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To Pay Tax in Colombia or Not

If we are good law abiding Expats, we will do our legal bit to help Colombia, but that doesn't mean we are going to empty our pockets for them.

When you decide to live in Colombia, one of your obligations is to visit DIAN and register your status with them, I registered before I received my first cedula, they used my passport to complete the process, telling me to return once I was in possession of my cedula. I had to do this, as I had sent ten boxes of personal possessions from Spain, and had to have a N.I.T.  for the import process.

Then you have an obligation to submit a Tax Return every year, for some like myself this causes a bit of extra work, because here the Tax year runs January to December, and in the UK it runs April to April, so I have to work out what is from January to April of one UK Tax year, and April to December of the following.

Again unlike the UK where you can file your own Tax Return, here you can't, you have to employ a certified Accountant, and they come in all qualities from total rubbish, to cheap and thorough, to those that charge more than your tax bill! I have had the pleasure of the first two of these, fortunately now I have a gem. Some will let you prepare your own Tax return and they will check it, then put their signature and stamp to it. However if you can find a good Accountant, they are worth their weight in gold.

If you are not sure if their is a Double Tax Treaty with your home Country, ask your Accountant to liaise with DIAN, and find out, at the time the UK didn't have a Double Tax Treaty, but it turned out that DIAN had a mutual agreement with HMRC in the UK, which amounted to the same thing, therefore my pension in the UK is taxed at source, as a result I provide my UK tax certificates to DIAN, and they work out what the difference is between the two countries, after that they deduct my tax right offs, and if I am lucky I end up paying nothing, except my Accountants bill.

The first meeting I had with  the Accountant who has done my returns for the last few years, she told me, "No one wants to pay Tax, and you pay me to to keep your bill to a minimum", to date she has done just that.

In order to reduce your bill, keep every receipt you get, that has anything to do with;
property improvements,  maintenance, furniture or taxes;
vehicle purchase, sales, maintenance, taxes, insurance. 
Personal bills, such as EPS, other healthcare bills,
Receipts for transfer of funds from your Transfer Company, to show the amount and rate of exchange, Account statements from your home country bank to show 'main' income, as proof it is not from criminal activity,
Any other bills that might just be used to offset taxes here, ask your Accountant, I'm sure I have missed some off.

I would suggest to help your Accountant, and keep his or her bill down, you sort your receipts out, and put them in separate classifications, in date order. I know I get a discount for doing this, and as you have to find them in the first place, it only takes a few minutes to get them in order.

I know there are many Expats who don't file a Tax Return, they think by using an ATM with their home countries Cashcard they can avoid DIAN, and they brag about it, but slowly but surely the Authorities are catching up with these people, it just isn't worth it. I certainly don't like the idea of having to spend my life looking over my shoulder, it may cost a little more, but it's worth the peace of mind.

Dear Phil,

I have been seeking out a tax professional with the same client-money-saving attitude as yours.

One pro told me it would take nine hours of his time at $130 US per hour to research my case and put a filing together.  Then he offered a $30 an hour discount.

Another quoted a tax rate for my payment higher than the tax rate for my main class of income.

A third one I just emailed earlier today.

Please tell us the name and email address of your Colombia accountant.  It doesn't matter what city he or she is in.

cccmedia in Depto. de Nariño

cccmedia I would normally willingly have given that information, especially as I only paid a total equivalent of $86 US last year for her services, but she has gone into semi-retirement, and told me not to give out her details.

One piece of advice, I wouldn't go for one advertised on the internet, they are usually very expensive, you are better with a local Accountant, speaks no English, does commercial accounts, because then your declaration is a doddle for them, and your fee is their undeclared pocket money. Ask a local shop if they have a good Accountant, it would be worth it in the long run.

Phil makes a lot of sense on this issue.

SunsetSteve :

Phil makes a lot of sense on this issue.

It appears I might save about $814 US on my accountant charges for tax year 2017 if I take Phil's advice, compared to what the Medellín pro was quoting me.

This strikes me as a classic example of saving big money in South America by utilizing one's Spanish-language skills instead of seeking out a pro who speaks English and promotes his services to Gringos.

Thanks, Phil. :)

cccmedia in Depto. de Nariño

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