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% for fiscal year (FY) 2022. This rate is applied upon taxable income.

An additional 5% surcharge is applicable through 2027 for financial institutions and include Insurance & Reinsurance companies as well as stock & commodities brokers & infrastructure suppliers to the stock and securities markets,  with taxable income equal to or greater than over USD 1.1 m. 

A permanent surcharge is introduced for crude oil and coal extraction and production industry players with taxable income equal to or greater than over USD471k. Surtax rate goes from 5% or up to 10% (15% for oil extraction) subject to current year averaged market prices being at or over 65% of averaged prices over preceding 120 months.

A  3% temporary surcharge is introduced  for hydro-electric power companies with taxable income equal to or greater than over USD282K, 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%).

Qualifying businesses, as Off-shore (E&P), qualified companies operating at onshore FTZ (port services, permanent FTZ 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 Free Trade Zones (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 to apply to qualified FTZ companies demonstrating revenue growth of 60% in 2022 vs 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

Starting FY 2023, drawing from OCDE- propelled Pillar II, but certainly broader in scope and goals, a Minimum Effective Tax Rate (“METR”) of 15% is introduced beginning 2023 for resident corporations (a few industries are exempted: social interest housing, zomac or entities which adjusted profits is equal or lower than zero, among others).

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

METR to start by dividing the due tax (+/- certain adjustments) over the book profit (+/- certain adjustments).

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.

Deductible limitations

Certain non taxable income items, special deductions, exempt income and tax credits, such as environmental benefits, donations and others, to be capped at 3% of the taxpayer's net income before their subtraction.

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.