Dividends Between Companies: How Does the Increase in Withholding Tax Affect Them?

Tax attorney Juan Camilo Riveira, wrote an article for El Heraldo about the impact of the increase in withholding tax on dividends distributed among Colombian companies, as established in the 2022 Tax Reform (Law 2277). Mr. Riveira explains that withholding this tax increased from 7.5 to 10 percent, affecting the cash flow and liquidity of companies receiving dividends, as it can only be used in the income tax return of individuals or foreign investors when they receive the dividends regardless of the time elapsed. He also highlights that there are exceptions to this tax withholding, such as in the case of Colombian Holding Companies (CHC), whose incorporation entails tax benefits and seeks to attract investment to the country, as long as certain requirements established by law are met.

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