Corporate Tax rate in Colombia applies to resident and non-resident legal entities with a permanent establishment in Colombia. 

All commercial companies are considered legal entities, including commercial companies such as joint-stock companies and limited companies, but also civil companies and associations.

Resident companies in Colombia are those who have their headquarters in Colombia, this is, referring to Colombia as the place where they make relevant management decisions. Resident entities are subject to tax on their worldwide income, including capital gains. 

“corporate tax is levied to those resident and non resident legal entities in Colombia who have a permanent establishment in the country”

The corporate tax rate in Colombia is levied on the income of a corporation in a taxable year or calendar year. In Colombia, the current general corporate tax rate is 35% for the current year, 2023 and an additional 5% surcharge is applicable for financial institutions where taxable income equals 508 million COP. 

Even though the tax rate in Colombia is higher compared to other countries, the equal benefit comes with a lower dividend tax rate, being 10% or even less if applied to Colombian residents. 

The taxable profit results from the difference between the income obtained and the expenses incurred to obtain it. In simpler words, to calculate the tax rate in Colombia for a company, is to take the total expenses and subtract the expenses based on things such as employees, raw materials, etc.