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Taxes in Colombia: corporate income tax, withholding on payments abroad, VAT and local taxes

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Last verified: 2026-10-26 · Status: Changing

Colombian companies and branches pay 35 percent income tax on taxable profit, with a 15 percent minimum effective tax on adjusted book profit and 12 years to use losses. Money leaving to foreign owners is taxed at source: 20 percent on dividends out of taxed profits, 20 percent on royalties, services and technical assistance, 15 percent on interest on loans of a year or more and 33 percent on management fees, while 19 percent VAT, the 4 per thousand financial transactions tax and the municipal industry and commerce tax sit on top. A government tax bill filed in July 2026 would lift the dividend withholding to 30 percent; it was still in committee when this page was checked.

USD figures use the TRM of COP 3,158.43 per US dollar, valid 24 to 26 October 2026, from the official TRM series certified by the Superintendencia Financiera and published on datos.gov.co. UVT thresholds use the 2026 UVT of COP 52,374 (DIAN Resolución 000238 de 2025). Conversions are for orientation only.

Key facts

Corporate income tax, general rate	35 %Estatuto Tributario art. 240 (Ley 2277 de 2022 art. 10), as of 2026-10-26 · in force
Additional points for financial institutions and insurers with taxable income of 120,000 UVT or more, tax years 2023 to 2027	5 percentage pointsEstatuto Tributario art. 240 par. 2, as of 2026-10-26 · in force
Minimum adjusted tax rate on adjusted book profit (not for foreign legal persons without residence)	15 %Estatuto Tributario art. 240 par. 6, as of 2026-10-26 · in force
Tax loss carryforward period for companies	12 yearsEstatuto Tributario art. 147, as of 2026-10-26 · in force
Withholding on dividends to foreign companies and non resident individuals, out of taxed profits	20 %Estatuto Tributario art. 245 (Ley 2277 de 2022 art. 4), as of 2026-10-26 · in force
Withholding on dividends from taxed profits paid to Colombian companies (creditable up the chain; registered groups exempt)	10 %Estatuto Tributario art. 242-1 (Ley 2277 de 2022 art. 12), as of 2026-10-26 · in force
Withholding on royalties paid to non residents	20 %Estatuto Tributario art. 408, as of 2026-10-26 · in force
Withholding on services, consulting and technical assistance paid to non residents	20 %Estatuto Tributario art. 408, as of 2026-10-26 · in force
Withholding on interest on foreign loans of one year or more	15 %Estatuto Tributario art. 408, as of 2026-10-26 · in force
Withholding on other interest paid to non residents (loans under one year)	20 %Estatuto Tributario art. 408, as of 2026-10-26 · in force
Withholding on management or direction fees paid to non residents	33 %Estatuto Tributario art. 408, as of 2026-10-26 · in force
Withholding on taxable payments to non cooperative, low or no tax jurisdictions or preferential regimes	35 %Estatuto Tributario art. 408 par. and art. 240, as of 2026-10-26 · in force
Significant economic presence gross income threshold	31300 UVTEstatuto Tributario art. 20-3 num. 1.2, as of 2026-10-26 · in force
Elective income tax on gross Colombian income for non residents with significant economic presence	3 %Estatuto Tributario art. 20-3 par. 2, as of 2026-10-26 · in force
Withholding on payments to non residents with significant economic presence (if not electing the 3 percent regime)	10 %Estatuto Tributario art. 408 inc. 8, as of 2026-10-26 · in force
VAT, general rate	19 %Estatuto Tributario art. 468, as of 2026-10-26 · in force
VAT withheld by Colombian VAT responsible payer on taxed services from non residents	100 % of the VATEstatuto Tributario art. 437-2 num. 3 and art. 437-1 par. 1, as of 2026-10-26 · in force
Related party interest bearing debt to prior year net equity, above which interest is not deductible	2:1 ratioEstatuto Tributario art. 118-1, as of 2026-10-26 · in force
Transfer pricing documentation threshold, gross equity	100000 UVTEstatuto Tributario art. 260-5 num. 1, as of 2026-10-26 · in force
Transfer pricing documentation threshold, gross income	61000 UVTEstatuto Tributario art. 260-5 num. 1, as of 2026-10-26 · in force
Country by country report threshold, consolidated group income	81000000 UVTEstatuto Tributario art. 260-5 num. 2, as of 2026-10-26 · in force
Financial transactions tax (GMF) on withdrawals and debits	0.4 %Estatuto Tributario art. 872 (4 per thousand), as of 2026-10-26 · in force
Share of GMF paid that is deductible for income tax	50 %Estatuto Tributario art. 115, as of 2026-10-26 · in force
Municipal industry and commerce tax (ICA) rate band, industrial activities	2 to 7 per thousandDecreto Ley 1333 de 1986 art. 196 (Ley 1819 de 2016 art. 342), as of 2026-10-26 · in force
Municipal industry and commerce tax (ICA) rate band, commercial and service activities	2 to 10 per thousandDecreto Ley 1333 de 1986 art. 196 (Ley 1819 de 2016 art. 342), as of 2026-10-26 · in force
General period after which a filed return becomes final	3 yearsEstatuto Tributario art. 714, as of 2026-10-26 · in force
UVT for 2026	52374 COPDIAN Resolución 000238 de 2025, as of 2026-10-26 · in force
TRM used for USD conversions (valid 24 to 26 October 2026)	3158.43 COP per USDOfficial TRM series, Superintendencia Financiera de Colombia, as of 2026-10-24 · in force
Withholding on dividends to foreign shareholders proposed in bill 004 de 2026 Cámara (in committee)	30 %Proyecto de Ley 004 de 2026 Cámara art. 14, as of 2026-10-26 · pending
Additional points for financial institutions proposed in bill 004 de 2026 Cámara (total rate 50 percent)	15 percentage pointsProyecto de Ley 004 de 2026 Cámara art. 12, as of 2026-10-26 · pending
Elective significant economic presence rate proposed in bill 004 de 2026 Cámara	5 %Proyecto de Ley 004 de 2026 Cámara art. 29, as of 2026-10-26 · pending

The rule

1. Colombian companies, permanent establishments of foreign entities and foreign legal persons that must file a return pay income tax at a general rate of 35 percent. Financial institutions, insurers and reinsurers, stockbrokers, commodity exchanges and securities market infrastructure providers with taxable income of 120,000 UVT or more add 5 points for tax years 2023 to 2027, a total of 40 percent, and pay a 100 percent advance on that surtax.
Example: Taxable income of COP 1,000,000,000: income tax of COP 350,000,000. / About US$316,613 of taxable income: about US$110,815 of tax.Estatuto Tributario (Decreto 624 de 1989), as amended by Ley 2277 de 2022 art. 10, Art. 240, first paragraph and paragraph 2, 2022-12-13 official text · verified 2026-10-26

2. A minimum effective tax applies to companies taxed under art. 240 and to free trade zone users under art. 240-1, but not to foreign legal persons without residence in Colombia. The adjusted tax rate (Tasa de Tributación Depurada) is the adjusted tax divided by the adjusted book profit before tax and may not be below 15 percent; if it is, the shortfall (adjusted profit times 15 percent, minus adjusted tax) is added to the income tax. Companies consolidated in Colombia run the test at group level and allocate the top up among members with positive adjusted profit.
Example: Adjusted book profit of COP 1,000,000,000 and adjusted tax of COP 100,000,000 (10 percent, for example after exempt income and tax credits): top up of COP 150,000,000 minus COP 100,000,000 = COP 50,000,000. / About US$316,613 of adjusted profit and US$31,661 of adjusted tax: top up of about US$15,831.Estatuto Tributario, as amended by Ley 2277 de 2022 art. 10, Art. 240, paragraph 6, 2022-12-13 official text · verified 2026-10-26

3. Companies may carry tax losses forward against ordinary net taxable income of the following 12 tax years. Shareholders may not use the company's losses against their own income. A return showing a loss stays open to review for the same period the company has to use the loss.
Example: A loss of COP 500,000,000 from tax year 2026 can be offset against taxable income up to tax year 2038. / A loss of about US$158,306 in 2026 can be used until 2038.Estatuto Tributario, as amended by Ley 1819 de 2016 art. 88 and art. 277, Art. 147, first paragraph; art. 714, fourth paragraph, 2016-12-29 official text · verified 2026-10-26

4. Dividends paid to foreign companies without their main domicile in Colombia and to non resident individuals bear 20 percent income tax, withheld at source on the gross payment. If the dividend comes from profits that were not taxed at company level (the art. 48 and 49 calculation), the company rate of art. 240 applies first and the 20 percent applies to the remainder. Dividends from taxed profits paid to a Colombian company bear a 10 percent withholding that is credited up the chain to the resident individual or foreign investor; dividends within a registered business group or control situation are exempt from that 10 percent unless the intermediate company exists to defer tax.
Cost to do it: No fee; the Colombian company reports the withholding in its monthly withholding return (art. 606).
Example: A dividend of COP 650,000,000 out of taxed profits to a foreign parent: withholding COP 130,000,000, net COP 520,000,000 before any treaty relief. / About US$205,798 declared, US$41,160 withheld, US$164,639 to the parent.Estatuto Tributario, as amended by Ley 2010 de 2019 and Ley 2277 de 2022 art. 4 and art. 12, Art. 245 (first paragraph, par. 1 and par. 2); art. 242-1 (first paragraph, par. 1 and par. 3), 2022-12-13 official text · verified 2026-10-26

5. Payments to non residents bear income tax withholding on the nominal amount: 20 percent on interest, commissions, fees, royalties, rents, personal services, know how, software and other services, and a single 20 percent on consulting, technical services and technical assistance whether rendered in Colombia or from abroad; 15 percent on interest from foreign loans of one year or more and on the financial component of cross border leasing; 1 percent on leasing of ships, helicopters and aircraft and on reinsurance premiums; 5 percent on interest on loans of eight years or more for public private partnership infrastructure; 33 percent on management or direction fees; and 10 percent on sales or services by non residents with significant economic presence that do not fit the other categories. Payments to residents of jurisdictions classified as non cooperative or of low or no taxation, or to preferential regimes, bear withholding at the general corporate rate.
Cost to do it: No fee; the Colombian payer reports what it withheld in its monthly withholding return (art. 606), signed by the statutory auditor where the company has one. Treaties may lower these rates.
Example: A royalty of COP 100,000,000 to a foreign licensor: income tax withheld COP 20,000,000. Interest of COP 100,000,000 on a two year loan from abroad: COP 15,000,000. / About US$31,661 of royalty: US$6,332 withheld. The same amount of interest on a two year loan: US$4,749 withheld.Estatuto Tributario, as amended by Ley 2010 de 2019 art. 98 and Ley 2277 de 2022 art. 61, Art. 408 and its paragraph, 2022-12-13 official text · verified 2026-10-26

6. Non residents with a significant economic presence in Colombia are subject to income tax on income from selling goods or services to customers or users in Colombia. Presence exists where there is deliberate and systematic interaction with the Colombian market (presumed with 300,000 or more customers or users in Colombia, or where prices can be shown or paid in pesos) and gross income from such transactions of 31,300 UVT or more in the current or prior year; listed digital services include online advertising, digital content, streaming, data monetisation, intermediation platforms, subscriptions, cloud and data storage, search engines and licensing of intangibles. Such a person may elect to file and pay 3 percent on total gross income from those sales instead of bearing withholding, and treaties prevail.
Example: The 2026 threshold is 31,300 UVT x COP 52,374 = COP 1,639,306,200 of gross income from Colombian customers. A platform electing the 3 percent regime on COP 2,000,000,000 of Colombian sales pays COP 60,000,000. / Threshold of about US$519,026; 3 percent on about US$633,226 of sales is about US$18,997.Estatuto Tributario, added by Ley 2277 de 2022 art. 57, Art. 20-3 (num. 1 and 2, par. 1, 2 and 4), 2022-12-13 official text · verified 2026-10-26

7. The general VAT rate is 19 percent. VAT applies to sales of goods, imports and services rendered in Colombia or from abroad; services and intangibles supplied from abroad are treated as supplied in Colombia when the direct user has its tax residence, domicile, permanent establishment or seat of business in Colombia. A VAT responsible Colombian business that hires a non resident for taxed services must withhold 100 percent of the VAT (reverse charge), which it may then credit under the general rules.
Example: Technical services invoiced from abroad for COP 100,000,000: the Colombian payer withholds COP 20,000,000 of income tax (art. 408) and self assesses COP 19,000,000 of VAT, paid to DIAN and creditable if the services relate to VAT taxed activity. / About US$31,661 of services: about US$6,332 of income tax withheld plus about US$6,016 of reverse charge VAT.Estatuto Tributario, as amended by Ley 1819 de 2016 art. 173, 180 and 184 and Ley 2010 de 2019 art. 5, Art. 468; art. 420 (lit. c and par. 3); art. 437-2 num. 3; art. 437-1 par. 1, 2019-12-27 official text · verified 2026-10-26

8. Interest on debts owed directly or indirectly to related parties, Colombian or foreign, is deductible only while the average related party debt for the year does not exceed twice the taxpayer's net equity at 31 December of the prior year; interest on the excess is not deductible. For other debts the taxpayer must be able to show DIAN, with a sworn creditor certificate, that the loan is not a back to back or guaranteed related party loan.
Example: Net equity of COP 1,000,000,000 at 31 December 2025 and average related party debt of COP 3,000,000,000 in 2026: one third of the related party interest (the share above COP 2,000,000,000) is not deductible. / Equity of about US$316,613 supports about US$633,226 of related party debt; above that, interest is disallowed pro rata.Estatuto Tributario, as amended by Ley 2010 de 2019 art. 63, Art. 118-1 (second and third paragraphs, par. 1 and 2), 2019-12-27 official text · verified 2026-10-26

9. Taxpayers with gross equity of 100,000 UVT or more at year end, or gross income of 61,000 UVT or more in the year, that transact with related parties abroad must prepare and send transfer pricing documentation (a master file and a local file). Groups with consolidated income of 81,000,000 UVT or more in the prior year must file a country by country report through the Colombian parent or a designated entity.
Cost to do it: The documentation is prepared by the taxpayer, usually with transfer pricing advisers; fees are market priced and not set by law.
Example: In 2026 the thresholds are COP 5,237,400,000 of gross equity or COP 3,194,814,000 of gross income (at the 2026 UVT of COP 52,374). / About US$1,658,229 of gross equity or US$1,011,520 of gross income.Estatuto Tributario, as amended by Ley 1819 de 2016 art. 108, Art. 260-5 (num. 1 and 2), 2016-12-29 official text · verified 2026-10-26

10. The financial transactions tax (gravamen a los movimientos financieros) is 4 per thousand of each taxed withdrawal or debit. 50 percent of the tax actually paid is deductible for income tax if certified by the withholding agent; other taxes, fees and contributions paid in the year and related to the business are 100 percent deductible, except income tax itself.
Example: Paying out COP 100,000,000 from a Colombian bank account costs COP 400,000 of tax, of which COP 200,000 is deductible. / About US$31,661 paid out: about US$127 of tax, about US$63 deductible.Estatuto Tributario, as amended by Ley 1819 de 2016 art. 214 and Ley 2277 de 2022 art. 19, Art. 872; art. 115 (first and second paragraphs), 2022-12-13 official text · verified 2026-10-26

11. The municipal industry and commerce tax (ICA) is levied by the municipality where the activity is carried out, on all ordinary and extraordinary income of the year (excluding exempt or non taxed activities, returns, discounts, exports and sales of fixed assets), at the rate set by each municipal council within 2 to 7 per thousand for industrial activities and 2 to 10 per thousand for commercial and service activities. Special rules remain for Bogotá (Decreto Ley 1421 de 1993) and other special bases set by law.
Example: A services company with COP 1,000,000,000 of taxable income in a municipality at the 10 per thousand ceiling pays COP 10,000,000 of ICA, deductible for income tax under art. 115. / About US$316,613 of income: about US$3,166 of ICA.Decreto Ley 1333 de 1986 art. 196 (from Ley 14 de 1983 art. 33), as replaced by Ley 1819 de 2016 art. 342, Ley 1819 de 2016 art. 342 and art. 343, 2016-12-29 official text · verified 2026-10-26

12. A tax return becomes final if DIAN does not notify a special requirement (the formal proposal to adjust it) within three years after the filing deadline, or after the actual filing date if filed late; a return with a refundable balance becomes final three years after the refund request.Estatuto Tributario, as amended by Ley 1819 de 2016 art. 277, Art. 714 (first and second paragraphs), 2016-12-29 official text · verified 2026-10-26

Tax	Who pays or withholds	Rate	Norm
Corporate income tax	Colombian companies, branches and permanent establishments	35% (40% for listed financial entities with taxable income of 120,000 UVT or more, 2023 to 2027)	Estatuto Tributario art. 240
Minimum adjusted tax	Companies under art. 240 and 240-1	Top up to 15% of adjusted book profit	Estatuto Tributario art. 240 par. 6
Dividend withholding, foreign shareholder	Paying company	20% (taxed profits)	Estatuto Tributario art. 245
Dividend withholding, Colombian holding company	Paying company	10%, credited up the chain; registered groups exempt	Estatuto Tributario art. 242-1
Royalties, services, technical assistance to non residents	Colombian payer	20%	Estatuto Tributario art. 408
Interest on foreign loans of one year or more	Colombian payer	15%	Estatuto Tributario art. 408
Management fees to non residents	Colombian payer	33%	Estatuto Tributario art. 408
VAT	Seller, or Colombian payer by reverse charge on foreign services	19%	Estatuto Tributario art. 468, 420, 437-2
Financial transactions tax (GMF)	Account holder, withheld by the bank	4 per thousand	Estatuto Tributario art. 872
Industry and commerce tax (ICA)	Business, to each municipality where it operates	2 to 7 per thousand industrial; 2 to 10 per thousand commerce and services	Ley 1819 de 2016 art. 342

Main federal and local taxes a foreign owned Colombian company meets, with the 2026 rate and the norm. Rates as in force on 26 October 2026; treaties may lower withholding.

Step	Rate	COP	Approx. USD
Royalty invoiced		COP 315,843,000	US$100,000
Income tax withheld and paid to DIAN	20%	COP 63,168,600	US$20,000
Net remitted to the parent through the FX market		COP 252,674,400	US$80,000
Reverse charge VAT paid by the subsidiary (creditable if linked to taxed sales)	19%	COP 60,010,170	US$19,000

US$100,000 of royalty paid by a Colombian subsidiary to a foreign parent with no treaty, at the TRM of COP 3,158.43 (COP 315,843,000). The royalty is deductible for the subsidiary if transfer pricing and other deduction rules are met.

Item	In force	Proposed	Bill article
Dividend withholding, foreign shareholders (art. 245)	20%	30%	Art. 14
Surtax for financial institutions (art. 240 par. 2)	5 points (40%), 2023 to 2027	15 points (50%)	Art. 12
Elective significant economic presence rate (art. 20-3 par. 2)	3%	5%	Art. 29

Reform tracker: Proyecto de Ley 004 de 2026 Cámara, filed 20 July 2026, in first debate in the Third Committee of the Chamber as of 26 October 2026. Nothing below is law.

Worked example

Profit out as a dividend: a foreign owned SAS with COP 1,000,000,000 (about US$316,613) of taxable profit pays COP 350,000,000 of income tax; distributing the remaining COP 650,000,000 triggers COP 130,000,000 of withholding, leaving COP 520,000,000 (about US$164,639) for the parent before treaty relief, a combined 48 percent on pre tax profit.
Profit out as a royalty: the same COP 315,843,000 (US$100,000) paid as a royalty instead of a dividend bears 20 percent withholding (US$20,000) but, if deductible, saves 35 percent income tax at the subsidiary; transfer pricing documentation and the art. 408 withholding must be in order, and the reverse charge VAT must be paid.
Shareholder loan: interest of COP 100,000,000 (about US$31,661) on a two year loan from the foreign parent bears 15 percent withholding, and only the interest on related party debt up to twice the prior year net equity is deductible.

Step by step

Register the company in the RUT, the DIAN registry that identifies income taxpayers, VAT responsible persons and withholding agents (Estatuto Tributario art. 555-2; see start/start-here).
Register for ICA in each municipality where the company carries out industrial, commercial or service activity, and check each municipality's rate and filing calendar.
Set up the monthly withholding return (art. 606) before the first payment abroad: royalties, services, interest and dividends to non residents are withheld by the Colombian payer at the art. 408 or art. 245 rates unless a treaty lowers them.
Self assess reverse charge VAT on services bought from abroad (art. 437-2 num. 3) in the same period the payment is made.
Test related party financing against the 2:1 thin capitalization limit (art. 118-1) and the transfer pricing thresholds (art. 260-5) before the year end.
File the annual income tax return and run the 15 percent minimum tax test (art. 240 par. 6); keep working papers for at least the three year review period of art. 714, longer if the return shows a loss.
Channel dividends, royalties and loan payments through the FX market and keep the FX declaration that matches the withholding certificate (see fx/fx-and-capital-controls).

Common traps

Consulting and technical assistance rendered entirely from abroad still bear 20 percent Colombian withholding (art. 408) and, as services used in Colombia, 19 percent VAT by reverse charge (art. 420 par. 3).
Management or direction fees paid abroad bear 33 percent withholding, not 20 percent (art. 408).
Paying a recipient in a jurisdiction listed as non cooperative or low tax, or under a preferential regime, raises withholding to the general corporate rate of 35 percent (art. 408 par.).
Dividends out of profits that were not taxed at company level (the art. 48 and 49 calculation) bear 35 percent first and then 20 percent on the remainder (art. 245 par. 1).
Interest on loans of less than one year from abroad is withheld at 20 percent, not the 15 percent rate for loans of one year or more (art. 408).
Back to back or guaranteed loans from unrelated lenders are counted as related party debt for thin capitalization; the borrower needs a sworn creditor certificate (art. 118-1 par. 1 and 2).
ICA is owed to every municipality where the activity takes place, not only to the domicile, under the territoriality rules of Ley 1819 de 2016 art. 343.
The 2026 bill 004 de 2026 Cámara would raise the dividend withholding to 30 percent; it was in committee on 26 October 2026, so model dividends under both rates if distributions are planned for after its possible enactment.

Sources

Related: Colombia country profile · live dashboard · central bank and release calendar · our posts on X · where Argentina is involved, see The Argentine Thread guide

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