Doing Business In... 2025 Comparisons

Colombia’s legal system follows the civil law tradition. The branches of government are the legislative, the executive and the judiciary. The ordinary judiciary structure is:

• the Corte Suprema de Justicia;
• the Tribunales Superiores de Distrito Judicial; and
• the Juzgados.

Foreign investments in Colombia do not require approval from the authorities. The country generally has a liberal approach to foreign investment, with a few exceptions. 

Foreign investment is not allowed in activities directly related to defence, national security, and the processing or disposal of toxic, dangerous or radioactive waste that is not generated in the country. Colombian companies can also be fully foreign owned, except for those in the national broadcast television sector, where foreign ownership is capped at 40%.

Although foreign investment is not subject to approval from governmental authorities, all investments made by non-residents in Colombia must be registered in a timely way with the Colombian Central Bank, either directly or through the local financial institutions through which the funds are transferred. Foreign investments include, among others, the acquisition of equity interests in Colombian companies and contributions to local joint ventures or trusts.

To complete this process, foreign investors must register the investment by submitting a foreign exchange declaration (declaración de cambio).

The registration process requires the submission of certain information, such as:

• the value of the investment;
• the number of shares or membership interests acquired;
• the destination of the investment; and
• the origin of the funds.

Depending on the type of investment, deadlines for registration will vary. Registering foreign investment ensures access, through the formal exchange market, to convertible currency to remit dividends and repatriate the investment.

Although foreign investment is not subject to approval from governmental authorities, all investments made by non-residents must be registered with the Colombian Central Bank. Failing to properly complete this registration may lead to penalties being imposed. Under the Colombian exchange regime, the Superintendencia de Sociedades has the authority to audit international investment records and impose sanctions for non-compliance. Although Decree 1746 of 1991 authorises penalties of up to 200%, the Superintendencia de Sociedades typically enforces penalties that reflect the severity of the violation.

This section is not applicable in Colombia.

This section is not applicable in Colombia.

The most common form of legal entity in Colombia is the simplified stock corporation (SAS) due to its flexible regime and the freedom its shareholders have to establish the terms and conditions for its functioning and internal governance structure. Corporations (sociedades anónimas, or SA) and foreign company branches are vehicles that are also used.

SAS

Benefits and most common uses

The SAS offers greater flexibility than other types of corporate vehicles in Colombia. Its incorporation process is simple, there are fewer administrative requirements, and shareholders have greater freedom to determine operational terms and internal structure. The SAS is used for almost any business (except those that, by law, require a corporation). 

Incorporation process

An SAS can be incorporated by a private document registered with the relevant chamber of commerce or by public deed (if assets are being contributed to the company for its incorporation, the simplified stock company must be incorporated by means of a public deed granted before a Colombian notary public).

Term

The term can be indefinite.

Number of partners/shareholders

An SAS must have a minimum of one shareholder, and there are no limits on how many shares they can hold. There is also no limit on the maximum number of shareholders.

Liability

Liability is limited to shareholder contributions, except in situations involving company fraud or abuse that harms third parties.

Capital requirements

Shareholders have a maximum term of two years from incorporation to pay for the subscribed shares.

Governance

The shareholders of an SAS appoint managers responsible for the company to represent it before third parties (called legal representatives). Although the SAS may have a board of directors, it is not a requirement.

Other relevant matters

The SAS does not need a legal reserve, and a statutory auditor is only required if their profits are above 3,000 minimum monthly wages.

SA

Benefits and most common uses

A corporation or SA offers a more traditional structure. Their shares can be registered and traded on the national stock market. Banking institutions and listed companies must be corporations by law.

Incorporation process

An SA can only be incorporated by a public deed granted before a Colombian notary public and registered with the chamber of commerce. By-law amendments would have to be formalised by public deed.

Term

The term must be limited but may be extended by the shareholders.

Number of partners/shareholders

There must be a minimum of five shareholders in an SA. Under Colombian law, no shareholder may have 95% or more of the outstanding capital of the corporation.

Liability

Shareholder liability is limited to the amount of their contributions. However, in cases of fraudulent actions, overvaluations of contributions in kind and wilful misconduct, or actions of a parent company giving rise to the bankruptcy of an affiliate, the liability of shareholders could be extended.

Capital requirements

At the moment of incorporation, shareholders have to subscribe to at least 50% of the authorised capital and make an initial payment of at least one third. The balance must be paid within one year from the date of incorporation.

Governance

An SA must have a board of directors. This must consist of at least three members and their alternates, as well as a legal representative.

Other relevant matters

An SA must have a legal reserve and statutory auditor.

Foreign Company Branch

Benefits and most common uses

Branches are a great alternative for foreign companies that want to have a permanent presence in Colombia. A branch office is an extension of the company’s home office and is not a separate legal entity. Branches are widely used by investors in the hydrocarbons sector.

Incorporation process

The home office issues a resolution, which is formalised in a public deed granted before a Colombian notary public and registered with the chamber of commerce.

Term

The term is limited to the duration of the home office, but can be extended as long as it is within the duration of the home office.

Number of partners/shareholders

The branch is not a separate entity to the foreign company. The foreign company is therefore the sole owner.

Liability

As it is not a separate entity from the foreign company, the home office is liable for the assets and liabilities of the branches. They are jointly and severally liable for tax obligations.

Capital requirements

The allocated capital must be fully paid, and any increase in capital requires an amendment to the by-laws along with authorisation by the foreign company’s competent corporate body. However, increasing supplementary investment does not need a by-law amendment and can be made in cash from abroad.

Governance

Branches do not have any separate governance bodies from their home office. A legal representative/general agent acts on behalf of the company.

Other relevant matters

A branch must have a legal reserve and statutory auditor.

Once the shareholders identify the type of corporate vehicle that best suits their needs, the incorporation process is generally simple and expeditious. The incorporation of corporations and branches does not require authorisation from governmental authorities, as a rule. However, there are specific cases where authorisation from governmental authorities would be required.

Companies and branches must be registered in the commercial registry kept by the corresponding chamber of commerce of the municipality where it is to be domiciled. 

For purposes of incorporating a corporate vehicle in Colombia, the following main steps must be completed. 

• An incorporation document must be prepared containing the company’s by-laws and the names of the shareholders and identification documents. If the shareholders are foreign entities, apostille identification documents are needed. Depending on the type of vehicle, this may be completed through a private document or a public deed.
• The new entity must be registered with the corresponding chamber of commerce of the municipality where it is to be domiciled, by filling out the Registro Único Empresarial y Social (RUES) form.
• The new entity must be registered with the tax authorities by completing the form to obtain a tax identification number (NIT). The chamber of commerce also handles the processing of the national tax registry (RUT) used for registering entities with the Tax and Customs National Authority (DIAN). The RUT includes general taxpayer information, along with tax and customs obligations. To obtain this registration, the requisite fees and taxes must be paid to the chamber of commerce.
• Acceptance letters for the positions of legal representatives, substitutes and board members must be obtained, if these appointments are made in the incorporation document, along with copies of the documents for the appointed positions.

These documents must be filed with the chamber of commerce. Once all documentation is submitted, the registration process with the chamber of commerce often takes between one and two weeks.

Companies are required to report changes in management to the chamber of commerce within a month of the change being completed. Additionally, companies must register if they are under the control of another entity and report any changes to such controlling structure within 30 business days. Any amendments to the company’s name, legal address or social activity must be registered. Any changes in capital, whether increases or decreases, must also be reported to the chamber of commerce.

Private companies are required by Colombian law to fulfil the following main periodic obligations.

• Companies and commercial establishments must renew their commercial registration (matrícula mercantil) with the chamber of commerce by March 31st each year.
• Companies are required to convene an annual meeting of the General Shareholders Assembly to approve the year-end financial statements, annual reports and dividend distribution. The annual meeting must be summoned with at least 15 business days’ notice for corporations (SA) and at least five business days’ notice for simplified stock corporations (SAS).
• If the company is under permanent supervision or control by the Superintendencia de Sociedades, or if the company has received a special request for information, it has to submit the financial statements along with their notes, management report, statutory auditor’s report and other required documents to the Superintendencia de Sociedades. In addition, controlling companies must provide consolidated financial statements to the Superintendencia de Sociedades in respect of their controlled subsidiaries.
• The financial statements, notes and report must be filed with the chamber of commerce, unless these have already been submitted to the Superintendencia de Sociedades.
• The ultimate beneficial owner (UBO) of the company must be registered in the single registry of ultimate beneficial owners administered by the Colombian tax authority. The UBO must be an individual person. Identifying the ultimate parent company alone is not sufficient to meet Colombian regulatory requirements.
• Companies registered in the Public Contracting Register (RUP) must annually renew their registrations.
• Companies that meet certain specific criteria are also required to implement compliance programmes to mitigate the risks of money laundering, financing of terrorism, financing of the proliferation of weapons of mass destruction as well as corruption and transnational bribery.

Companies are operated and managed according to the rules set out in their by-laws, except for foreign company branches, which must follow the rules established in the by-laws of the home office. Except as set out below, there is freedom to establish the conditions for the operation and management of local vehicles.

Legal entities must appoint at least one legal representative, who is an authorised officer and is empowered to act on behalf of the company. Except for simplified stock corporations, all other entities are obliged to appoint an alternative to the legal representative as well. The legal representative is usually appointed by the board of directors; if the company does not have a board of directors, the legal representative is appointed by the shareholders. The by-laws may establish limits to the powers of the legal representative by means of including events in which the legal representative may require prior authorisation of the shareholders or the board of directors to carry out or perform certain actions (eg, entering into contracts exceeding a certain amount). 

Simplified stock corporations (SAS) are not required to have a board of directors. However, for corporations (SA), a board of directors is mandatory and must be composed of at least three members, with their alternates. Decisions taken by the board of directors and by the shareholders must be approved according to the majority rules set out in the company’s by-laws, and both shareholder and board decisions must be recorded in minutes, which must also be incorporated into the corresponding company’s minutes ledger.

A foreign branch does not have any separate governance bodies from its home office. Instead, a legal representative or general agent acts on behalf of the company, suggesting more centralised control from the parent company.

Shareholders of corporations (SA) and simplified stock corporations (SAS) are only liable up to the amount of their respective contributions. However, it is possible to pierce the corporate veil if the company is used to defraud the law or to the detriment of third parties. In these cases, the shareholders and administrators who have carried out, participated in or facilitated the fraudulent acts are liable too. However, piercing the corporate veil involves a high burden of proof, and the specialist company court rarely finds sufficient evidence to do so.

The business judgement rule applies to administrators and usually does not interfere with the normal course of business of administrators or companies. However, the law establishes certain duties for administrators that they need to uphold, with the most important being acting with loyalty and diligence and in the interest of the company. If shareholders consider that an administrator has not acted accordingly, they can commence a corporate action for liability (acción social por responsabilidad), and an administrator who has breached their duties can be liable for the damages caused to the company.

Even though Colombia follows a civil law system, consistent case law can also be binding precedents on the parties to a dispute. Employment relationships are governed by:

• the law;
• the employment contracts;
• the collective bargaining agreements (where applicable); and
• in some cases, by consistent case law (where not expressly regulated by law).

Employment agreements in Colombia can be agreed verbally. Although not required by law, for evidence purposes it is advisable to formalise the terms of the employment relationship in writing and ensure that the written agreement contains certain minimum information (eg, initiation date, type of contract and events of termination for cause). Some provisions are only valid if agreed in writing, such as:

• trial period;
• the characterisation of salary as being “integral”; and
• fixed-term duration of the employment agreement. This type of arrangement can only have a total duration of four years.

The ordinary working hours are those agreed by the parties, or, in the absence of an agreement, the established legal maximum, which is currently 44 hours per week (this is being gradually reduced so that, by 15 July 2026, it will be 42 hours).

Overtime work is that exceeding the ordinary working hours of the company and, in all cases, that exceeding the legal maximum working hours. Overtime work may never exceed two hours a day and 12 hours a week. The labour reform, approved by Congress in June 2025, eliminated the requirement for employers to obtain authorisation from the Ministry of Labour for employees to work overtime. Overtime work must be remunerated as follows:

• daily overtime work (between 6.01am and 7pm) – 25% over the value of daily ordinary work;
• nightly overtime work (between 7.01pm and 6am) – 75% over the value of daily ordinary work; and
• regular night work (not overtime) – 35% over the value of daily ordinary work.

Employers and employees may mutually agree on legally defined special flexible schedules or shifts that are tailored to the business activities of the employer and the duties of the employees. Depending on the types of schedules or shifts, overtime payments may not apply.

Employees classified as direction, trust and/or management personnel are not entitled to receive overtime surcharges.

Generally, Colombia is an employment-at-will jurisdiction, as an employment agreement may be terminated by the unilateral decision of either of the parties, with or without just cause. Employment can also be terminated by mutual consent of the parties, by the termination of the fixed-term agreed upon or by failure to extend the probation period.

For probationary purposes, the employer should provide written notification to the employee in the case of employment termination.

In some cases, the employer must give the employee advance notice of no less than 15 days. These include where the employer terminates the employment agreement due to recognition of a retirement pension if the employee is still providing services. Apart from those very specific cases, employment law does not require advance notice for the termination of employment contracts, except in the case of non-renewal of fixed-term contracts. Notice of non-renewal of a fixed-term contract must be provided at least 30 calendar days in advance of the date of the expiry term. If it is not, the contract will be automatically renewed.

Employers must pay employees amounts due immediately upon termination (eg, salaries, outstanding vacations, accrued social benefits, outstanding commissions, and any other labour benefit owed). The exact amounts vary depending on the agreed salary structure (eg, integral salary or ordinary salary plus mandatory benefits structure) and the termination scenario (eg, dismissal for cause, mutual consent or resignation).

Unilateral termination without cause will give rise to the payment of statutory severance. The formula to calculate the statutory severance upon unilateral termination without cause depends on the employee’s monthly salary, whether the labour contract is for a fixed or indefinite period of duration, and the actual time of duration of the employment.

For indefinite-term contracts, the legal severance for dismissal is as follows:

• for employees who earn less than ten minimum legal monthly salaries (for 2025, COP14.235 million or USD3,560), the severance is equivalent to 30 days of salary for the first year of service and 20 additional days of salary for each additional year of service, proportionally per fraction;
• for employees who earn ten minimum legal monthly salaries or more, the severance is equivalent to 20 days of salary for the first year of service and 15 additional days of salary for each additional year of service, proportionally per fraction;
• for employees who had more than ten years of service as of 27 December 2002, the severance is equivalent to 45 days’ salary for the first year of service and 40 additional days of salary for each year subsequent to the first, proportionally for fractions of the year; and
• for employees who had ten years of service or more as of 31 December 1990 and are entitled to reinstatement, the severance is equivalent to 45 days salary for the first year of service and 30 additional days of salary for each year subsequent to the first, proportionally for fractions of the year.

For agreements entered into under a fixed period or for the duration of a specific job or activity, the severance is equivalent to the salaries corresponding to the unexpired period of the contract, or to the term remaining for the completion of the specific job or activity, which cannot be less than 15 days of salary.

Under Colombian law, a collective dismissal occurs when an employer unilaterally and without cause terminates the employment agreements of a certain percentage of its employees within a period of six consecutive months, without the required authorisation from the Ministry of Labour. These percentages, which are established by law, vary depending on the size of the company’s workforce.

To proceed with a collective dismissal, the employer must obtain prior authorisation from the Ministry of Labour. The Ministry can, at its discretion, approve or reject this request. In practice, the Ministry is often reluctant to grant such authorisation, typically taking more than 12 months to review the request and possibly denying it. Mass layoffs conducted without authorisation from the Ministry of Labour, or in cases where such authorisation has been denied, will be considered void. Consequently, employees must be reinstated with back-pay for salaries and labour benefits accrued but not paid during the period of unemployment.

In Colombia, works councils/employee representative bodies do not exist as such. However, employees have the right to form or join unions.

A union must have a minimum of 25 members, each of whom must be at least 14 years old, in order to be formed. These requirements must be certified at an initial constitution meeting and executed with the intention to become unionised employees, at which time the employees will sign a foundation minute. The foundation minute is one of the requirements that must be fulfilled to register the union with the Ministry of Labour.

To become part of an already existing union, employees must be at least 14 years old and meet the requirements established in the by-laws of the union.

Unions are authorised to enter into collective bargaining agreements on behalf of the affiliated employees. In addition to the provisions agreed upon between the parties, the collective bargaining agreement must indicate:

• the company or establishment;
• industry and trades covered thereby;
• the place or places where it is to govern;
• the date on which it takes effect, its duration, and the causes and methods of its renewal and termination; and
• the responsibility for non-performance.

Irrespective of the kind of union or the number of affiliates working for an employer, negotiation is held by each union within an entity.

An employee may belong to more than one union, and unions of the same or a different nature may coexist in the same company. Employers must recognise the right of association of employees and unions.

Employees are subject to payment of income tax, at rates that depend on the employee’s total income and/or compensation earned during the corresponding fiscal year and that range from 0% to 39% of the employee’s taxable income.

Employers are required to withhold the applicable income tax when the salary is paid to the corresponding employee.

Both the employee and employer must make contributions to the social security system. For the healthcare system, a contribution of 12.5% of the employee’s base salary must be made, of which the employee contributes 4% and the employer 8.5%. For the pensions system, a contribution of 16% of the employee’s salary must be made, of which the employee contributes 4% and the employer contributes 12%.

Employers must also make mandatory contributions to certain private and public entities that provide services to the community related to welfare, education and children’s rights (locally referred as parafiscales), which collectively amount to 9% of the employee’s salary.

The main taxes applicable to companies, and the current applicable rates, are as follows.

Corporate Income Tax (CIT)

The general CIT rate for 2025 is 35%. This tax is imposed on the total income (generated or not in Colombia) of the Colombian company (ie, companies incorporated in Colombia, domiciled in Colombia or having their place of effective management in Colombia) and on the income of foreign non-resident companies generated in Colombia. An additional surcharge ranging from 5% to 15% is applicable to companies in the hydrocarbons and mining sectors. Industrial users of a free trade zone (FTZ) are subject to a special CIT rate of 20%. Since the 2023 fiscal year, local companies are subject to a minimum effective tax rate of 15% of accounting profits. If the tax liability calculated on net taxable income results in an effective tax rate of lower than 15% of accounting profits, the taxpayer must increase the tax liability until it reaches the minimum.

Capital Gains Tax

In Colombia, a company must pay capital gains tax when it sells fixed assets held for two years or more or upon liquidation if the company was incorporated for a term of two years or longer, at a rate of 15%.

Withholding Tax (WHT)

The WHT system is a general mechanism of advance tax collection. All corporate entities are required to collect or withhold taxes from payments made to third parties. The WHT collection agents must collect the applicable WHT amounts, and every month must deposit the withheld amounts to the tax authority, file monthly WHT returns and issue WHT certificates to the withheld third parties. The withheld third parties, who are also subject to CIT declaration/payment, may credit the withheld taxes in their annual CIT return. The WHT rates vary depending on the nature of the payment. The general WHT rate on payments made to foreign non-residents is 20%.

Value Added Tax (VAT)

The standard VAT rate in Colombia is 19% of the invoiced amount. This tax is applicable to:

• the sale of movable assets;
• the provision of services in Colombia or from abroad (if the beneficiary is located in Colombia); and
• the importation of assets or goods that have not been expressly excluded – certain services are exempt from VAT, such as medical services, educational services, internet connectivity, and in some cases energy, gas and water utilities.

Industry and Commerce Tax

This is a municipal tax applicable to all individuals, legal entities and de facto companies who carry out industrial, commercial or service activities within the jurisdiction of the relevant municipality. The rates vary from 0.2% to 0.7% calculated over the gross income for industrial activities and 0.2% to 1.6% calculated over the gross income for commercial and services activities.

National Stamp Tax

This is an indirect levy triggered by the execution of certain legal acts, documents and contracts that generate legal effects in the country. As a general rule, any private agreement may be subject to this tax, even if does not require the involvement of a notary or public authority. Dormant since 2010 (when its rate was reduced to 0%), the tax was temporarily reactivated by the government at a 1% rate by Decree 175 of 14 February 2025, issued pursuant to temporary exceptional state powers of national commotion. This amendment of the Colombian tax code will apply until 31 December 2025.

According to recent doctrine by the DIAN and consistent with jurisprudence of the Council of State, for contracts with an indetermined amount, the triggering events are the signing, granting or acceptance of the document, while the taxable base is defined by each payment or credit made under the contract. Therefore, payments made before 22 February 2025 – the effective date of the Decree – are subject to a 0% rate while those made from that date through the end of the year will be taxed at 1%. Starting 1 January 2026, the rate should revert to 0%. 

Colombia offers the following tax incentives to local and foreign companies.

Double Taxation Treaties

Colombia has entered into an extensive network of double taxation treaties.

Foreign Tax Credit Applicable to all Colombian Companies

Foreign income taxes may be credited by Colombian companies against their local CIT liability, subject to certain limitations.

Corporate Income Tax Exemptions

The following income generated locally by a Colombian company is exempt from CIT:

• income obtained from eco-tourism services;
• income related to the sale of social interest or priority housing, provided that the taxpayer obtains the corresponding governmental permit; and
• income of companies incorporated in the departments of La Guajira, Norte de Santander and Arauca (ZESE) until 2024 will have a five-year CIT exemption.

Tax Credit Applicable to Certain Investments

A 30% tax credit is available for investments made in certain scientific and/or technological projects or in professional training projects of governmental, public or private institutions.

Special CIT Rate for Free Trade Zones

These are geographically delimited areas in the Colombian territory that have a special tax and customs regime. Companies that have this status can access tax benefits such as the application of a preferential (lower) income tax rate, 0% VAT and tariffs on foreign goods, and 0% VAT on domestic goods, among others.

Tax Benefits for Investments in Non-Conventional Energy Sources

Tax incentives exist to encourage the generation of energy from clean and renewable sources. The following are the main tax incentives:

• income from the sale of electric power generated from wind, biomass or agricultural waste is exempt from CIT, provided the seller issues and negotiates greenhouse gas reduction certificates;
• income tax deduction of 50% of the value of the investment made in energy generation projects from non-conventional sources;
• VAT exemption on the acquisition of goods and services necessary for the development of non-conventional energy projects;
• exemption from payment of import duties on machinery, equipment, materials and inputs necessary for the production of energy from non-conventional sources; and
• accelerated depreciation incentive for machinery, equipment and civil works necessary for the development of non-conventional energy generation projects.

The CFC and CHC Regimes

Colombia offers two additional tax incentive regimes that are particularly relevant for multinational structures and cross-border investments: the controlled foreign company (CFC) regime and the Colombian holding company (CHC) regime.

The CFC regime

The CFC regime is aligned with OECD BEPS Action 3 and targets foreign entities controlled by Colombian tax residents. Under the Colombian tax code, passive income obtained by such entities may be attributed and taxed in Colombia. However, the regime offers an incentive by excluding active income from taxation. In addition, income effectively distributed is not subject to additional taxation if already reported, allowing for deferral and avoidance of double taxation. These features position the CFC regime as a compliant yet flexible structure for managing offshore investments.

The CHC regime

The CHC regime offers a full income tax exemption on dividends and capital gains derived by a CHC from qualifying foreign subsidiaries, as long as the CHC holds at least 10% participation and meets certain substance requirements. Dividends paid by the CHC to non-residents are considered foreign-sourced and may benefit from WHT relief. This regime is a powerful incentive to set up regional holding platforms in Colombia, aiming to boost inbound and outbound foreign direct investment.

Tax consolidation is not allowed in Colombia.

Thin capitalisation rules (when the level of debt of a company is much greater than its equity capital) are applicable in Colombia based on the following:

• debt-to-equity ratio – for income tax purposes, a taxpayer generally may not deduct interest paid on loans that are acquired, directly or indirectly, from related parties and that exceed a 2:1 debt-to-equity ratio, considering the taxpayer’s net equity on December 31 in the preceding year; and
• loans from third parties – where a related party acts as guarantor or provides a guaranty, participates in a back-to-back operation, or substantially acts as a creditor in any other transaction, loans from third parties are subject to the thin capitalisation limitation.

Transfer pricing rules are applicable in Colombia. 

The following are some of the key anti-evasion rules applicable in Colombia.

Indirect Sales

Colombia has an indirect transfer regime. The regime taxes the indirect disposal of assets located in Colombia, through the transfer, by any means, of shares, participations or rights in foreign entities, as if the Colombian underlying assets were directly transferred. Secondary legislation clarifies the tax basis calculation and WHT obligations on indirect transfers.

General Anti-Abuse Rule

This rule grants the DIAN the power to recharacterise operations that have no business purpose. This encompasses transactions that are artificial, have no economic or commercial purpose or are aimed at obtaining a tax advantage. The burden of proof for this purpose is on the DIAN.

Limitation on Benefits Rule

Colombia has an anti-abuse clause that contains a limitation on benefits rule, whereby only one tax benefit can be applied to a single economic event. Otherwise, a taxpayer will lose the higher benefit applied.

Colombia operates a multi-tiered tariff system based on the Most Favoured Nation (MFN) principle, with the following general structure:

• 0–5% – applied to capital goods, industry inputs and raw materials not (or scarcely) produced domestically;
• 10% – applicable to most manufactured products; and
• 15–20% – imposed on consumer goods and others categorised as “sensitive” products.

In addition, Colombia implements targeted higher tariffs to protect specific sectors:

• automobiles – tariff set at 35% to support local assembly operations;
• agricultural goods (eg beef, rice, diary) – tariffs can reach as high as 80–98%, drastically limiting imports outside regulated quotas; and
• steel products – a 35% safeguard tariff on imports (specifically from China, Turkey and Russia) was instituted in 2024 to counteract price undercutting and subsidy-driven dumping.

Preferential Trade Agreements

Free trade agreement (FTA) with the United States (effective May 2012)

This involves a gradual elimination of tariffs, currently benefiting about 70% of US agricultural exports, with remaining tariffs phased out over a 19-year period.

Trade agreement with the European Union (active since 2014)

This involves nearly 100% tariff elimination for EU-manufactured goods and broad agricultural liberalisation, though sensitive products – such as poultry, rice and pork – remain protected via safeguard mechanisms.

Any transaction, regardless of its legal form (eg, shares or asset purchase, acquisition of IP rights, etc), that meets the requirements below is subject to pre-merger control by the Superintendencia de Industria y Comercio (SIC).

• The transaction entails a change of control in one or more undertakings involved in the transaction. “Control” is defined in antitrust law as the possibility of influencing another party’s commercial policies and strategies or disposing of key assets. Minority shareholdings may grant control under this definition in certain circumstances (ie, through veto rights).
• The parties to the transaction (eg, buyer and seller) are active in Colombia either in the same economic activity (resulting in a horizontal overlap for the transaction) or on different levels of the same value chain (creating vertical links).
• In the fiscal year immediately preceding the transaction, the parties had revenues in Colombia or total worldwide assets in excess of the value set yearly by the SIC. In 2024, this value was equivalent to COP81.7 billion or USD18.5 million.

If these conditions are met, parties require an authorisation from the SIC prior to closing the transaction. The type of submission for obtaining this clearance will depend on the parties’ combined market share. If market shares in all relevant markets in Colombia are below 20%, a short-form notification is available. If the combined share in at least one relevant market in Colombia is equal to or exceeds 20%, a full filing (or pre-assessment request) will be required.

Joint Ventures

As per SIC precedent, joint ventures (JVs) are economic concentrations (fulfilling the first criteria above) if they:

• are permanent or long-lasting;
• involve the joint development of a non-complementary activity of the parties; and
• are fully functional in terms of financial and administrative capacity.

If the JV meets these requirements and additionally meets the local overlap and thresholds test, it will be subject to pre-merger control.

For short-form notifications, the SIC has ten business days from the date on which the authority receives all the required information to review it and issue a letter acknowledging receipt of the submission. The authority has up to five years from the date of closing to challenge the implied approval through the short form.

For full filings, the SIC has an initial stage (Phase 1) to review and decide on the submission, which lasts 30 business days from the date the necessary information is submitted. During this phase, the SIC may either approve the transaction or proceed to a more detailed review (in a second phase). During Phase 1, the SIC also posts a notice on its website to inform third parties about the transaction, allowing them ten business days to file any challenges and relevant information.

If the SIC considers that the transaction requires further review and analysis, it will move the submission to Phase 2. This second phase lasts three months from the date the required information is submitted. The SIC can extend this term at least once. In this phase, the SIC requests additional information from other authorities, competitors, clients and suppliers to perform its market analysis. If the SIC issues a request for further information (RFI) to the parties during Phase 2, this resets the three-month period, but only the first RFI has this effect; subsequent RFIs do not suspend the duration of the review.

Colombian competition law generally prohibits anti-competitive agreements between competitors, such as price fixing, bid rigging and market allocation, among others.

Antitrust laws apply to any market agent, whether domestic or foreign, whose conduct has or may have an effect, even if partially, in any market in Colombia.

Penalties for companies engaging in anti-competitive agreements can be of up to 100,000 minimum monthly salaries (COP142.3 billion or USD34 million). Fines against individuals can be as high as 2,000 minimum monthly salaries (roughly COP2.8 billion or USD683,000 at current exchange rates). The SIC can impose fines against corporate officers and employees who executed, authorised or tolerated the conduct.

Colombian competition law generally prohibits anti-competitive behaviour (ie, behaviour that is restrictive regardless of the existence of a dominant position) and abuses of dominance (eg, tying, discrimination and market access obstruction, among others).

Penalties for companies engaging in abusive unilateral conduct can be of up to 100,000 minimum monthly salaries (COP142.3 billion or USD34 million). Fines against individuals can be as high as 2,000 minimum monthly salaries (roughly COP2.8 billion or USD683,000). The SIC can impose fines against corporate officers and employees who executed, authorised or tolerated the conduct.

A patent is an exclusive right granted to an inventor over their invention. In Colombia, the patent protection period lasts for 20 years from the filing date, and it cannot be renewed.

The registration process begins with the submission of the application to the SIC, along with the required registration fees. Following this, the office carries out formal and substantive examinations to ensure compliance with legal requirements and to assess the invention’s novelty, inventive step and industrial applicability. If all criteria are satisfied, the patent is granted.

Enforcement of patent rights may involve cease-and-desist letters and conducting mediation hearings as out-of-court remedies. Judicial remedies include filing for injunctions, ordering seizures and pursuing infringement lawsuits, which enable the patent holder to seek monetary compensation for damages.

A trade mark identifies goods or services and can be categorised into types such as word, stylised and figurative trade marks, or even other non-traditional ones such as colour or sound marks. Protection is valid for ten years from the registration date and can be renewed indefinitely every subsequent ten years.

The registration process involves filing an application with the Trade Mark Office, paying the required fees and undergoing a formal examination. Following this, the trade mark is published to allow for opposition. Afterwards, the office conducts a substantive examination to assess the trade mark’s distinctiveness. The Office then issues a resolution granting or denying the registration of the trade mark.

Enforcement activities for trade marks include issuing cease-and-desist letters and holding mediation hearings as out-of-court remedies. Judicial remedies include filing for injunctions, seizures and infringement actions, through which the owner can seek monetary compensation for damages.

Industrial design protects the ornamental aspects of a product, focusing on its aesthetic appearance rather than its technical or functional features. The protection for industrial designs lasts for ten years from the filing date and cannot be renewed.

The registration process for industrial designs begins with filing an application and paying the required fees. This is followed by a formal examination and publication of the design for opposition purposes. After the opposition period, a substantive examination takes place, which results in a resolution either granting or denying the registration of the design.

Enforcement of industrial design rights may involve sending cease-and-desist letters and conducting mediation hearings as out-of-court remedies. Judicial remedies include filing for injunctions, seizures and infringement actions, allowing the owner to seek monetary compensation for damages incurred due to the infringement.

Copyright protects the original expression of artistic, scientific or literary works. It encompasses both moral and economic rights, with moral rights protected indefinitely and economic rights protected for the lifetime of the author plus 80 years from the work’s creation.

In Colombia, registering works with the National Copyright Office (Dirección Nacional de Derecho de Autor) has declaratory but not constitutive effects. However, it is advisable to register works to establish evidence of ownership.

Enforcement of copyright involves activities such as cease-and-desist letters and conducting mediation hearings as out-of-court remedies. Judicial options include filing for injunctions, seizures and infringement actions, allowing the owner to seek monetary compensation for damages caused by the infringement.

Other protected IP rights include trade secrets, which can be enforced via unfair competition actions. Trade secrets encompass undisclosed information usable in productive, industrial or commercial activities, capable of transmission to third parties.

Software is safeguarded under copyright law in Colombia and follows similar procedures.

Law 1581 of 2012 is the primary regulation governing data protection in Colombia. It adopts a consent-based approach for the processing of personal data concerning Colombian data subjects. It covers various important matters, including:

• requirements for valid consent for the processing of personal data;
• special treatment and protection of sensitive personal data;
• rights of data subjects regarding their personal data;
• transmission and transfer of personal data to third parties;
• obligations imposed on data controllers and processors; and
• penalties for violations of the data protection regulations.

Additionally, Decree 1377 of 2013 (compiled in Decree 1074 of 2015) supplements these provisions by imposing additional obligations related to the minimum content requirements for privacy policies, notices, data transmission and transfer agreements, and specifications for international data transfers.

The SIC has consistently ruled that Colombian data protection laws apply to any company that processes personal data in Colombia. According to the definition of “processing” in Law 1581 of 2012, which includes data collection, any company, whether local or foreign, that collects or processes personal data from Colombian residents is subject to the provisions and obligations of Colombian data protection law.

In several cases, the SIC has explicitly stated that even the act of collecting data through cookies from web or mobile browsers falls under the scope of Colombian data protection regulations. Therefore, any foreign entity engaged in online data collection from Colombian individuals must comply with local data protection laws.

The data protection authority in Colombia is the SIC.

Labour Reform

The current government submitted a labour reform bill of law to Congress, which was approved on 20 June 2025. The main changes are as follows.

• The general applicable rule is that employment contracts should be indefinite term agreements, with fixed-term contracts being the exception. After four years, fixed-term agreements will automatically become indefinite-term contracts.
• Increase of surcharge for work performed during Sundays and holidays.
• Increase of hours that are considered night-time work.
• Apprentices must be hired through formal employment agreements, which increases payroll costs.
• Mandatory leave for medical and school appointments.
• Regulations for special work categories, including agricultural workers, digital platform workers and professional athletes.
• Measures aimed at promoting equity and reducing pay gaps.
• Mandatory hiring of people with disabilities.

Environmental, Social and Governance (ESG) Considerations

It is not currently compulsory for unlisted companies to report on ESG issues. However, the Superintendence of Companies issued External Circular 100-000010 on 21 November 2023, adding a further Chapter XV on ESG reporting to its Basic Legal Circular. This Chapter establishes the recommendations to be considered by companies when preparing the sustainability report.

Also, the Superintendence of Companies issued guidelines in March 2025 for the voluntary filing of a Sustainability Report for the fiscal year 2024. The recommendations are aimed at companies that meet certain thresholds – ie, companies that are subject to the permanent supervision or control of the Superintendence of Companies, and that have reached total income or assets equal to or greater than approximately USD14.8 million as of December 31st of the immediately preceding year. Reports must be based on international standards.

Conflicts of Interest

According to Colombian regulations introduced in early 2024, when an officer or a manager (such as a board member) may have a conflict of interest, all relevant information must be disclosed to the shareholders so that they can decide whether to waive the conflict, thereby releasing the legal representative from responsibility, and whether a general authorisation can be granted.

In December 2024, a draft bill was presented to the Colombian legislature to update corporate regulations. It introduced new rules on administrators’ duties and a broader definition for conflicts of interest, which includes events where the administrator has an economic interest in the operation that could impair their judgement and independence.

The liability regime for administrators can now be extended to shareholders with personal interests if the company suffers damage. Administrators may also face compensatory damages for bad faith in requesting authorisations.

Competition Law

The Constitutional Court declared unconstitutional certain provisions that allowed regional governments to bar the sale of liquor produced in other regions.

The Court found that these provisions:

• violated the principle of free competition by enabling monopolistic practices, allowing only one supplier in certain regions;
• restricted consumer choice, limiting access exclusively to products from local liquor industries; and
• contradicted constitutional principles, related to economic freedom, consumer rights and the regulation of state monopolies.

While the Court acknowledged that consumer choice can be subject to regulation, it emphasised that a total restriction is unconstitutional. The ruling concluded that the law imposed an arbitrary limitation on economic freedom and competition, and therefore could not be justified under the Colombian Constitution.

Consumer Protection and Net Neutrality

The Constitutional Court declared unconstitutional a provision that allowed internet service providers (ISPs) to offer differentiated service plans based on users’ consumption profiles. This effectively prohibits mobile network operators from determining which applications are included in their data packages.

The Court found that this practice:

• enabled content blocking or interference;
• allowed discriminatory access to content, applications or services based on origin or ownership for commercial purposes; and
• violated the principle of net neutrality, infringing on the rights to freedom of expression and informational pluralism.

In the preliminary statement of the decision, the Court emphasised that net neutrality is a fundamental regulatory principle for ensuring equal treatment of all internet traffic. Any deviation undermines the internet’s democratic role as a platform for the free exchange of ideas and information. The Court also reaffirmed the internet’s essential role in enabling fundamental rights, including education, work and especially freedom of expression.

To ensure a smooth regulatory transition, the Court deferred the ruling’s effects for one year from the date of publication of the full decision. As of now, only the preliminary press release (issued in late May) is available; the full text has not yet been published.

Consumer Protection Legislative Outlook

A bill of law proposes a comprehensive reform of Colombia’s Consumer Protection Statute. The bill aims to modernise and strengthen consumer rights across both traditional and digital markets.

Key proposals include:

• empowering local authorities to impose sanctions;
• requiring transparency in credit offers (eg, disclosing the annual cost of financing);
• mandating the display of product reparability indexes; and
• prohibiting tied sales, deceptive environmental claims (greenwashing) and discriminatory profiling in customer service.

Technology

There are currently more than nine bills filed before the Senate concerning artificial intelligence (AI). These legislative proposals aim to establish public policy frameworks for the development, use and implementation of AI technologies.

On 20 May 2025, Congress introduced a bill of law establishing a comprehensive framework for the regulation of AI. Drawing on international models – including those from the European Union and Brazil – the bill outlines incentives, risk classifications and accountability mechanisms for AI development and deployment in Colombia:

• national AI oversight and regulatory authority – the Ministry of Science, Technology and Innovation will be the entity responsible for supervising and regulating the development and use of AI;
• adaptation and review – the Ministry will periodically review and update the law to ensure that it remains relevant in light of technological advancements;
• regulatory sandboxes – these controlled environments will allow for the testing of AI innovations under flexible regulatory conditions, promoting responsible experimentation;
• incentives for AI research and development – the bill of law seeks to implement programmes and funding to support AI research; and
• protection of fundamental rights – continuous monitoring and oversight will be carried out to classify and mitigate risks, ensuring the safe development and use of AI.

Impact of Global Trade Developments

As of 2025, Colombia’s trade regime is being indirectly affected by escalating global trade tensions, particularly the intensifying trade war between the United States, China and other major economies. The United States has recently imposed a universal 10% tariff on nearly all imports, alongside a 145% tariff specifically targeting Chinese goods. In retaliation, China has enacted tariffs of up to 125% on US exports. These measures have disrupted global supply chains and altered trade flows, creating both challenges and opportunities for Colombia. While certain Colombian sectors may benefit from trade diversion and increased export potential, others face rising costs for imported inputs and heightened uncertainty in international markets, which could undermine industrial competitiveness and economic stability.