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‘Significant presence’ Thus the reform will be able to tax the platforms • ENTER.CO

Gustavo Petro’s new tax reform has streaming platforms in its sights. The document presented contemplates the figure of “Significant Presence”, but what is this and how does it affect companies that trade with Colombia?

Before explaining in detail what “significant economic presence” means, it is worth explaining that streaming platforms, such as Netflix, HBO Max, Disney, Spotify and others, are not required to pay income tax in Colombia (as they are in other parts of the world). Only since the 2016 tax reform were they ordered to start paying VAT when, through article 178 of the project, it was proposed to collect money through payments made to entities that issue credit and debit cards for digital services. This was initially aimed at companies like Spotify and streaming audio that were booming at the time.

It may interest you: Will digital platforms increase in price due to Petro tax reform?

What is ‘significant presence’?

So, the document of the new reform establishes in its articles 56 and 57 that when a foreign entity or person has a significant economic presence, it will have to pay taxes. The tax will have to be based on their income or profits obtained at the national level, just as permanent establishments and branches do today. So, it is necessary to understand that a foreign person begins to have a significant presence in Colombia when he meets one of these 3 conditions:

  1. When you obtain gross income of 31,300 UVT, that is, 1,189 million pesos or more for transactions of goods or services with people in the country.
  2. When you use a Colombian website or a Colombian domain (co).
  3. When you maintain a commercial interaction with 300,000 or more Colombian users.

As it currently stands, the companies required to pay taxes in Colombia are only 108 with a turnover of more than 20 billion Euros per year. But only the right to tax the utility is transferred in a minimum percentage that represents less than 0.5% of the current collection, according to Dian’s calculations.

Image: Karolina Grabowska at Pexels.com

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