Doing business

(Last updated: 05 Nov 2008)
 

Business opportunities

Austrade’s business development specialists have prepared a range of market profiles that offer potential to assist in your exporting investigations. Austrade’s in-market teams have identified opportunities for Australian exporters in various industries (see 'Profiled industries in this market' on the left side of this page).

In conjunction with the market profiles, the Opportunities Online portal may be a useful addition to your information sources. The database established by Austrade aims to deliver international sales leads ('export opportunities'), including tenders, identified by our overseas network to Australian businesses.

Registering is simple and once this is done you will have the option of accessing a weekly newsletter featuring the most recent opportunities uploaded onto the system in industry sectors of interest to you. Another feature is the ability to view, and also print, the complete page of opportunity details.

For general inquiries concerning Austrade’s services, please contact Austrade Direct on 13 28 78.

Business etiquette

Business tips

Initial correspondence with potential business partners should be in Spanish, as letters in English are more likely to be given lower priority.

The level of proficiency in English can vary among Colombian business executives - many understand and read more fluently than they are willing or able to speak, and therefore an interpreter may be useful.

Address people by their title and surname, or use Señor, Señora. 'Doctor/Doctora' is often applied to any accomplished or educated person, regardless of whether or not he or she has a Ph.D. or is a medical doctor.

Personal contacts do play a special role in Colombia and can make the difference between finding an open or closed door.

Business attire is mostly suit and tie for men and suit or dress for women. Evening functions are similarly dressy unless advised otherwise. Colombians view a person's clothing as an indicator of status; err on the side of conservatively well dressed.

Please also note:

Bribery of foreign public officials is a crime. Australian individuals and companies can be prosecuted in Australia for bribing foreign officials when overseas. For more information, go to the Attorney General's Department on foreign bribery.

Tariffs and non-tariff barriers

In general, persons or companies importing goods to Colombia must comply with the following procedures:

Step 1: Registering the import

The first step is to fill out the import registry (Registro de Importación) that can be obtained at any of the regional offices of the Ministry of Trade, Industry and Tourism - MINCOMERCIO. The import registry is only required for a limited set of goods which are subject to special certifications and approval processes by various state agencies.

More specifically, the import registry is required in instances where imports are subject to: licenses under the prior licensing regime, safeguards or special import-export systems. An import registry is also required for certain goods that be subject to different kind of certifications by state agencies (such as the Ministries of Agriculture, Social Protection, Environment, Defense, etc.) such as fishing products, oil products, sanitary and phytosanitary certification and certification of conformity with technical standards. 

Recently, the Colombian Government has established a new system, known as VUCE (Ventanilla Única de Comercio Exterior), which allows obtaining approvals (authorisations), permits or certificates using Internet technology.  Through VUCE, the importer can sign, pay, and review the status of a process involved with any of the 18 government entities (ministries and agencies) that are engaged with import activities. 

The importer is required to register in the VUCE system using his RUT - Registro Único Tributario (Unique Tax Registry) and a certificate authorising the electronic use of his signature. Throughout VUCE, the importer can pay and file the import registry procedure, as well as to obtain the previous approvals or certificates required in order to import from the appropriate entities.

For more information and support in determining whether an import registry and other certifications are required, contact one of the certified customs brokers (SIAS) in Colombia.

In addition, if the importer is a company, a fiscal identification number (Número de Identificación Tributaria), known as NIT, must be submitted. Once filled out, the import registry form must be filed at a MINCOMERCIO regional office, along with other required documents.

Step 2: Value declaration

Filing of a Customs Value Declaration is mandatory for goods valued at US$5000 or more and for partial shipments that make up a total shipment valued at or above US$5000. The form must be requested at one of the regional offices of the Dirección de Impuestos y Aduanas Nacionales (DIAN) - National Tax and Customs Administration.

Colombia has adopted the Valuation Code of the General Agreement on Tariffs and Trade. This means that in most cases the declared value of the imported goods will be based on the transaction method. In other words, the declared value of the goods will be the price actually paid or to be paid for them with certain adjustments.

Step 3: Import declaration and payment of customs duties

This step must be completed either a maximum of 15 days prior to the goods' arrival to the country or, alternatively, once the goods have arrived at a customs warehouse. First, an Import Declaration form must be requested at a DIAN regional office.

Once filled out, the importer must bring the import declaration form to an authorised financial entity in the city where the goods have been landed. At the authorised financial entity, the importer should proceed to pay the applicable customs duties.

Step 4: Withdrawal from Customs

Upon payment of the applicable duties, the importer must present at the warehouse where the goods have been landed, the original and the third copy of the import declaration form and the following additional documents:

• Transport documents
• Original copy of the value declaration
• Original copy of the Certificate of Origin and Certificate of Conformity, if required

The customs officer will then authorise withdrawal of the goods unless an inspection is deemed to be necessary.

Exceptions

The procedures described above are those that need to be followed in most transactions. However, a small number of goods may still require a license before their importation is authorised. Other import modalities that may have different procedures include:

• Re-importing for passive reconditioning
• Unaltered re-importing
• Imports covered by a warranty
• Temporary importation for re-export
• Temporary importation for active reconditioning
• Imports to be transformed or assembled
• Postal traffic and urgent deliveries

For more information on the procedures that apply under the above import modalities, contact one of the regional offices of MINCOMERCIO.

(Source: Colombia Trade News. Published by the Colombian Government Trade Bureau) 
 
The import of certain goods requires the importer to be registered at the appropriate entity or the issue of a permit/special authorisation. Specifically:

• Ministry of Transport: Public passenger transport vehicles; transport vehicles for cargo: need registration by importer.
• Ministry of Social Protection: Medicines, foodstuffs, cosmetics, elements and apparatus for administering medicines, sutures and curative materials, biological products, contrast media for X-rays, other live substances for human medical diagnosis, sanitary towels and similar products, environment deodorants, household cleaning products, pesticides and insecticides for home use: need sanitary registration.
• Colombian Agriculture Institute (ICA): Requisite: Zoosanitary permit for live animals and dehydrated products of animal origin; milk and its substitutes; biological material to diagnose domestic animal diseases.
• Requisite: Concept on inputs. Plaguicides for agricultural use. Requisite: Sales licence. 

Tariff

Import climate

Colombia has signed several multilateral and bilateral free trade agreements. The most important of these are:

• The Andean Community (ANCOM) with Venezuela, Ecuador, and Bolivia (Peru withdrew in April 1997).
• The Latin American Integration Association (LAIA) with Argentina, Brazil, Mexico, Chile, Paraguay, Uruguay, El Salvador, Costa Rica, Guatemala, Nicaragua, Honduras and Cuba, which was later renegotiated country by country on a bilateral basis.
• The G-3 (Colombia, Mexico, and Venezuela).
• The Colombia-Chile bilateral agreements. Full implementation will take several years, but once achieved, would give Colombia access to a free market of over 200 million people. Colombia has also requested admission to NAFTA.

Under the ANCOM agreement, the signatory countries must assign a common external tariff (CET) for imports coming from third countries and, at the same time, eliminate duties for products manufactured and traded within the region.

There are four tariff levels in the CET: 5, 10, 15, and 20 per cent. As these member countries grow and modernise, foreign firms may consider the expanded ANCOM market attractive enough to initiate local production for the regional market.

Due to a number of integration agreements with various countries, a complex system of tariffs are applied according to the different treaties. The prior import-licensing requirement has been virtually eliminated. Approximately 97 per cent of the 5162 items in the Colombian Harmonized Tariff Schedule are now on the free import list (ie., no license required). Import prices are now undergoing closer scrutiny (for duty collection purposes), as is the entry of foreign currency. US dollars can be exchanged freely through banks and financial corporations.

Import duties are ad valorem and are assessed on the CIF value of shipments. Colombia's tariffs conform to the 5-20 per cent Common External Tariff (CET) in effect for the Andean Community. Government entities are no longer exempt from import duties.

Special taxes, fees and/or surcharges

Most imports of consumer goods, consumer electronics, and apparel (in addition to a 15 per cent estimate for freight and insurance FOB costs), are subject to a 1.2 per cent surcharge on the FOB value of products for a so-called 'Customs Services Fund', which was introduced recently under Article 56 of Law 633 of December 29, 2000.

A 16 per cent value-added tax (VAT) is levied on the CIF duty-paid value of imports, with only a few exceptions.

Courier or express shipments

Courier or express shipments not exceeding US$1000 in value and 20 kilograms in weight are freely imported into Colombia. These shipments are classified under HS 98.08.00.00.00, and are subject to a 10 per cent CIF tariff and 16 per cent value-added tax assessed on the CIF-duty-paid value of most merchandise shipments, plus 1.2 per cent FOB surcharge for Customs services.

Rules apply to either air or surface courier shipments contemplated under the new Customs Code that entered into effect on July 1, 2000.

Subsidies/bounties

Export incentives include the 'Plan Vallejo' (drawback) or 'Maquila', 'Plan Vallejo, Jr.', and the CERT (Tax Reimbursement Certificate), soft credit lines, and export credit insurance policy.

Under the 'Plan Vallejo' or 'Maquila', imports of raw materials, inputs, and semi-finished items, as well as machinery, equipment and parts for the production, transformation, or assembly of exportable goods are exempt from any prior import license requirement, customs duties, taxes, surcharges, or fees (provided they are later re-exported in the form of finished products). Imports under these plans should be authorised by the DIAN (Internal Revenue & Customs Service) and must enter into a special arrangement with MINCOMEX, the government entity that establishes the minimum local content and export percentage requirement on a case-by-case basis.

The 'Vallejo, Jr.' plan allows for duty-free importation of raw materials used in the production of exportable goods, as well as the replenishment of foreign-origin raw materials.

The CERT is a tax-reimbursement certificate which can be applied to taxes on income, customs duties, and certain other taxes. The amount of the CERT is calculated as a percentage of the value of the exported goods, and varies by product and country of destination. CERT values range from 2.25 percent to 2.50 percent. Exports from designated free-trade zones now qualify for the CERT program, depending on percentages of national content.

Legislation in effect encourages the establishment, operation, and maintenance of free industrial and commercial trade zones (most of which are located by seaports) so as to increase assembly operations (U.S. 807/807A), transformation or manufacturing of exportable goods, and bonded warehousing.

Non-bariff barriers

Import restrictions

Import regime

Imports may be classified as ordinary, under franchise, temporary, re-importation, guaranteed import, temporary import for re-exportation, special import-export systems, for assembly or transformation, postal, express and courier, and travellers.

Free import list

The majority of HS tariff categories do not require prior import license approval by the Ministry of Foreign Trade (MINCOMEX). However, customs duties and all other taxes must be paid. An import request or registration form is still required.

Prior import list

The prior import-licensing requirement has been virtually eliminated; import registrations are common for most imports. Import licenses are valid for six months; 12 months for capital goods. Requests for extensions are complicated and are permitted only for official imports and capital goods with valid justifications, for successive periods of three months per extension.

Bans/prohibitions

No tariff categories appear on the prohibited import list, except for used bags and sacks of vegetable fibres. Items previously prohibited are now permitted under license. However, no import licenses are approved for used automotive vehicles of any kind, used parts and accessories for tractors and automotive vehicles, or used tyres, which in practice are all considered as prohibited items for import into Colombia. Furthermore, imports of old or used clothing, closeouts, irregulars, rags, and scrap cordage of textile material wastes are subject to prior import license approval which, in practice, is not granted.

Product certification, labelling and packaging

Labelling

The Colombian Foreign Trade Institute (INCOMEX) requires specific technical standards for a variety of products. The particular specifications are established by the Colombian Institute of Technical Standards (ICONTEC), or under ISO-9000. Certificates of conformity must be obtained from the Superintendency of Industry and Commerce before importing products that are subject to technical standards.

If requesting customs duty exemption due to the existence of a norm authorising it by type of product or by type of legal person making the import, indicate the appertaining article or decree.

Specific marks or labels are not required, except for food, pharmaceutical products and textiles. Labels on processed food products must indicate:

• The specific name of the product
• Ingredients in order of predominance
• Name and address of manufacturer and importer
• Number of units
• Instructions for storage and usage (when required)
• Expiration date
• Other instructions as required by the Ministry of Health or the Industry and Commerce Superintendency

Labels and illustrations cannot be inaccurate or misleading.

Labels on pharmaceutical products must indicate in Spanish:

'For sale under medical, dental or veterinary prescription,' with the generic name, commercial name, net weight or volume, weight or quantity of active ingredients, license number and the lot control number.

For those products having limited shelf life, the date of expiration should be included.

Insecticides and other toxic products should display the skull and crossbones, the word 'poison' in Spanish, and information regarding usage and antidotes. Products for which there are no antidotes cannot be licensed and can only be used in programs under the direct control of public health authorities.

A transcription of text that corresponds to the customs heading, as per customs tariff schedule is required. A specific description of the goods supplying enough information to allow its full identification is also required. Such identification includes, among others, the following: commercial and technical name, make, model, material of construction, use, and technical characteristics.

When the import involves vegetable material or beneficial biological agents for agricultural purposes, the following text must be entered: 'For its nationalisation must comply with all sanitary requirements of ICA'.

Foodstuff, additives and beverages must contain the following details on the label and packaging:

• The importer
• The name of the product
• The name and address of the manufacturers
• The net content
• A list of ingredients
• The Ministry of Health registration number
• Storage details
• Instructions for use and use by date

These details must be in Spanish.

In the case of medicines and biological products for veterinary use, any packaging and labels approved by the Ministerio de Salud (Ministry of Health) may be used. Lids of packaged medicines must be fitted with a safety strip, bearing the producers name.

Methods of quoting and payment

Quotations should be in US dollars, C&F or FOB (Incoterms 1990) port of entry.

Most products are imported through letters of credit and/or time drafts. Soft and long-term financing is an important sales tool, especially for government imports or public tenders. Imports may be financed by foreign suppliers, financial intermediaries in Colombia, and/or foreign financial institutions.

Colombian importers may freely negotiate payment terms with their suppliers, but importers must list the agreed-upon payment terms on the import documents and may not subsequently change them. These are generally between one and six months for imported products for immediate consumption, including raw materials, intermediate goods, and consumer goods, with almost no term limitations for capital goods, which are payable within the timetables set on the import documentation, plus a grace period of three additional months.

Foreign payments may be authorised in instalments, but in no case can the original terms
listed on the import documents be changed. Often changes on monetary measures may limit amounts, advance deposits, and payback timetables for direct external loans.

Exporters should be alert to financial market competition and be prepared to offer soft and long-term financing after verifying the customer's credit status and the guarantees offered. Local importers usually obtain trade financing from commercial banks or credit agencies. Colombian exporters have access to credit offered by the Colombian Foreign Trade Bank (BANCOLDEX), which replaced the former Export Promotion Fund (PROEXPO). This credit is granted at competitive commercial rates and may be requested at any stage of a foreign trade transaction (including raw material purchase, technical assistance, marketing and promotion, shipment, etc.). This credit is now being extended to Colombian importers - namely for industrial imports.

Loans of foreign origin and/or foreign financing of imports are permitted, but are subject to a prior import deposit (with a few exceptions, ie. capital goods) of 10 per cent for six months from the date of the bill of lading or air waybill and registration with the Central Bank (Banco de la República). The Central Bank may also establish other limitations and/or conditions, ie., interest rates, end-uses, quantity limits, terms and other pertinent conditions to avoid undue pressures on and/or inconveniences to the Colombian exchange market.

(Source: www.trade.uktradeinvest.gov.uk/colombia/doing_business)

Documentary requirements

Packing list

Customs valuation and inspection, if necessary.

An Andean declaration for all imports (with few exceptions) with an FOB value of US$5000 and over.

Certificate of origin, when required.

Customs procedures have been simplified significantly; fewer forms are required, as import/export procedures and customs clearance have become practically virtual - import, export and custom transit declarations are to be presented to Customs through electronic or magnetic media and passwords are assigned to users.

The SIAs or Customs Intermediary Entities have been established to act on behalf of importers, exporters and custom transit operators. However, anyone may also act without a SIA directly before Customs, in the cases outlined in the Customs Code, ie. foreign trade operations under US$1000, diplomatic possessions, international organisations' shipments, travellers' possessions, etc. The SIAs must meet numerous legal and capital requisites to become operative.

The Permanent Customs Users, as well as the High-Volume Exporters, are those organisations and/or private firms so identified for their large import and export volumes. They both enjoy some benefits that help expedite their shipments through Customs.

All incoming shipments shall be transferred to either bonded warehouses or free trade zones (or accredited private warehouses for product transformation, processing or industrial manufacture), under Customs custody. This transfer must be done within two days from airport arrival or five days from seaport arrival. The goods may remain for a maximum of two months from the arrival date, while undergoing customs clearance. This initial period may be extended for two additional months, but after that extension expires, merchandise shall be declared as abandoned by Customs authorities if goods are not cleared for consumption. Merchandise rescue procedures are time-consuming and expensive considering warehousing and handling charges, in addition to a 15 per cent penalty charge on the custom value of goods.

Importers are responsible for placing a correct value on imported merchandise and paying corresponding duties and fees through commercial banks. The drastic reduction in paperwork has simplified and accelerated the customs clearance process from weeks to a matter of hours. However, pilferage in customs warehouses continues to be a problem. Certificates of conformity may be required for sensitive imports and other categories of products suspected of being imported through smuggling and/or fraud.

Warehousing charges

Imported goods stored in customs warehouses are subject to fines if an import manifest is not presented within two working days from their arrival.

Samples

Samples usually require the same documents as commercial shipments; they may be imported without an import license, registration form, or payment of import duties if they are consigned to a designated free trade zone, bonded warehouse, or imported on a temporary basis in-bond.

Prior authorisation requirements

Phytosanitary clearance, as well as permits or proof of compliance, are required by government entities when importing raw cotton, cotton yarns, and other vegetable fibres.

Direct import costs

Consumer articles including, electronics, audio/video equipment, data processing, communications items, storage devices, electric/electronic household appliances, etc., from around the world now appear in Colombian stores. Although an increasing percentage of these products is legally imported, a significant amount comes in through contraband, which is a major problem, especially for consumer goods. Over US$5 billion in all kinds of products (mainly consumer goods) is estimated to enter the country illegally.

One of the causes for so much contraband is the fact that most imports of consumer goods, consumer electronics, and apparel (in addition to a 15 per cent estimate for freight and insurance FOB costs), are subject to an FOB 1.2 per cent surcharge, plus a 20 per cent CIF import duty and a 16 per cent VAT assessed on the CIF-duty-paid value of imported products. This approximate 62 per cent margin over the basic FOB price of legally imported goods encourages contraband.

Exporters should note that consumers in Colombia usually end up paying an additional 80 to 120 per cent over the FOB price of imports. Final retail prices usually depend on profit margins agreed on between suppliers and their Colombian representatives.

(Source: Doing Business in Colombia. U.S. Commercial Service)

Customs authority contact:

Dirección de Impuestos y Aduanas Nacionales (DIAN) - National Tax and Customs Administration

Certificates of origin

Only imports from countries with trade preferences are required to have certificates of origin. 

Insurance

Colombia permits 100 per cent foreign ownership of insurance firm subsidiaries. It does not, however, allow foreign insurance companies to establish local branch offices.

Insurance companies must maintain a commercial presence in order to sell policies other than those for international travel or reinsurance. Colombia denies market access to foreign maritime insurers. A commercial presence is required to provide information processing services.

Weights and measures

The metric system is used in Colombia. Sizes may be identified as small, medium, large, extra-large, etc, and/or by European size numbers.

Setting up in Colombia

Finding the right partner

Partnerships and agreements such as joint venture partners offer advantages for Australians wishing to operate in Peru. Austrade Bogotá can assist with partner searches reducing the time taken to locate potential business contacts.

In market representation

Local distributors, agents or representatives can facilitate business however finding the appropriate person or company to represent your company’s goods and services requires market insight and knowledge. Austrade Bogotá can assist with market representation via services which include due diligence, access to credit checking agencies and reference checks.

Taxation

Companies are taxed at the national and local level. National taxes include income and related taxes (remittance tax and tax on windfall profits), net worth tax, value added tax (VAT), tax on financial transactions, stamp taxes and registration fees. Local taxes include property tax applied to real state and those on industry and commerce.

National taxes

Income and related tax

This tax is considered a single tax and is made up of three components: income tax, tax on occasional gains (windfall profits) and tax on remittances. The income tax rate is 35 per cent. For tax year 2006 a surcharge of 10 per cent was applied, thus for a rate of 38.5 per cent.

The tax is determined by applying the rate to the net taxable income. In general, said income is obtained by adding up all of the ordinary and extraordinary earnings likely to produce a net increase in holdings and that are not expressly exempted by law. Then, the costs and expenses imputable to such earnings are subtracted from the sum to obtain the gross income. Deductions are subtracted from the gross income to obtain the net income. The income items that are expressly declared exempt are subtracted and tax discounts are subtracted from the tax payable.

When net income, calculated as described above, is less than six per cent of net worth (assets minus liabilities) the greater of these two amounts shall be regarded as net income for tax purposes.

As for the tax on windfall profits, the rate is 35 per cent, except on earnings from raffles, gambling, lottery and other similar games, for which it is 20 per cent. Income that qualifies as windfall profits relates to:

• Profits from the sale of fixed assets held for more than two years.
• Profits from liquidation of a company.
• Gains from inheritances, legacies and donations
• Gains from lotteries, raffles, gambling and other similar games

Remittance tax is due on the transfer abroad of occasional income and gains earned in Colombia. In the case of foreign branch offices, the tax is payable due to mere obtainment of profits, which are presumed as being transferred to a foreign country.

Some exceptions to the remittance tax are dividends and shares (the drafting of dividends and shares to foreign countries involves an additional income tax rate of seven per cent), the credit interest obtained abroad by certain companies, and reinvestment of profits.

Remittance tax rates vary, depending on the origin of the funds remitted abroad. The most common rate is seven per cent. The tax base in the case of profits earned in Colombia, is comprised of commercial profits obtained during the tax year.

As for commissions, fees, royalties, rental fees, payment for personal services, use of industrial property or know-how, and benefits or royalties from literary, artistic or scientific property, the tax base is calculated by deducting the income tax from the payment or partial payment.

Net Worth Tax (Patrimony Tax)

For taxable years 2004, 2005 and 2006, a patrimony tax must be paid by all taxpayers holding net worth in excess of COP3 billion (approximately US$1,080,000 using 2,778 as reference rate). The tax is computed on total assets less total liabilities as of January 1 of each year, at the rate of 0.3 per cent. The value of investments in companies (shares and quotas) are excluded.

Value Added Tax (VAT)

The VAT is an indirect tax applicable to the provision of services and the sale and import of goods, in general being 16 per cent. The VAT is structured as a value added tax, in such a way that at the moment the tax is determined, the application of discounts is allowed.

Financial Transaction Tax

It is the tax on financial movements, which is equivalent to 0.4 per cent of the value of a financial transaction, whereby resources are made available through deposit into checking deposit or savings accounts and from drafting cashier’s checks.

Stamp Tax

The stamp tax is a national levy paid in Colombia to register public and private documents with contract value above an amount set each year by the national government. The  standard rate is 1.5 per cent of the total value of the contract. However, there are special rates and certain exemptions.

Registration fees

These fees are charged to register acts, contracts or documentary legal transactions in which individuals are parties or beneficiaries and where registration with public records offices or chambers of commerce is mandatory under the law. Registration fees are set by regional legislatures, within the following ranges:

• Acts, contracts or legal transactions of an established amount and subject to registration with public records offices: between 0.5 per cent and 1 per cent.
• Acts, contracts or legal transactions of an established amount and subject to registration with chambers of commerce: between 0.3 per cent and 0.7 per cent.
• Acts, contracts or legal transactions of no established amount and subject to registration with public records offices or chambers of commerce, such as appointments of legal representatives or fiscal auditors, statutory amendments implying no assignment of rights or increase in capital, and explanatory deeds: between two and four times the minimum daily wage.

For legal documents, contracts or legal transactions that are subject to registration fees and have private and public entities as parties, the tax base is equal to 50 per cent of the value established in the document containing the act or the proportion of subscribed capital or corporate capital stock corresponding to the private parties. If a document is subject to registration fees, the national stamp tax is not charged.

Local taxes

Industry and Commerce Tax

It is a local tax on industrial, commercial or service activities performed within the municipality’s territory. Exports do not pay this tax. The taxable basis for the tax is the value of the revenues

For the case of industrial activities, the revenues under the item of production distribution are understood as earned in the municipality where the plant is located. The taxable base can only be reduced in some cases expressly provided for such as the value of returns, exports and revenues from the sale of fixed assets, among others.

In the case of commercial or service-related activities, the taxable basis is the monthly average of the revenues for the last year, excluding the items mentioned in the previous paragraph.

• The rate is set by each municipality within the following limits established by law: Industrial activities: 0.2 to 0.7 per cent a month
• Commercial and service-related activities: 0.2 to 0.10 per cent a month.

Property Tax

Charged on real estate. Tax rates may range from 0.1 to 0.16 per cent of the assessed property value.

Tax benefits

The Colombian fiscal system has numerous benefits, as tax deductions, exempt earnings and tax discounts. In addition, the following benefits were designed to promote foreign and local investment:

• Importing machinery: Companies with a large volume of exports are exempt from paying the VAT for imported machinery that is not manufactured in the country and which is used for transformation of raw material. Such benefit applies also when the importation of the machinery is made through a local leasing company
• Public utilities: Exempted Income for the use of water, electricity, telecommunications, natural gas and community services.
• Purchase of assets: Taxpayers who demonstrate the purchase of productive property plant and equipment are allowed to a special income tax deduction equivalent to 30 per cent of the purchase value of each year’s acquisitions. This tax benefit applies to taxable years 2004 through 2007.
• Building and remodelling of hotels: The building and remodelling of hotels enjoys a 30-year income tax exemption.
• Eco-tourism: Companies providing eco-tourism services certified by the Ministry of the Environment, Housing, and Development may qualify for income tax benefits.
• New medical products and software: Companies registering new medical products and software that involved significant national scientific research are granted income tax exemptions.
• Urban renovation plans: There is an income tax exemption for urban renovation projects.
• Oil exploration: Seismic services for oil exploration have a five-year income tax exemption.
• Construction of aqueducts and sewage services: Public utilities companies constructing aqueducts and sewage regional services or in nearby municipalities are entitled to an income tax discount.
• Housing: Income tax exemption for housing lease contracts that have a purchase option.
• Power generation using alternate fuels: companies selling electric power generated with wind, biomass or agricultural waste, qualify for an income tax exemption.
• River transport with shallow drafts: River transport of supplies using shallow-draft vessels and barges qualify for an income tax exemption.
• Wood development for commercial purposes: New forest plantations, including ‘guadua’ (a type of bamboo), benefit from an income tax exemption, as well as investments in commercial sawmills and properly registered commercial tree plantations.
• Fuel alcohol: In Colombia’s main cities, fuel alcohol that is mixed with gasoline will be exempt from the gasoline tax and surcharge.
• Gas for vehicles: VAT is not charged on the vehicle conversion kits of gasoline to gas.
• Tariffs elimination: Tariffs are not paid on industrial machinery not produced in the country.

Banking and finance

Colombia’s ’s banking system is advanced and internationally focused. Bogotá hosts several multi-national banks including  Banco Santander, ABN Amro, and HSBC. The federal bank is the Banco de La Republica.

Opening accounts without the correct documentation and resident papers may be difficult.

Global financial services are also available in Colombia with KPMG and Grant Thornton amongst the better known financial institutions.

Bogotá publicly listed companies trade on the Colombian Stock Exchange or the Bolsa de valores de Colombia (BVC)