One of the most important moments of the economic agenda in Colombia is the beginning of the tax calendar and with this, the requirements that the Dian begins to make to taxpayers who must comply with their tax obligations. These dates include deadlines for the declaration and the payment of taxes, such as income tax and VAT, should not be overlooked.
For investors, making informed decisions about when and how to move their funds to maximize their tax benefits is important, as is clearing up doubts regarding the obligations that tools such as CDT must comply with, especially in everything related to withholding tax, which, despite what many believe, is not a tax.
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What is retention?
In order to better understand this issue, Portafolio consulted experts from MejorCDT, who explained that withholding tax is not an additional tax, but rather a government mechanism to collect taxes gradually.
CDT.
“This system allows taxpayers to make an advance payment of their tax income tax, which will be deducted from the final amount to be paid at the time of the annual income tax return. Early withholding can reduce the final amount of taxes to be paid, and even result in a refund from the Dian,” said David Susa, CTO of MejorCDT.
Regarding whether it is true that withholding tax is applied during a transaction, they pointed out that this process occurs when there is an exchange of goods or services between a buyer and a seller, since this is the way to ensure that tax obligations are met, collecting the tax at the time of the transaction.
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“The withholding tax in the case of CDT is applied only to the returns or interest generated by the CDT, not to the initial capital invested.” It is important to note that the initial capital remains intact and continues to generate profits even after the payment of the withholding tax,” added this expert.
On the other hand, David Susa highlighted that the withholding is applied as an advance payment of income tax and because of this it provides the advantage of being deductible for those who must declare income. That is, investors can subtract this amount from their tax return, which helps reduce the tax burden on income generated by investments such as CDTs.
CDT.
“Contrary to what some believe, withholding tax does not apply exclusively to Term Deposit Certificates (CDT). This mechanism is used for a variety of taxes, such as VAT, ICA and income, in different situations of daily life. Thus, almost all forms of income received from investments are subject to some type of withholding,” clarified the CTO of MejorCDT.
It does not touch the investment
Finally, it should be noted that withholding tax does not eliminate the profitability of investments and that, for example, in the case of a CDT, the withholding is calculated on the value of the profitability obtained at the maturity of the certificate and that currently, this percentage is 4%.
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“To give an example of how this works, if $10 million is invested and a return of $400,000 is received, the withholding would be $16,000, applied only to the return, not to the total amount invested, and that is why There is no need to fear that your money will be affected by using these systems,” concluded David Susa.
