COLOMBIA Law and Practice Contributed by: Jaime Trujillo, Juan David Velasco, Natalia Ponce de León and Angelica Navarro, Baker McKenzie S.A.S.
5.2 Taxes Applicable to Businesses 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/
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. 5. Tax Law 5.1 Taxes Applicable to Employees/ Employers 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 applica - ble 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 con - tribution 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 contribu - tions to certain private and public entities that provide services to the community related to welfare, education and children’s rights (local - ly referred as parafiscales ), which collectively amount to 9% of the employee’s salary.
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