Impacto redistributivo de la tributación a los dividendos en Colombia

Colombia introduced a tax on dividends in 2017 with a tax rate of 10% that was raised to 15% starting in 2019. The profits of 2016 and previous fiscal periods, which are not covered by the dividend tax, will be gradually finished and then the dividend tax could raise COP$ 1.2 billion, approximately 1% of national tax revenues and 0.13% of GDP. Taxpayers located in the last decile of rent assume almost entire dividend tax, since in that group is concentrated 94% of dividends. Their effective average tax rate goes from 15.4% to 17.1%, as result of application of this tax. The partner-partnership joint taxation would be between 30% and 40.5% in 2022, explained by the tax rate of 30% on corporate income and 15% on dividends. However, the redistributive effects of dividend tax are very limited, because its tax rate is practically unique for any level of income and affects only 158 thousand people, 0.3% of Colombian population or 5% of personal income taxpayers who present an income tax statement. The Gini index does not change when dividend tax is introduced. The inequality of taxpayers' disposable income goes from 0.431 to 0.428. The progressivity of dividen tax could be improved if income tax focus is transferred to individual level and dividens are taxed with marginal tax rates are applied to the dividends. However, this route seems a little risky, because it requires a modern tax administration to efficiently face the control and service for millions of personal income taxpayers. Additionally, the average rate applied to corporate income will be 30% from 2022, while at the personal level the average nominal rate is only close to 9%. This circumstance could eventually reduce income tax overall collection.