Colombia taxes residents on worldwide income and non-residents on Colombia-source income only. Colombia operates a self-assessment system, with the tax authority (DIAN) conducting post-filing review and audit.
The Colombian tax year is the calendar year. Individual filing deadlines are staggered across several weeks (typically August-October of the following year) based on the last digits of the taxpayer's ID number, confirmed annually by DIAN; corporate filing deadlines are similarly staggered based on the entity's NIT.
Colombia's headline corporate income tax (CIT) rate is 35%.
The headline personal income tax (PIT) rate is 39%.
The standard VAT/GST (or equivalent consumption tax) rate is 19%.
An individual is a Colombian tax resident if present in Colombia (continuously or not) for 183 days or more within any 365-day period (spanning two calendar years if applicable, with residency assigned to the second year once the threshold is crossed). Colombian nationals can also be deemed resident regardless of days present if: their spouse or dependents are Colombian tax residents; 50% or more of their income, assets, or property is sourced in or managed from Colombia; they fail to provide DIAN with proof of foreign tax residency on request; or they are fiscally resident in a jurisdiction Colombia treats as a tax haven. Residents are taxed on worldwide income; non-residents at a flat 35% on Colombia-source income only.
A non-Colombian entity has a Colombian permanent establishment through a fixed place of business or a dependent agent habitually concluding contracts in Colombia on the entity's behalf, following the OECD Model Treaty definition as applied under Colombian domestic law and any applicable tax treaty.
Colombia's ECE regime (Entidades Controladas del Exterior, Estatuto Tributario Articles 882-893, introduced by Law 1819 of 2016) applies to both individuals and corporate entities, requiring a Colombian resident holding 10% or more of a foreign entity subject to a lower effective tax rate to include their proportionate share of the foreign entity's passive income directly in their own Colombian tax return, regardless of whether that income is actually distributed.
Colombia's thin capitalization rule (Estatuto Tributario Article 118-1, as most recently modified by Decree 761 of 2020 following Law 2010 of 2019) limits deductible interest on related-party debt, local or foreign, to a 2:1 debt-to-equity ratio, calculated against the entity's net equity as of December 31 of the prior tax year, down from the original 3:1 ratio that applied when the rule was first introduced in 2013. Interest attributable to debt exceeding this ratio is non-deductible. Exceptions apply to businesses in unproductive or pre-operational phases, factoring companies with under 50% related-party operations, special-purpose infrastructure project entities, and entities supervised by the Superintendence of Finance.
Colombia does not use an elective check-the-box classification system; entity classification generally follows the entity's actual legal characteristics. Colombia does not have a comprehensive ATAD2-style anti-hybrid regime, though its transfer pricing and CFC rules (see CFC section above, the ECE regime) address related cross-border profit-shifting concerns.
No foreign bank account or foreign financial asset reporting regime exists requiring residents to separately disclose foreign accounts; foreign income is reported through the standard annual tax return.
Colombia does not provide a broad participation exemption for foreign dividends in the European sense; dividends from a foreign subsidiary are generally taxable, with relief from double taxation available through Colombia's foreign tax credit system and, for ECE (CFC)-attributed income specifically, mechanisms to avoid double-counting profits already taxed under the ECE regime on subsequent actual distribution.
Colombia has a real foreign tax credit regime available to both individuals and companies for foreign tax paid on foreign-source income also taxed in Colombia, capped at the Colombian tax otherwise due on that income.
Colombia maintains approximately 15 double tax treaties, a comparatively narrow but growing network reflecting Colombia's relatively recent (2020) OECD accession. Colombia has no comprehensive income tax treaty with the United States, though a Tax Information Exchange Agreement is in place.