Through Decree 1457 of 2020, the Government regulated law 2010 of 2019, concerning the dividend tax.
With that in mind, the norm set forth the treatment for dividends distributed to liquid successions and resident individuals, as well as those distributed to non-resident companies, entities, and individuals, as of January 1, 2020, from profits generated as of January 1, 2017.
Likewise, the Decree regulated the treatment of dividends distributed by companies belonging to the simple tax regime, as well as those coming from foreign entities, which are paid to national companies. Regarding the last-mentioned, it established that they will be subject to the income tax rate set forth in section 240 of the Colombian Tax Code (CTC). This is 32% for 2020, 31% for 2021, and 30% as of 2022.
On the other hand, the decree determined what is understood by dividends declared as payable. It stated that are those whose eligibility can be immediately effective, either because they were approved by the highest management body of the entity, without having a term or condition, or because such term or condition expired, making the dividends enforceable.
Additionally, it regulated the payment of dividends corresponding to profits generated in the 2016 and previous taxable periods, distributed to non-resident individuals, liquid successions and/or companies. In this regard, it established that they will be subject to a withholding tax at a rate of 33%.
It also regulated the withholding tax on dividends distributed to residents and non-residents as of January 1, 2020, from profits generated as of January 1, 2017.
Finally, it established the conditions and the procedure to request in refund the withholdings that had been made on dividends and participations distributed to beneficiaries or residents in States with Double Taxation Agreements, which result in more than the rates provided therein.
See full text of Decree 1457 of 2020