Table of Contents
When doing business in Latin America, you should consider the different types of taxes in Colombia. By knowing all the local taxes in Colombia, you will be able to adapt faster to new markets, enhance management processes, and diminish risks before they may affect your business. Essentially, there are two types of taxes in Colombia, National Taxes and Local Taxes, with the collection and enforcement of National Taxes being undertaken by the Colombian Tax Authority (DIAN). The primary National Taxes are Value-Added Tax (VAT), Financial Transactions Tax, Stamp Tax, Income Tax, and Wealth Tax. Colombia has been one of the most popular destinations for foreign direct investment (FDI) in Latin America during recent years. It increased its inflows between 2018 and 2019 by 24% reaching $14.3 billion (all figures in US-Dollars). Further its gross domestic product (GDP) has grown significantly since 2001, never dropping below 2% and reaching a total of $323.6 billion in 2019. At the same time, gross national income (GNI), hit $6,510 per capita that year. This figure places Colombia as an upper-middle-income country according to the World Bank. Colombia is bordered by Brazil, Ecuador, Peru, Panama, and Venezuela. It is only four hours away by plane from the United States and can therefore be considered a gateway to South America, as well as to Asian markets via the Pacific Ocean. The country is a founder member of the Pacific Alliance along with Chile, Mexico, and Peru. Further, it has over 60 free trade agreements (FTAs) in place and has recently become a member of the Organization for Economic Cooperation and Development (OECD).If you are thinking about expanding your business to Colombia or are already active in the market, read on to understand the different types of taxes in Colombia. Or go ahead and contact us now for a free quote. See Also: How to setup an SAS corporation in Colombia?sanitation, and public transport all exempt. There are two categories of value-added tax, common IVA and simplified IVA. The common category applies to businesses valued at US$34,000 and over while the simplified category applied to the smaller businesses. Nevertheless, regardless of the category, the amount remains the same, however, from an accounting perspective simplified IVA is easier to manage and does not need to be treated separately.