Corporate Taxes in Colombia

Guide to Complying with your Tax Obligations

Taxes are an important part of business life in Colombia. As a business, you must comply with a variety of tax obligations and file tax returns and payments on specific dates.

In this article, we will provide you with a complete guide on business taxes in Colombia and how you can comply with your tax obligations.

Taxes for companies in Colombia: Types of taxes

In Colombia, companies are subject to several types of taxes, some of which are as follows:

Income tax (ISR):

ISR is a tax on corporate income. Companies must file income tax returns and pay the tax on specific dates.

Value added tax (VAT):

VAT is a tax on the value added of goods and services sold by companies. Businesses must collect VAT from their customers and file VAT returns and payments on specific dates.

Industry and commerce tax (ICA):

ICA is a local tax levied on commercial and business activities. Companies must file returns and pay ICA on specific dates.

Parafiscal Contribution:

The parafiscal contribution is a tax applied to some specific industries, such as the tourism industry. Companies must file returns and pay the tax on specific dates.

How to comply with your company’s tax obligations

To comply with your company’s tax obligations in Colombia, it is important that you follow these steps:

Register with the DIAN:

The DIAN is the entity in charge of collecting taxes in Colombia. It is important that you register your company with the DIAN and obtain a tax identification number (NIT) before you start operating.

Maintain accurate accounting records:

You must keep accurate and up-to-date accounting records to comply with your tax obligations. This includes the filing of returns and payment of taxes on specific dates.

Prepare tax returns:

You must prepare and file the corresponding tax returns on specific dates. It is important that you are accurate and complete when preparing your returns, as any errors can result in penalties and fines.

Make the corresponding tax payments:

You must make the corresponding tax payments on specific dates. It is important to make sure you have the necessary funds to make payments at the right time.

How to Reduce Your Tax Burden

In addition to complying with your tax obligations, there are some strategies you can use to reduce your tax burden in Colombia. Some of these strategies include the following:

Take advantage of tax deductions:

In Colombia, there are certain tax deductions that can reduce your tax burden. It is important that you are aware of the tax deductions available and that you take advantage of them effectively.

Use the appropriate tax regime:

The tax regime you choose can have a big impact on your tax burden. It is important that you evaluate the different tax regimes available and choose the one that best suits your company.

Plan your expenses and earnings:

By carefully planning your expenses and earnings, you can reduce your tax burden. For example, if you incur certain expenses at specific times, you can take advantage of available tax deductions.

Use creative accounting:

While it is important to be accurate and complete on your tax returns, you can also use creative accounting to reduce your tax burden. However, you must ensure that any strategy you use is legal and ethical.

Conclusion

Complying with your company’s tax obligations in Colombia may seem overwhelming at first.

However, if you follow the right steps and take advantage of available tax reduction strategies, you can minimize your tax burden and avoid penalties and fines.

Remember to keep accurate and up-to-date accounting records, prepare and file complete and accurate tax returns, and make the appropriate tax payments on specific dates.

With these sound practices, you can keep your business financially sound and in compliance with the law.