The new tax reform brings a benefit that will directly impact the income of Colombian entrepreneurs. Every time a business received debit and credit card payments, it had to assume 1.5% withholding at source for income tax.according to the Colombian ‘fintech’ Bold.
However, according to the firm, now those who have their business registered as a natural person not responsible for VAT and have a RUT, are exempt from withholding at source for income tax, generating savings every time they receive card payments.
“What this tax benefit seeks is to benefit small and medium-sized Colombian companies, with a change that will encourage electronic paymentsas well as it will reduce costs for informal entrepreneurs and positively impact their cash flow,” explained José Vélez, CEO of the Colombian fintech Bold, which has managed to get more than 300,000 businesses to implement dataphone payments.
This benefit was formalized with article 401-4 in the Tax Statute created by article 25 of Law 2277 of 2022. Given this provision, purchasers must not practice withholding at source for income tax, when a Colombian natural person not responsible for VAT receive payments through payment service providers.
The fintech Bold estimates that within its customer base there are thousands of enterprises that comply with being a natural person NOT responsible for VAT and that having RUT could activate this benefit easily and quickly. According to the CEO, in principle the benefit for Bold customers will apply to payments with Visa, MasterCard, American Express and Codensa. Users who want to generate this savings only have to enter the Bold business panel and go to the tax benefits section, select “Start application”, attach and send the updated RUT and if approved, the benefit will be applied to the next transaction.
The CEO also reaffirmed the importance of continuing to work to eliminate the barriers that discourage economic formalization, banking and the massification of digital payments.