INDIVIDUAL TAXATION

Non-residents are subject to income tax on all his Colombian-sourced income. Income of married couples are assessed and taxed separately.

INCOME TAX (impuesto de renta)

Income of non-residents is taxed at a flat rate of 33% for 2008.

RENTAL INCOME
Income from leasing real property is considered as ordinary income and taxed at 33%. Rental income is subject to 3.5% withholding tax, which is considered as advance tax payment. This tax can be credited against the taxpayer’s income tax liability when he files his tax return.

Taxable rental income is computed by deducting income-generating expenses (such as administrative expenses, insurance, realtor or leasing agent fees, taxes, maintenance and repairs) from the gross rent. Property taxes are also deductible.

CAPITAL GAINS
Capital gains from selling real property are considered as ordinary income and taxed at 33%. The taxable gain is computed by deducting the following from the selling price: acquisition costs (as revalued by the consumer price index), costs of transferring ownership, and improvement costs.

Industry and Commerce Tax

This tax is levied on the gross income of all industrial, commercial, or service activities carried out in a given jurisdiction or municipality through a real estate property. Generally the applicable tax rates are between 0.2% and 1%, depending on the municipality and type of activity. In Santa Fe de Bogotá, this tax is levied from 0.414% to 1.38%. This can be deducted for income tax purposes.

WEALTH TAX ((impuesto al patrimonio)

Wealth tax is an annual tax imposed on individuals who exceed a certain amount of wealth. Wealth tax is levied at 1.2% on the taxpayer’s net worth in excess of the threshold amount, which is COP3 billion (US$1,188,119) until 2010. The first COP220 million (US$87,129) of the taxpayer’s residence is exempted from this tax.

As of January 2011, wealth tax is levied at progressive rates. Under this system, the taxpayer’s residence value up to COP319,215,000 (US$126,422) is exempted from the wealth tax.

PROPERTY TAX

Real Estate Tax (impuesto predial unificado)

Property taxes are levied on the cadastral value of the properties as assessed by the municipalities. The rates of the unified property tax on the aggregate value of the land and buildings range between 0.1% and 1.6%. In Santa Fe de Bogotá, Colombia’s capital, the property tax range from 0.002% to 0.015%.

Real estate tax paid is deductible from rental income for individual income tax purposes.