The new financing law
The new financing law, approved in December 2018, modified the retention table of article 383 of the ET and exonerated limitation to some exempt income. In addition, the independent party that accepts the new simple tax regime would be totally exempt from withholding taxes.
The new financing law 1943 of 2018; made several important changes to the rules of the ET that govern the income tax and its withholding tax for resident natural persons who receive labor income (labor and non-labor).
Therefore, as of January 2019, those who must act as withholding agents on labor income in payments or account payments made to resident natural persons, should take into account the following novelties:
- The retention procedure at the source applicable to labor income, established in Articles 383 and 385 of the ET, will continue to be applied to payments made to resident natural persons who obtain labor payments and also to payments or credit payments. for fees, commissions, services or emoluments in favor of resident natural persons who state that during the year they do not subcontract 2 or more other persons. In addition, and because the financing law repealed article 340 of the ET, it will no longer matter if those other 2 or more persons are linked for periods of less than or greater than 90 continuous or discontinuous days during the fiscal year (until 2018). retention in the source for work income with the table of article 383 was only practiced to those who did not subcontract to other 2 or more natural persons for periods of 90 days or more, continuous or discontinuous, within the fiscal year. See articles 220.127.116.11.6 and 18.104.22.168 of the DUT 1625 of October 2016, after being modified by Decree 2250 of December 29, 2017).
- The debugging of the payments or credits in account submitted to withholding at the source will be the same that was practiced until December 2018 and that is explained in article 388 of the ET, which was not modified. In said filtering, the total of the gross income of the month will be taken and all the values corresponding to untaxed income will be subtracted, among which the voluntary contributions to the pension funds of the individual regime, regulated by article 55 of the ET, which was modified to establish that such contributions can not exceed 25% of gross income, and in absolute values the 2,500 UVT during the same fiscal year (which would give us 208 UVT per month, about $ 7,128,000 during 2019 Until December 2018, those untaxed revenues had no limit. See article 22.214.171.124.9 of DUT 1625 of 2016, after being added with Decree 2250 of December 29, 2017). At the net value obtained there, the same deductions can be deducted from article 387 of the ET (which was not modified, and in which the values for dependents, prepaid health and interest for a single credit for the acquisition of housing) are shown, same as the income exempted from articles 126-1 (which was not modified and contains the details for voluntary contributions to voluntary pension funds), or 126-4 (which was also not modified and contains the details of the voluntary contributions to the AFC accounts), or 206 of the ET (which was modified to establish new exempt income in sections 6, 8 and 9 in favor of the members of the Military Forces, National Police and professors and rectors of public universities, the exempt income of such numerals is not subject to the 40% limit that will be mentioned later), or 206-1 of the ET (for certain values paid to the diplomatic staff This article was modified but it continues ratifying that the values mentioned there are exempt income that are not subject to the 40% limit that will be mentioned later). The value of all exempt deductions and rents (excluding income exempted from subparagraphs 6, 8 and 9 of article 206 of the ET, as well as exempt income from article 206-1 of the ET) will continue to be subject to the 40% limit of net income (gross income less income not taxed), and in absolute values, said 40% can not exceed the 5,040 UVT per year (420 UVT per month, approximately $ 14,393,000 during 2019).
c. The table of article 383 of the ET will be applied to the net value obtained after having made all the purifications, which was modified with article 34 of the financing law and went from having only four ranges (with a maximum marginal tariff of 33%) to have seven ranks.