Industry and Commerce Tax in Colombia

According to the Bogotá Chamber of Commerce, the Industry and Commerce Tax in Colombia is the tax generated by the "direct or indirect exercise or realization of any industrial, commercial, or service activity in a specific municipality, and is applicable regardless of whether the person owns a commercial establishment or not. The revenue from this tax is allocated to public services and community needs within the respective municipality or district." It is regulated by Law 14 of 1983.

This tax is calculated based on the taxpayer’s net income obtained during a taxable period. To determine these earnings, the total ordinary and extraordinary income is considered, subtracting those related to exempt and non-taxable activities, as well as refunds, reductions, discounts, exports, and the sale of fixed assets.

It is important to note that this is a subnational tax, meaning it must be declared in each municipality where a person carries out industrial, commercial, and service activities. Therefore, if taxable activities are performed in two or more municipalities, declarations must be submitted in each of those municipalities.

According to the following criteria, the ICA declaration should be submitted:

1. At the location where the factory or industrial plant is situated.

2. In the municipality where the establishment open to the public is located; at the location where the price is agreed, or where the merchandise is dispatched, if it involves electronic sales.

3. In the municipality where the service is provided, except for:

   • In the transport activity, which is declared at the location where the good or person is dispatched.
   • In television or internet services, which are declared at the location where the subscriber is based.
   • In mobile phone and data services, whose declaration is submitted at the user’s main residence.

Law 14 of 1983, in article 33, establishes a range of rates within which each municipality is free to set the tax rate. The ranges are:

• Commercial activities: From two to seven per thousand (2-7 x 1,000).
• Commercial and service activities: From two to ten per thousand (2-10 x 1,000).

The financial sector has special treatment established from article 41 of Law 14 of 1983.

Finally, failing to submit the ICA declaration, submitting it after the established deadlines, or declaring with errors can result in penalties.

References

Everything about the Industry and Commerce Tax (ICA)

Who must pay the Industry and Commerce Tax