These tax changes have been presented by the Colombian government as measures against tax evasion, and as the way to clean up public finances, promote economic and social development, reactivate the economy, create jobs, encourage entrepreneurship, and promote labour and tax formalisation all over the country.

Most of these measures have also been the result of the country’s commitment to adopt the OECD’s recommendations and standards. There is no doubt, the OECD’s tax recommendations and standards have been implemented by Colombia. This has resulted in a positive outcome: Colombia is the OECD’s 37th member.

In a nutshell, the most relevant measures in this regard can be summarised as follows:

Act 1607 of 2012:      

• Redefinition of tax residence for individuals, including tie-breaker rules for citizens residing in other countries but whose family, assets, and business remain in the country.
• Place of effective management regulation for foreign entities whose direction and management decisions were made within Colombian territory and therefore would have to be deemed local entities/taxpayers.
• New anti-avoidance rules within the Colombian tax regime.

Act 1739 of 2014:

• Normalisation tax 1.0: A “reloaded” tax amnesty programme finally declared constitutional by the Colombian Constitutional Court, applicable to taxpayers who had omitted assets or included inexistent debts in their tax returns and could regularise said situations through a normalisation tax payment in fiscal years 2015 (at a 10 per cent tax rate), 2016 (at a 11.5 per cent tax rate) or 2017 (at a 13 per cent tax rate).
• Wealth tax for fiscal years 2015, 2016, 2017, and 2018, applicable to individuals and corporations whose net worth exceeded COP$ 1,000 million as of January 1^st
• The filing of the informative foreign assets return, through which taxpayers must annually report and detail the information of foreign bank accounts, investments, receivables and other foreign assets.

Act 1819 of 2016:

• Introduction of controlled foreign corporation (CFC) rules taxing passive income derived through foreign investment vehicles controlled by Colombian entities or individuals.
• First rules on Ultimate Beneficial Owners (UBO), requiring reporting of foreign UBOs controlling 25 per cent or more of Colombian companies deemed subsidiaries or affiliates of foreign entities, permanent establishments, and local trusts and investment funds.

Act 1943 of 2018:

• Normalisation Tax 2.0: New amnesty programme for taxpayers who had omitted assets with a new normalisation tax rate of 15 per cent.
• Additional and new rules regarding the report of rights/participation in foreign trusts, private interest foundations, and life insurance policies for tax purposes.
• Net worth tax for fiscal years 2019, 2020, and 2021, to individuals whose net worth exceeded COP$5,000 million as of January 1^st
• Annual return to report UBOs. Creation of the first version of the UBOs registry managed by the Colombian Tax Office (CTO).

Act 2010 of 2019:

• On October 26^th of 2019, Act 1943 of 2019 was declared unconstitutional by the Colombian Constitutional Court. The Court made this decision based on various procedural mistakes made by the Congress.
• To mitigate any fiscal impact, the Colombian government filed a new tax bill. As a result, the rules on tax amnesty, net worth tax, and reporting requirements were left untouched and were once again introduced by Act 2010 of 2019.

Act 2155 of 2021:

• Normalisation tax 3.0: New normalisation tax at a 17 per cent rate. For the first time, the deadline for filing and paying normalisation tax was February 2022 and taxpayers had to make an advance payment during November 2021, equivalent to 50 per cent of the tax due determined on the estimated taxable base for January 1^st, 2022.
• Broader definitions on reporting rules concerning rights and participation in trusts, foundations, insurances, or similar fiduciary structures.
• Introduction of new rules and new formal obligations regarding the report of UBOs information. Creation of new UBOs registry (Registro de Único de Beneficiarios finales – RUB) and establishment of penalties for non-compliance.