TMT 2025

COLOMBIA Law and Practice Contributed by: Maria Carolina Pardo, Ciro Meza, Angélica Navarro and Carlos Ignacio Arboleda, Baker McKenzie

Other Taxes Additional taxes may apply depending on the type of service provided. Here, the main chal - lenges are as follows: • tax instructions are not available in full in English, instead being published in Spanish – this could pose a challenge to foreign service providers; • the Colombian tax system, especially its web - site and user platform, is cumbersome; • all tax obligations must be paid in Colombian pesos, leading to exchange rate issues and contingencies; • information requests to non-resident provid - ers do not consider data sharing restrictions applicable in the incorporation jurisdic - tion, nor that foreign service providers may not have such information, as they are not required to request it in the first place under their legislation; and • not all tax payments can be made to an international bank account – some obligations need to be paid locally through local banks. 1.3 Taxation of Digital Advertising The tax treatment of digital advertising is the same as the tax treatment of digital services. Ensuring compliance with tax laws related to digital advertising in Colombia involves several important steps: • knowing your tax obligations – understanding Colombian law and possible tax implications; • consulting with tax professionals – engaging with local tax advisors or legal experts who are familiar with Colombian tax laws and can provide guidance on compliance require - ments and help navigate complex tax regula - tions;

istered with the ITC Ministry and to pay fees and royalties. The law does not specifically regulate the offer - ing or rendering of services from abroad by sup - pliers that have no local presence, or have only a limited local presence (eg, sales, marketing, customer support). However, the law prohibits rendering telecommunications services locally without fulfilling the registration requirements. 1.2 Digital Economy Taxation The tax treatment of digital services and goods in Colombia depends on the type of service pro - vider and the type of service. Value Added Tax (VAT) Digital services provided by local or non-resident providers to Colombian consumers are subject to 19% VAT, except for cloud computing services, which are excluded. VAT is generally collected by filing VAT returns and making payments via local banks. When extraterritorial VAT applies, Colombian consumers who qualify as VAT col - lectors must use the reverse charge mechanism to withhold and remit 100% of the tax. Income Tax Since 1 January 2024, foreign digital service providers with a significant economic presence (SEP) in Colombia have been subject to income tax. These taxpayers can choose to pay the tax by either: • using the application of the withholding tax (WHT) system, where a 10% WHT is applied to payments or accruals for Colombian users/ customers; or • registering in Colombia and filing the cor - responding income tax, which is 3% on the gross income earned from sales to Colom - bian customers/users.

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