The simple tax regime

The simple tax regime

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The simple taxation regime (RST) in Colombia was incorporated into its tax legislation by the National Government, through the Financing Law, as an optional annual taxation regime whose advance payments of Income Tax are made on a bimonthly basis, in a given taxable year.

The purpose of this article is to inform about the main aspects of such tax regime.

What is the purpose of the Simple Taxation Regime?

The purpose of this new regime is to simplify the taxpayers’ compliance with their tax obligations, favoring their formalization.

Who can access the Simple Taxation Regime?

Both individuals and legal entities may access this system voluntarily, provided that they comply with the following:

  • That they are a natural person who develops enterprise activity or legal person of corporative nature, whenever their shareholders are natural persons.
  • The annual gross income, of the previous taxable year, is equal or greater than 1,400 UVT, but less than 80,000 UVT, for this purpose, ordinary and extraordinary income must be taken into consideration.
  • Be registered in the Unique Tax Registry (RUT).
  • To have fulfilled its tax obligations within the established terms, as well as its obligations of the Integral Security System.

How to register?

It will be possible to check on the DIAN’s website if a certain taxpayer can access the system. To do so, he/she must have a registered user.

Subsequently, the control panel must be clicked on the option “Opt for the Simple System”, which will enable a questionnaire to establish whether it meets the requirements.

Once the questionnaire has been filled in, the system will confirm if, based on what has been filled in, you can access the regime and you will have to confirm the change of this regime.

What are the benefits of this regime?

Taxpayers belonging to the simple taxation regime have the following benefits:

  • They are not subject to income tax.
  • They are not subject to income tax.
  • The form of payment of the tax to the industry and commerce is simplified.
  • The payment of the complementary tax of notices and boards is simplified.
  • Small stores, micro markets and hairdressing salons will not have to comply with the formal and substantial VAT obligations.

What is the Unified Tax that the Simple Taxation Regime provides?

The Unified Tax is created by this regime, which replaces the mono-tax, this includes the following simple taxes:

  • Income Tax.
  • Industry and Commerce Tax.
  • Sales tax, in case any activity of the Indicas is carried out in article 908 of the Tax Statute.
  • Consumption tax, in case of activities of sale of drinks and food.

What is the rate of the Unified Tax?

The simple consolidated rate will depend on the annual gross income, as well as the business activity of each company:

  • Small stores, micro markets and hairdressing salon: Depending on the annual gross income, a rate of 2% to 11.6% may be applied.
  • Commercial activities, mechanical technical services, telecommunications activities and other activities: The fee may range from 1.8% to 5.4%.
  • Consulting services: The simple consolidated rate may go from 4.9% to 11.6%.
  • Food and beverage sales: The rate may go from 3.4% to 7%.

How is the tax paid?

As indicated, taxpayers of the simple tax regime must make bimonthly advances, through an electronic payment receipt. The amount of the advance payment will depend on the activity and gross income, as indicated.

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