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About the Tax Residence of the Wealth Tax in Colombia.

The obligation to pay the wealth tax is subject to the condition of tax residence. In effect, tax residence for natural people is understood as those who remain continuously or discontinuously in the country for more than 183 days regardless of their nationality and measured within a 365 calendar year. Accordingly, they must report the income they have generated inside and outside the country and additionally the assets they own both in Colombia and abroad.



On the other hand, there is an official study carried out for the year 2.021 by the entity in charge of taxes in Colombia based on the income tax returns for adult natural persons. It concludes the following regarding the level of wealth owned by those tax residents. The number of citizens with wealth greater than $162 million is 1.848.647 inhabitants. Of those, those who have wealth greater than $649 million are 369.729 people. In turn, those who possess wealth greater than $2.784 million are 36.972 people and those who possess wealth greater than $9.579 are 3.697 people.


That is to say that 5% of the wealthiest adults in the country possess assets greater than $162 million. But the percentage of adults with the most wealth decreases to 1% if assets greater than $649 are considered and the percentage drops to 0.1% for assets greater than $2.784 million and to 0.01% for assets above $9.579 million.


The wealth tax in Colombia according to current legislation is paid by natural persons and legal entities from assets of 3.338 million pesos and the taxpayers of the tax according to the results of the official entity for the year 2.023 are the following:

From $3.338 to $5.734 million 18.937 taxpayers

From $5.734 to $11.233 million 9.501 taxpayers

Of more than $11.233 million 3.680 taxpayers

 

A total of 32.118 taxpayers. In these taxpayers added together the assets reach the sum of 216 billion and they pay a total wealth tax of 1.2 billion pesos.

By cities in Bogotá there are 17.175 taxpayers, followed by Medellín and Cali with 5.982 and 2.461 respectively. In Bogotá, the wealth is 112 billion in Medellín and 36 billion in Cali and 16 billion in Cali.

In Bogotá, the wealth tax reaches 630.594 million, in Medellín 187.062 million and in Cali 92.944 million.


Of all the above, some observations are the following. In Colombia, according to the study on wealth levels, there are 37 million adults of which only 1.9 million have wealth greater than $162 million and in turn only 36.972 people have wealth greater than $2.784 million, which is reflecting the high inequality in wealth among that population and the vast majority have assets less than $162 million.


But even so, those who pay wealth tax as mentioned before only pay taxes on high wealth values ​​of $3.338 million and above and between natural and legal people there are only 32.118 taxpayers.

In addition, with rates of 0.5%, 1% and 1.5%, the collection of this tax is only $1.2 billion. This collection only accounts for 0.4% of the total collected in 2.023 of $279 billion and is lower than the individual collection of all other taxes, including, for example, the 4X1000.


It should be noted that tax collection as a percentage of Colombia's GDP in 2.022 (19.7%) was below the Latin American average (21.5%) and below the OECD average (34.0%).



As previously presented, the wealth tax in Colombia has a very low collection rate. There are analysts and researchers who propose making this tax an instrument that allows, given the inequality of wealth among the population, to obtain a much higher collection for the purpose of making social investment. Also, as it is designed, they propose increasing rates for the highest ranges of wealth. As for national or foreign tax residents who remain in the country for more than 183 days, they are taxable subjects because in any case they are very high levels of assets from which they must pay taxes, levels that could be lower with lower scales to increase collection, make equity and avoid tax evasion.

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Today, as for the world markets, the stock markets are with mixed behavior due to the commercial uncertainty of the United States with other countries and awaiting the meetings of the central banks of the week.


The price of oil falls due to concerns about the economic slowdown in China that influences global demand. WTI and BRENT register 74.5 and 78.5 dollars per barrel respectively.


In Colombia, the stock market rose 1.1% and the peso began the day with a devaluation of 4.251 per dollar and by midday moderated to 4.223.

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