Colombia

Corporate income tax (CIT)

National companies (i.e. incorporated in Colombia under Colombian law) are taxed on worldwide income. Foreign non-residents are taxed on their Colombian-source income only.

The current general CIT rate is 35%. This rate is applied upon taxable income.

An additional 5% surcharge is applicable through 2027 for financial institutions, including insurance and reinsurance companies as well as stock and commodities brokers and infrastructure suppliers to the stock and securities markets, with taxable income equal to or greater than USD 1,100,000.

A permanent surcharge is introduced for crude oil and coal extraction and production industry players with taxable income equal to or greater than USD 471,000. The surtax rate goes from 5% up to 10% (15% for oil extraction), subject to current year averaged market prices being at or over 65% of averaged prices over the preceding 120 months.

A 3% temporary surcharge is introduced for hydro-electric power companies with taxable income equal to or greater than USD 282,000 for years 2023 through 2026.

Taxable income is generally defined as the excess of all operating and non-operating revenue over deductible costs and expenses. The customary costs and expenses of a business are generally acceptable as deductible expenditure for CIT purposes, provided they are necessary, reasonable, and have been realised during the relevant tax year under the accrual or cash method of accounting, as the case may be.

The current general capital gains tax rate is 15% (up from 10% previously).

Qualifying businesses, such as offshore (exploration and production) companies, qualified companies operating at onshore FTZs (port services, permanent FTZs dedicated to the refining of fuels derived from petroleum or the refining of industrial biofuels), and qualified FTZ companies providing logistic services to FTZ management entities located in FTZs, enjoy a reduced rate of 20% (while subject to capital gains tax at 15%, where applicable). 

The preferential 20% rate for other qualified FTZ companies will only survive subject to an export-oriented plan to be submitted for approval by the government in 2023 or 2024.

Grandfathering provisions apply to qualified FTZ companies demonstrating revenue growth of 60% in 2022 compared to that of 2019.

Worldwide income earned by non-resident entities that is attributable to branches and permanent establishments (PEs) will be taxed at 35% or 15%, depending on whether the income is to be treated as ordinary income or capital gain.

Minimum presumptive tax

The minimum presumptive tax was phased out as of FY 2021.

Minimum effective tax rate (METR)

Starting from FY 2023, drawing from the OECD-propelled Pillar II, but certainly broader in scope and goals, an METR of 15% is introduced for resident corporations (with exemptions for social interest housing, zomac, and entities with adjusted profits equal to or lower than zero, among others).

Subject to a formulaic system, in-scope taxpayers will be required to true-up the METR to 15%.

Income tax for equality (CREE)

CREE was repealed with the tax bill of 2016; nevertheless, there are some minimum base excesses (CREE taxable income less CREE minimum base) that can be offset during FY 2017 and following years, respecting a cap of five years from the moment in which the excess was generated. CREE tax losses can also be offset during FY 2017 and following years without a time limitation.

Stability Agreement Regime

As of 1 January 2013, the Legal and Tax Stability Framework was repealed. Applications under consideration will be grandfathered and approved if they meet the applicable requirement. Any already executed Legal Stability Agreements will continue to apply until expiration.

Local income taxes

In addition to CIT, there is a local (municipal) tax, known as industry and trade tax. For more information, see Industry and trade tax in the Other taxes section.