Colombia

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TAXES - ACCOUNTING

 

 

Corporate tax

Tax rate for resident companies

The corporate income tax rate is 35%, whatever the status of the corporation, but exporter installed in Free Trade Zone are exempt from income tax.

   
Tax rate on long-term capital gains Tax rate on long-term capital gains is 35%.
   
System governing groups of companies and dividends paid by subsidiaries to their parent companies Dividends paid by non-residents are imposed at a rate of 7%, under the form of a withholding tax.
Residents are exempt from corporate tax.
The distributions, which the product is reinvested in Colombia for a period exceeding five years, are exempt from this tax.
   
Tax rate on branches A 35% income tax is imposed to branches like all others companies.




Income tax

Fiscal year The tax year begins on January the 1rst and ends on December the 31st of the same year.
   
Income tax rate Resident individuals in Colombia are taxed on worldwide income. Non-residents are taxed on Colombian-source income only. An individual is considered resident for a tax year if staying in Colombia for more than 6 months in the tax year. The income-tax is based on a progressive rate ranging from 0.29% to 38.5%.
   
Tax deductions or other allowances Income generated from the following activities is exempt from income tax: seismic engineer for oil and gas industries; hotels (news and remodelled hotels); software and medical patents; fluvial transportation; and energy generated from wind source.



VAT rates

Standard rates 16%
   
Reduced rates There are two reduced VAT rates in Colombia: 10% applies to commercial air transport and 7% applies to certain foodstuffs.
Are exempted items including insurance, healthcare, leasing of property for housing, financial leasing and utilities.
Higher rates from 20% to 25% apply to wines, other alcoholic beverages, pleasure boats and certain vehicles.



Other important taxes


Name of tax
Rate
Excise and import duties, property tax, stamp tax, transfer duty, municipal industry and commerce tax.  
 


 

Accounting

Introduction
Accounting has to be produced in Spanish. It uses the double entry system. In Colombia, the accounting must be drafted so that accounts give a clear, complete and precise vision of the review of the company's activity.
The decree 2160 of July 09, 1986 published by the Colombian Government summarizes the accounting practices generally accepted and the rules to respect in Colombia.


General accounting principles
PROFIT AND LOSS ACCOUNT: on December 31 n, to be compared with
n-1
1) Running products
2) Gross profit
3) Running expenses
4) Running income
5) Cost of global financing
6) Profits before income tax
7) Net profit.

Obligations and publications
The Colombian Business Code doesn't give any details regarding the obligations concerning the book-keeping or the accounts attestation. In practice, companies keep up to date a ledger, a ledger, an inventory report and establish annually documents which are necessary for the financial analysis (balance sheet, profit and loss account, annexes).

Certification and auditing
All companies as well as subsidiaries of foreign company have to seek an auditor to lead an annual audit of the financial health of the company. This auditor must have the chartered accountant's certification and assure the accuracy of the published account information. When they sign the financial status, they guarantee to be aware of all the required information.

Professionals and representative organizations
"Instituto Nacional de Contadores P¨blicos de Colombia".



Useful links
The Investments Promotion Agency

Last modified in January 2007
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