Taxation

The Colombian tax system includes taxes at the national, departmental and municipal levels. Resident individuals and companies are taxed on worldwide income and assets. Non-resident individuals, non-resident companies and permanent establishments of foreign companies are subject only to their Colombian-source income.

In 2016, the UK and Colombia signed a double taxation convention, hat entered into force on 13 December 2019.

The convention covers Colombian income tax and its complementary taxes, and CREE tax. For the UK side, it covers income tax, corporation tax, and capital gains tax.

VAT

VAT is levied on:

• the sale or transfer at any title of goods (movable and immovable), the provision of services and intangible assets associated to intellectual property rights
• the importation of tangible goods, unless a specific product is expressly excluded from VAT.

The general VAT rate is 19%, but there are reduced rates of 5% and 0%.

Corporate tax

The Corporate Income Tax is 30% for Colombian and foreign entities for 2022.

Most payments made abroad are subject to withholding tax at 20%, whereby the Colombian taxpayer must collect the withholding tax.

Regulations

Colombia has a complex legal and regulatory framework. UK companies interested in more information should get in touch with DIT Colombia who will be able to advise you further on any regulatory /legal matters. We can put you in touch with law firms and other consultants that can assist you on a case-by-case basis.

Some of the most relevant agencies are:

• the Colombian Tax and Customs Authority - DIAN who administer and collect Colombian national taxes
• the local tax authorities of the departments and municipalities who administer and collect local taxes
• INVIMA (Colombian Food and Drug Surveillance Institute), the national reference institution in health matters in charge of executing and implementing policies related to sanitary surveillance and quality control of medicines, biological products, food, beverages, cosmetics, and other products
• ICA, the agency in charge of executing policies to prevent, control and reduce sanitary, biological and chemical risks for animal and plant species that may affect agricultural, forestry, fisheries and aquaculture production in Colombia

Challenges

High taxation, accounting, regulatory compliance, foreign exchange provisions are some of the most common challenges that UK companies might face when doing business in Colombia.

The Colombian Government is making major efforts to improve the economic environment and streamline regulations in numerous sectors.

The GAN Business Anti-Corruption portal provides some basic procedures you can establish to protect your company.

Intellectual property

Intellectual property (IP) rights are territorial. Rights granted in the UK do not provide protection elsewhere. You should consider getting IP protection abroad if you want to trade overseas or sell to overseas customers via the internet.

The Intellectual Property Office’s International IP Service provides practical information to help you protect, manage and enforce your IP in Colombia.

British Businesses looking for IP support can also contact the IP Attaché for Latin America and the Caribbean.

Using agents and distributors

If you are interested in doing business in Colombia you should use a local agent or distributor who is familiar with the local regulatory framework.

Any foreign trade operations should be carried out through a customs broker who is familiar with the Colombian customs regime and the different permits, authorisations and licences that each product requires to be imported into Colombia.

UK companies entering into agreements in Colombia should seek professional advice.