Colombia Forum

WhoaNellie
Joined 2015
Posts: 2313

4 years ago

Equity tax...

4 years ago

Someone asked me specifically about the new Equity Tax for (at least) 2019-2021, of 1%. It appears that it is a wealth tax, and asset tax, for anyone with net worth of over about $1.5 million USD ($5 billion COP):

https://www.internationalinvestment.net/news/4000717/colombia-tax-comes-effect

https://taxinsights.ey.com/archive/archive-news/colombia-enacts-tax-reform-for-2019.aspx

From the last link:

Equity tax
The Tax Reform establishes a new equity tax on Colombian resident individuals’ worldwide net worth that will apply for years 2019, 2020, and 2021 (nonresident individuals will be taxed only on their Colombian assets). Nonresident entities will have to pay this tax on their assets owned in Colombia, such as real estate, yachts, artwork, boats, planes, and rights over mines or oil wells. In calculating this tax, nonresident entities should not consider shares in Colombian companies, accounts receivable from Colombian debtors, certain portfolio investments and financial lease agreements. For this tax to apply, the net equity of the taxpayer must be at least COP 5.000 million (approximately US$1.5 million) as of 1 January 2019.

The equity tax rate is 1%.

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Some observations:

1. Most expats would not have to worry about this - I suspect most do not have a net equity of at least $1.5 million USD.

2. If this did apply to me, I'd find a really good Colombia tax accountant who can explain the whole deal and suggest ways to lessen the impact.

3. Not that I am suggesting concealing or not reporting assets in the US - but I'd want to know, how would Colombia know, even if they (DIAN) share info with the IRS, what assets I held in the US that could be included in their reckoning - especially assets that are not reportable to the IRS? Many things that "rich" people own and that do not generate income or dividends, are taxed only locally.

Does anyone have any insights or experience with this?

William Russell

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