Taxes that must be filed by foreign companies in Colombia

Let nothing and no one limit your business growth. If you have thought about investing in the Colombian market, the time is now. Registering foreign companies in Colombia is not complicated, the challenge for every entrepreneur is to know what are the taxes that foreign companies must file in this country of opportunities. Find below the process to set up a company in Colombia:

Taxes in Colombia

Taxes are burdens paid by Colombian and foreign citizens to the State to promote social welfare and support public expenses.

In Colombia, the tax system is divided into two types: direct taxes, those charged to equity or wealth; and indirect taxes: those charged for a transaction carried out. Its collection and administration is in charge of the National Tax Office (DIAN).

As a foreign company: what taxes do you have to file?

If your goal is to register a company in Colombia, then as a taxpayer you belong to the group of “legal persons”. Let us walk you through the main taxes that you must file in Colombia:

1.- Income Tax

It is a direct tax applicable to the profits or net income that you receive as a foreign company during the taxable year, either through your branches on an occasional basis or through your establishments located in the country permanently.

Its regulation is provided for in article 20 of the Colombian Tax Code.

2.- Value Added Tax (VAT)

Recognized by its acronym IVA. It is an indirect tax that the Government receives when the foreign company buys a taxed good or service, passively assuming the tax that is included in the total price of the good or service.

In Colombia it is 19% additional to the value of the product that the foreign company sells or the service it provides. Its regulation is provided for in article 420 of the Colombian Tax Code.

3.- Consumption Tax

This tax is applied to goods and services that are not considered essential; However, when the foreign company acquires them and / or imports them, they will generate an economic value, such as the importation of motorcycles or automobiles for wholesale.

This type of tax has an additional tax on VAT, which can be 16%, 8% or 4%, depending on the good or service taxed. Its regulation is provided for in article 512-1 and following of the Colombian Tax Code.

4.- Industry and Commerce Tax (ICA)

Recognized by its acronym ICA. This tax is in favor of the Municipality.

Foreign companies file this tax when they carry out industrial, commercial, or service activities, either permanently or occasionally. The ICA is regulated in article 33 and following of Law 14 of 1983.

5.- Wealth Tax

This tax is applicable to taxpayers with net equity greater than COP5.000 million during years 2019, 2020 and 2021.

This provision is regulated by the article 292-2 and following of the Colombian Tax Code. The taxable base is the gross equity amount minus the debts on the calculation dates.

6.- Foreign assets declaration

It is not a tax but a tax obligation. Foreign companies that are subject to Income Tax owned inside or outside Colombia, must file their declaration of assets annually. Its regulation is provided for in article 607 of the Colombian Tax Code.

If you have expert legal advisory, then your foreign company will dominate the Colombian tax services in a matter of months. Meet your business goals!