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Tax rates in Colombia

Tax Rates

Consumption Taxes

Nature of the Tax
Impuesto al Valor Agregado (IVA) - Value Added Tax (VAT)
Tax Rate
19%
Reduced Tax Rate
5% on toasted coffee; wheat; sugar cane; cotton seeds; soy; rice; prepaid health services; health insurance; storage of agricultural products.


0% on tourism, if rendered to non-residents in Colombia used in the country for the benefit of a company that is registered in the National Tourism Registry and promotes tourism by engaging in certain qualified activities; exports and services rendered exclusively in Colombia and used exclusively abroad by companies or individuals who are not engaged in business in Colombia.


Exempt items include: interest and financial income from credit operations; education services provided by preschool, primary, middle and intermediate, higher and special or non-formal education establishments, recognized as such by the national government; energy and public energy services based on gas or other inputs; water for the provision of public water supply and sewerage services, public water supply and sewerage services, public sanitation services and public garbage collection services. A "three days without VAT campaign" also applies: each taxable year, during three days, certain groups of goods (such as clothing, appliances and school supplies) are VAT-free. This applies to domestic purchases and is subject to certain conditions, such as the method of payment, supported by an electronic invoice, price and number of units per buyer.

Other Consumption Taxes
Excise duties levied on cigarettes and certain alcoholic beverages (beverages with more than 35% alcohol) at rates ranging from 20% to 48%.
A tax of COP 50 applies to each plastic bag. Medicinal cannabis is subject to a tax of 16% that cannot be credited against VAT.
An indirect consumption tax is levied on mobile phone services at 4%, vehicles and aircraft at 8% or 16% and on restaurant and cafeteria services at 8%.
Luxury vehicles, chassis, hot air balloons and airships are taxed at 16%.
It should be noted that Colombia is divided into 32 departments which can affect some tax policies.

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Corporate Taxes

Company Tax
35%
A 20% rate applies to non-commercial companies located in a free-trade zone.
Tax Rate For Foreign Companies
Resident companies are taxed on their worldwide income whereas non-resident companies are only taxed on their Colombia-source income.
Worldwide income earned by non-resident entities that is attributable to branches and permanent establishments in Colombia will be taxed at 35% for 2021 (or 10% in case of capital gains). Profit remittances taxed at the branch level are subject only to the 10% rate. Worldwide income earned by non-resident entities that is attributable to branches and PEs will be taxed at 35% or 10%, depending on whether the income is to be treated as ordinary income or capital gain.
Capital Gains Taxation
Capital gains are generally taxed at 10%.
Capital gains from the sale of assets held for two years or more, or on the liquidation of a company incorporated for two years or more, are taxed separately at a rate of 10%.
Main Allowable Deductions and Tax Credits
As a general rule, expenses that are necessary, proportional, have a cause-effect relationship with the income-producing activity, and have been realised during the relevant tax year under the accrual method of accounting are tax-deductible.
Amortisation of tangible and intangible assets can be deducted at rates ranging from 2.22% to 20% (the International Financial Reporting Standards (IFRS) apply to the amortisation of assets acquired after December 31, 2016). Depreciation rates can be increased for companies that operate on 16-hour shifts (25% per each 16 hour-shift). Goodwill cannot be amortised for tax purposes (any goodwill generated since 2017).
Start-up expenses give rise to a tax deduction. Bad debt and interest expenses are generally tax-deductible (conditions apply).
Donations to charities give rise to a tax credit instead of a deduction from the tax base. Fines are not tax-deductible. Expenses incurred abroad for the purpose of earning income in Colombia are deductible up to 15% of the taxpayer's net income.
Most taxes, except for equity and standardisation taxes, are 100% deductible. 50% of industry and trade tax can be credited against CIT liability or, at the election of the taxpayer, 100% is a deductible expense. 50% of the financial transactions tax can be deducted.
Further deductions/credits include: 100% of fixed assets acquisition; 25% of the investments made for the control and improvement of the environment (tax credit); 120% of the salary payments made to employees who are under 28 years; 100% of the investments made in certain scientific and/or technological projects or in professional training projects.
Tax losses can be carried forward up to 12 years (for those incurred since 2017, indefinitely for losses incurred before). The carryback of losses is not permitted.
Other Corporate Taxes
Until 2021, businesses were subject to an alternative minimum tax of 0.5% (calculated from the net worth of the business in the year immediately preceding the current fiscal year). Some assets, like holdings in Colombian companies, could be excluded from the calculation of net worth. This tax was abolished as of 2021.

The equity tax (CREE by its acronym in Spanish) was abolished in 2017; however, base excesses (CREE income less CREE minimum base) from previous years continue to be offset against taxable income.

Employers are subject to a payroll tax of 9% on behalf of their employees that make more than ten minimum monthly wages (with 3% allocated to the Institute for Family Welfare, 2% to the National Apprenticeship Service, and 4% to the Family Subsidy Fund). Social security contributions amount to 28.5% of the gross salary, with approximately 20.5% being borne by the employer. Employers also need to pay a contribution for professional risks, at rates ranging between 0.522% and 6.96% of the monthly salary.

Registration fees apply to documents registered with the Chamber of Commerce (at variable rates between 0.3% and 0.7%) or the Register of Public Deeds (between 0.5% and 1%). Partial exemptions are provided for documents that are subject to both registration and stamp duties or that must be registered simultaneously with both institutions.

An industry and trade tax is applied at the municipal level, with rates ranging from 0.2% to 1% of gross receipts derived from carrying out industrial, commercial, and service activities within a municipal territory in Colombia. Real estate is subject to a municipal tax at rates varying based on the value of the property (and not according to the number of owners or the personal wealth of the taxpayer), usually ranging from 0.5% to 1.2%.

A 0.4% bank transaction tax is levied on withdrawals from chequing and savings accounts and from accounts opened with the Central Bank.

Companies also may be subject to a carbon tax. Furthermore, taxes are levied on plastic bags (COP 50) and on the sale, freely or onerously, of transformed products based on psychoactive or non-psychoactive cannabis (16%).

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 10.0 28.2 10.6 9.0
Time Taken For Administrative Formalities (Hours) 255.5 327.5 175.0 218.0
Total Share of Taxes (% of Profit) 71.2 46.8 36.6 48.8

Source: Doing Business, Latest available data.

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Individual Taxes

Tax Rate

Income Tax Progressive tax rate from 0% to 39%. The Colombian tax system is expressed on Tax Value Units, UVT.

For fiscal year 2022, the value of each tax unit is equivalent to COP 38,004.

Up to UVT 1,090 0%
UVT 1,091 to 1,700 19%
UVT 1,701 to 4,100 28%
UVT 4,100 to 8,670 33%
UVT 8,670 to 18,970 35%
UVT 18,970 to 31,000 37%
Over UVT 31,000 39%
Dividends subject to tax at the corporate level will be subject to the following rates on the individual's tax return UVT 0 to 300: 0%
Abobe UVT 300: 10%
Dividends not subject to tax at the corporate level 35% flat rate + the net income resulting from subtracting such tax from the gross income will be subject to an additional tax according to the above table
Allowable Deductions and Tax Credits
Residents can deduct from compensation mortgage interest paid in Colombia (up to 1,200 UVT tax units in 2022 or COP 45,605,000).
Employees may deduct prepaid medical assistance (up to COP 7,297,000 per year in 2022) and interests paid on educational loans granted by ICETEX (up to COP 3,800,000).
Donations made to certain institutions dedicated to the development of health, education, culture, religion, sports, scientific and technological research, ecology and the protection of the environment, or to social development programmes of general interest are deductible (limits apply).
Deductions are available for dependents, capped at 10% of gross labour income until a maximum of COP 14,594,000 for 2022.
Special Expatriate Tax Regime
There is no special tax regime for expatriates. Non-residents are taxed only on their Colombian-sourced income.
An individual is resident for tax purposes if the individual is present in Colombia for more than 183 days (whether or not continuously) in a 365-day period.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
Visit the website of the Ministry of Foreign Affairs for the full list of Double Taxation Agreements
Withholding Taxes
  • Dividends for residents: 7.5% (for profits taxed at corporate level in Colombia)/35%+0/10%% (for profits that have not been taxed at corporate level in Colombia - see the personal income tax section);
  • Dividends for non-residents: 10% (for profits taxed at corporate level in Colombia)/35%+10% (for profits that have not been taxed at corporate level in Colombia)
  • Interest: 4% (residents); for non-residents: 5% (on loans granted for the development of infrastructure programs)/15% (interest related to a loan with a term of one or more years)/20%
  • Royalties: 2.5% (residents)/20% (non-residents)

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Latest Update: November 2022