Understand why it’s important to engage with an accounting and tax advisory provider in Colombia.
Colombia is one of the leading economies in Latin America. Its dynamic economy attracts the attention of investors from all over the world. However, with an average of 10 mandatory tax payments and nearly 256 hours per year dedicated by each company to tax and accounting activities, it’s crucial to seek the support of an accounting and tax advisory provider to reduce administrative burdens.
Advantages of engaging with an accounting and tax advisory provider
When entering the Latin-American market, tax and accounting obligations might be overwhelming for foreign executives. Doing business in Colombia with the assistance of an accounting and tax advisory provider will ensure the success of your business operations. Some of the advantages include:
Evolving tax ecosystem
Companies doing business in Colombia must be aware that the Colombian legal system is constantly evolving. This means that local tax regulations are bound to change every year.
The Colombian Government has issued 3 major tax reforms in the past 4 years and a new one is expected to be issued before the end of 2020. Therefore, there are multiple tax regimes in force, which are applied according to the existing legislation of the year in which a business operates in the country.
Having a trusted accounting and tax advisor can help your business to comply with local regulations and requirements you must consider for each case.
Tax incentives, credits, and other benefits
The Colombian Government offers incentives, credits, and other benefits to foreign companies as a way of stimulating the economy and promoting investment. Taking advantage of said benefits might represent a great opportunity for companies. However, accessing these benefits can be a challenging experience unless you have the expert advice of an accounting and tax advisor.
Likewise, interacting with local authorities, complying with deadlines, and fulfilling legal requirements that are not always clear can be demotivating. Hiring a local accounting and tax advisor can make the whole process much shorter and smoother.
Nevertheless, despite the difficulty of these processes, taking advantage of benefits granted by the Colombian government may bring plenty of returns to your company. With the advice of local accounting and tax expert, foreign executives will be able to compare expected returns versus time and resources invested.
Effective tax rate
The World Bank has calculated the effective tax rate for companies operating in Colombia to be around 70% of the total expected income. This positions Colombia among the top places in this not so desired category.
Note that the Colombian tax system offers plenty of possibilities to optimize and lower said rate, while fully complying with local regulations. It is essential to understand how the tax system works and which accounting treatment is to be given to each transaction. This can result in lower taxes due at the end of the year.
Understand the Colombian tax system with the help of a local expert
Executives incorporating a company in Colombia must be aware of accounting and tax requirements to fully comply with local legislation and ensure the good standing of their business. It is essential that you have the support of a qualified account and tax specialist from the start.
At Biz Latin Hub, our team of multilingual legal and accountant experts have all the relevant knowledge, experience and capabilities required to help you comply with Colombian tax regulations and optimize your revenue.
Contact us today to receive personalized advice on how to comply with tax regulation in Colombia.
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