After several months of the approval of the tax reform last year, the Ministry of Finance and Public Credit published a draft decree, which would regulate the changes introduced by Law 2277 of 2022 for the digital economy, through the figure of ‘significant economic presence’.
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The draft establishes the conditions for the application of a new tax on the income of the digital multinationals in the country, which will come into force as of January 1, 2024.
As defined in the tax, and as stated in the draft of the decree, under this model, “non-resident persons or entities not domiciled in the country with a significant economic presence in Colombia on the income from the sale of goods or provision of services in favor of clients”.
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This, in the event that they are engaged in activities such as online advertising services; digital content, including mobile applications, e-books, music and movies; and free streaming services like TV shows, movies, music streaming, streaming media like podcasts, or other forms of digital content.
And also for “any form of monetization of information or data of users located in the national territory and that have been generated by the activity of said users in digital markets”; online services of intermediation platforms and digital subscriptions to media, news, music, video or games.
taxes
The reform will also begin that, among the conditions for it to be considered significant economic presence it is that, the previous taxable year or in the current taxable year, the company during the course had obtained gross income of 31,300 UVT ($1,327 million) or more, for transactions that involve the sale of goods with clients or users located in the national territory .
Or also, that “deliberate and systemic interactions in the Colombian market” are maintained, which implies an interaction or marketing activation of 300,000 or more customers.
A rate of 3% is applied to these on all gross income derived from the sale of goods or provision of digital services, from abroad, to users located in the national territory.
According to the draft disclosed by the portfolio for comments, for companies that choose to declare and pay income and complementary taxes through an annual declaration, an “anticipated collection mechanism different from withholding at source” will be established. .
This rate will correspond to 2% of the quarterly net income (January-April, May-August and September-December).
According to the draft decree, it is configured as sales of goods or provision of services for taxation due to significant economic presence when: the user’s domicile is in Colombia; when payments are made through credit, debit cards or other payment mechanisms located in Colombia; when the shipping address for the sale of goods is located in the country; and the IP address as well as the mobile country code is located in Colombia.
According to the draft, non-residents or entities not domiciled in the country with a significant economic presence must determine “if they choose to declare and pay income and complementary taxes through the form prescribed for that purpose or if they pay the tax through withholding at source as income tax and complementary for significant economic presence.
opinions
Since last year, when the implementation of these taxes was announced, there have been several positions around this proposal. From Alianza IN, the union that represents digital applications in the country, the draft decree is still being studied, but the association has highlighted several points about the measure since the tax was produced.
Although the union acknowledged the fact that a period of one year was given for the tax to begin to be governed, it has also highlighted that the OECD itself is seeking to advance in a digital collective tax, since one of the complications that the platforms face that provide services globally, according to the union, is the complexity of discriminating what income is taken in a country and developing specific accounting.
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On the other hand, Juan Camilo Pardo, economic research analyst at Corficolombiana, commented that “the tax on international digital companies It has several nuances.” On the positive side, he assured, these measures “have an effect on greater tax collection, and this would help to ‘level the playing field’ with other companies”, but on the negative side, the economist acknowledged that “an increase in the tax burden could discourage foreign investment, and there could even be risks that companies make the decision to leave the country”.
According to Pardo, from the point of view of tax equity, digital companies have often been criticized for their complex tax structures, and taxing these companies seeks, in a certain way, to promote greater tax equity, ensuring that all companies , regardless of their location or tax object, will contribute to the tax system.
LAURA LUCIA BECERRA ELEJALDE
Portfolio Journalist
