [email protected]. Personalized attention: Carrera 5 No. 14-32 offices 5, 7 and 8 Pasaje de la Quinta de Neiva, Huila, telephones 321 452 3315.
You can read: Income tax returns for individuals taxable year 2023