STARTING A BUSINESS IN COLOMBIA: CORPORATE TAX RATE IN 2024

Whether you’re considering moving directly to Colombia and setting up your own company, or even investing in Colombia from afar, there’s some insight worthy of your attention as to the legal terms regarding the corporate and business panorama in Colombia, that is, the corporate tax rate in Colombia.

The first step to organize your business plan in Colombia must be to evaluate the requirements your business must meet as stipulated by the Colombian law, setting up a company in the country includes taking into account the accounting, laboral, commercial, general and tax obligations.

When starting your own business in Colombia you must take into account requirements such as the payment of accounting, laboral, commercial and general tax obligations

This last category will be highly important as you will be required to register your company in the RUT (Unique Tax Register), declare and pay your taxes in Colombia.

Among these types of taxes in Colombia you will be responsible for paying what is known in Colombia as the income tax. The income tax is just, to say, the Colombian version referring to what is known in other countries as the corporate tax.

What is the corporate tax in Colombia for 2024?

One crucial aspect of taxation in Colombia is the corporate tax, applicable to both resident and non-resident legal entities with a permanent establishment in the country. Corporate tax in Colombia is levied on the income of corporations within a taxable year.

For 2024, the general statutory Corporate Income Tax (CIT) rate for Colombian companies and foreign corporate entities receiving Colombian source income is 35%. This rate applies regardless of whether you have a permanent establishment in Colombia or not.

While the tax rate in Colombia might seem higher compared to other countries, there’s a benefit when it comes to dividend taxes. Colombian residents can enjoy a lower dividend tax rate of 10% or even less.

Minimum Tax Rate

Since 2023, Colombian companies are also subject to a minimum tax rate of 15%. It’s important to factor this into your financial planning to ensure compliance and proper budgeting.

Special Rates and Exceptions

Did you know that you can get special rates and exceptions on your Corporate Tax Rate when doing business in Colombia? Eligible companies in free trade zones enjoy a reduced CIT rate of 20%. Certain activities, like hotel services in newly built facilities, eco-tourism, and book publishing, qualify for a special 15% CIT rate.

Surcharge and Additional Charges

From 2023 to 2027, financial entities, insurance companies, and stockbrokers with a taxable income over COP 5,647 million face a 5% surcharge. Non-renewable extractive industries may encounter a surcharge of up to 15%, depending on commodity prices. From 2023 to 2026, hydroelectric power generators will face a 3% surcharge.

Calculating Your Tax Rate

To calculate the tax rate for your company in Colombia, you need to consider the difference between the income obtained and the total expenses incurred. The taxable profit is the result of this calculation, to which the 35% corporate tax rate is applied.

Getting Started with Nexo Legal

While starting your own company in a foreign country can be challenging, we’re here to help. At Nexo Legal, we provide the legal assistance you need from the very beginning of your business plan in Colombia.

If you have any questions about the corporate tax rate in Colombia or need assistance with your business plans, don’t hesitate to reach out to us. We’re just a message away!

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direccioncomercial@nexo.legal

Calle 11 no. 43b – 50,

Parque Empresarial Calle Once

Oficina 407

Medellín, Colombia