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flag Colombia Colombia: Business Environment

In this page: Accounting Rules | Tax Rates | Intellectual Property | Legal Framework | Standards | Business Practices

 

Accounting Rules

Tax Year
The fiscal year begins on January 1st and ends on December 31st.
Accounting Standards
Colombian GAAP. On 13 July 2009, the Congress of the Republic of Columbia enacted Law No. 1314 concerning accounting, financial reporting and assurance. This law is called the "Law of Convergence" and states an intention to converge Colombian GAAP with international standards beginning from the year 2014 (proposed start year).
Accounting Regulation Bodies
Contaduria
Accounting Reports
The accounting structure should include:
- The balance sheet: Assets (current assets, liquid assets, bad debt allowance, salaries, other, income tax, inventories, expenses incurred, Total current assets), equipment (machinery property, Depreciation), and other assets ;
- The income statement: Revenues, Gross profit, Operating costs, Operating earnings, Total operating costs, Earnings before income taxes, Net income ;
- The operational balances; and
- The annexes.
Publication Requirements
The Colombian Commerce Code (in Spanish) does not detail the requirements for accounting and the certification of accounts. It is generally found in practice that companies maintain up-to-date ledgers and inventories also annually prepare the documents necessary for a financial analysis (balance sheet, income statement, operational balances and annex).
Professional Accountancy Bodies
INCP , National Institute of Expert Public Accountants.
Certification and Auditing
In Colombia all companies along with the subsidiaries of foreign companies are required to seek a statutory auditor to conduct an annual audit of the financial health of their organization. The auditors must be certified public accountants and must ensure the government the accuracy of the published accounting information. When signing the financial statements they certify that they have been informed of all the required information.
You can contact an external auditor: PricewaterhouseCoopers, Deloitte, KPMG, Ernst & Young.
Accounting News
See "News" on the website of the National General Accounting Office
IAS Plus

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Tax Rates

Consumption Taxes

Nature of the Tax
Impuesto al Valor Agregado (IVA) - Value Added Tax (VAT)
Tax Rate
16%
Reduced Tax Rate
10% on Health complementary plans and health prepaid services and some specific goods (cane sugar, wheat, roasted coffee).
1.6% on cleaning services and Private security services.
In 2013, Colombia created a new consumption tax of 8% to the sale of yachts, ships and aircraft.
Insurance products are exempt, products related to medical care, the lease-purchase of property for housing, lease-purchase financing and exported services.
Other Consumption Taxes
A new tax, applied by the customs service is designated for imports from all countries except for those that have signed trade agreements with Colombia. The taxation is set at 1.2% of the FOB value of the imported products. There are also excise duties levied on cigarettes and certain alcohols.

Learn more about Service Providers in Colombia on Globaltrade.net, the Directory for International Trade Service Providers.

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Corporate Taxes

Company Tax
25%. A 15% rate applies to companies located in free-trade zone.
Capital Gains Taxation
The tax rate on most capital gains is 10%.
Main Allowable Deductions and Tax Credits
Expenses are deductible for depreciation and depletion, net operating losses, payment to foreign affiliates, expenses abroad, certain taxes, certain exchange differences, and certain interests.
Other Corporate Taxes
Stamp duty, municipal tax, real estate tax, motor vehicle tax, tax on financial movements, equity tax, payroll tax, social security contributions, registration tax also exist.
Other Domestic Resources
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 

Country Comparison For Corporate Taxation

  Colombia Latin America & Caribbean United States Germany
Number of Payments of Taxes per Year 9.0 30.0 11.0 9.0
Time Taken For Administrative Formalities (Hours) 203.0 367.0 175.0 207.0
Total Share of Taxes (% of Profit) 74.4 47.2 46.7 46.8

Source: Doing Business - Last Available Data.

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Individual Taxes

Tax Rate

Income Tax Progressive tax rate from 0% to 33%. The Colombian tax system is expressed on Tax Value Units, UVT.
Up to UVT 1,090 0%
UVT 1,091 to 1,700 19%
UVT 1,701 to 4,100 28%
Over UVT 4,100 33%
Allowable Deductions and Tax Credits
Residents can deduct from compensation mortgage interest paid in Colombia; low income employees may choose to deduct either mortgage interest or prepaid medical assistance and educational expenses; some donations made to certain institutions dedicated to development of health, education, culture, religion, sports, scientific and technological research, ecology and the protection of the environment, or to social development programs of general interest are deductible.
Special Expatriate Tax Regime
There is no special tax regime for expatriates.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
See the website for taxes
Withholding Taxes
Dividends: 0/20/33%, Interest: 0/14/33%, Royalties: 26.4/33%

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Sources of Fiscal Information

Tax Authorities
Ministry of Finance and Public Credit
Department of Tax and Customs
Other Domestic Resources
The Colombian tax system

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Learn more about Taxes and Accounting in Colombia on Globaltrade.net, the Directory for International Trade Service Providers.

Intellectual Property

National Organizations
The organizations with competence in matters of industrial property and copyright are the Superintendencia de Industria y Comercio and the Dirección Nacional de Derecho de Autor.
Colombia is a signer of Paris Convention for the Protection of Industrial Property, the Convention that established the World Intellectual Property Organization (WIPO). Colombia has not signed the Patent Cooperation Treaty (PCT) but it is currently under consideration in Congress.
Regional Organizations
Since January 1994, the regulation of patent rights has become more accommodating since the enforcement of Decision 344 of the Cartagena Agreement. This decision has strengthened the legal protection of patents and trademarks in all the countries of the Andean bloc.
 

National Regulation and International Agreements

 
Type of property and law Validity International Agreements Signed
Patent
 
Invention Patent (patente de invención)
20 years
Trademark
 
Law on trademarks

10 years indefinitely renewable.

Copyright
 
WIPO Copyright Treaty

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Legal Framework

Independence of Justice
The judiciary is not independent and the country's judicial system is slow and plagued by corruption and extortion. However, considerable advances have been made in the promotion of transparency in the implementation of trade legislation.
Equal Treatment of Nationals and Foreigners
From a legal standpoint, foreign nationals can generally expect to be treated similarly to Colombian nationals, although some complaints to the contrary have been filed. For more information please contact your embassy.
The Language of Justice
Spanish
Recourse to an Interpreter
One is always permitted to be accompanied by an interpreter (contact your embassy).
Sources of the Law and Legal Similarities
The main basis of law in Colombia is the 1991 constitution, partly based on Spanish law. It also originated in the judicial review of legislative and executive acts. A new penal code, modeled on procedures in the U.S.A. was declared in 2004 and is being to be implemented gradually.
Checking National Laws Online
Law Online of Colombia

Learn more about Lawyers and Legal in Colombia on Globaltrade.net, the Directory for International Trade Service Providers.

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Standards

National Standards Organizations
ICONTEC, National Institute of Technical Standards and Certification.
Integration in the International Standards Network
The organization responsible for the choice of standards and standardization of production is the Colombian Institute of Technical Standards (Instituto Colombiano de Normas Técnicas y Certificación ; ICONTEC). This organization is an active member of the International Organization of Standardization (ISO), the International Electrotechnical Commission (IEC), and the Pan American Standards Commission (COPANT).
Classification of Standards
NTC/ISO
Online Consultation of Standards
To consult the national technical standards visit the ICONTEC website.
Certification Organizations
ICONTEC Colombian Institute of Technical Standards.

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Business Practices

General Information
Kwintessential
Information on doing business in Colombia
Opening Hours and Days
Banks are open Monday through Friday from 9am to 4pm in Bogota and 8am to 11:30am and 2pm to 4:30pm in the rest of the country. On the last workday of each month, banks close at noon.
Public administrative offices operate Monday through Friday from 8am to noon and 2pm to 6pm.
Business offices are open Monday through Friday and sometimes on Saturday from 8am to noon and 1pm to 5pm.
Store are open Monday through Saturday from 9am to 7pm.
Shopping malls are open daily from 10am to 7pm.
Some supermarkets are open 24/7
 

Public Holidays

New Year January 1
Easter Sunday Varies
Labor Day May 1
Independence Day July 20
Battle of Boyaca August 7
Immaculate Conception December 8
Christmas December 25
 
Holiday Compensation
The celebration of holidays are always postponed until the following Monday when the holiday falls on a week end.
 

Periods When Companies Usually Close

End of year vacation December 24-January 7
 

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Last Updates: October 2014