Business Obligations in Colombia for Foreigners: Complete Guide 2025

Colombia has become one of the top destinations for foreign entrepreneurs looking to expand in Latin America. Whether it’s due to its strategic location, trade agreements, or growth potential, opening a business in Colombia can be a smart move. But, Beware! an active company comes with a series of business obligations you cannot overlook if you want to operate legally and avoid penalties.

This clear and updated guide explains the key legal, tax, accounting, and labor obligations that foreigners must fulfill when establishing or managing a company in Colombia.

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Legal Obligations for Foreign Companies in Colombia

1. Commercial registration with the Chamber of Commerce
   Every company, whether owned by a national or a foreigner, must register with the local Chamber of Commerce. This formalizes the company’s legal existence and must be renewed annually before March 31.
   
   
2. NIT and RUT with the DIAN
   The Tax Identification Number (NIT) is obtained by registering in the Unified Tax Registry (RUT). It’s essential for invoicing, opening bank accounts, and fulfilling tax obligations.
   
   
3. Legal representation in Colombia
   A foreign national can act as the legal representative and establish a company using only their passport. However, to open a business bank account, it’s usually required to appoint a substitute representative with a Colombian ID (CC or CE) to manage virtual banking and services.‍
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4. Legalization of foreign investment
   Foreign investment in Colombia is automatically legalized when funds are transferred through an authorized bank (IMC), with no need for the former Form 15. This ensures official registration and allows for the repatriation of capital or profits in the future under foreign exchange regulations.

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Tip: Not registering your investment may create complications when trying to move funds out of the country.

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Tax and Fiscal Obligations

1. Income tax filing - (Declaración de Renta)
   The company must submit an annual income tax return. For S.A.S. entities, this is filed as a legal entity with a general corporate rate of 35% (as of 2025).
   
   
2. Withholding tax - (Retención en la fuente)
   If your company hires vendors, employees, or makes payments subject to withholding, it must act as a withholding agent and report these to the DIAN.
   
   
3. Value-Added Tax  - ( Impuesto al Valor Agregado-IVA)
   Companies that sell taxable goods or services must declare and pay VAT monthly or bimonthly. The standard rate in Colombia is 19%.
   
   
4. Industry and commerce tax- (Industria y Comercio -ICA)
   This municipal tax ranges from 0.2% to 1% of gross income, depending on the city. Each municipality sets its own payment schedule.
   
   
5. Electronic invoicing
   Since 2021, all companies in Colombia must issue electronic invoices through DIAN-approved providers.
   

Recommended resource: You can check official calendars and updated rates directly on the DIAN website.

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Accounting Requirements for Foreign Companies

1. Accounting records
   You must maintain organized accounting in accordance with International Financial Reporting Standards (IFRS), and retain accounting books for at least 10 years.
   
   
2. Statutory auditor (Revisor Fiscal)
   ‍Companies must appoint a statutory auditor if they exceed 3,000 SMMLV (minimum legal monthly salary in force) in revenues or 5,000 SMMLV in assets. This independent public accountant oversees accounting and tax compliance.

3. Reports to control entities
   Depending on the size and activity, the company may need to report to the DIAN, the Superintendence of Companies, or the UGPP.
   
   

Example: If your S.A.S. has annual income of $723.000 USD you are required to have a statutory auditor.

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Key Labor Obligations

1. PILA registration and social security
   If you hire employees, you must enroll them in health, pension, occupational risks (ARL), and family compensation funds through the PILA platform.
   
   
2. Labor contracts and legal payments
   Employment contracts in Colombia must follow the Substantive Labor Code. You must pay legal benefits such as social security, severance, severance interest, mandatory bonuses, and vacation. There's also the service contract option, which is useful for hiring without a direct employment relationship.
   
   
3. Reports to the Ministry of Labor
   Companies must report hires, terminations, work accidents, and comply with audits or requests from the Ministry.
   

Official link: Updated labor guides are available at MinTrabajo.gov.co.

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 Colombia Tax Calendar 2025

Below is a table with the key dates of the main obligations:

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This calendar may vary depending on your business type, city, and activity. We recommend checking the DIAN annually for updates.

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FAQs About Business Obligations in Colombia

Do I need a legal representative in Colombia if I’m a foreigner?
No. You can be the legal representative using only your passport. You’ll only need a substitute with a Colombian ID (CC or CE) if you plan to open a business bank account.

Can I create a company without being in Colombia?
Yes. You can establish a company remotely through an authorized firm and legal proxy.

What taxes do I owe if my company is inactive?
Even without income, obligations such as income tax filing or commercial registration renewal still apply.

How much does a statutory auditor cost?
It depends on your company’s operations, but the average is between $500 and $1500 USD  per month.

What are the penalties for tax noncompliance?
Penalties can range from 5% fines for late filing to business closure or loss of tax benefits

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Want to Run Your Business Without Risks?

Meeting all business obligations in Colombia as a foreigner isn’t hard—when you have the right guidance and team. At Prodezk, we help entrepreneurs from all over Latin America and Europe establish companies in Colombia, stay compliant, and operate without legal or tax surprises.

Do you have specific questions about your company? Contact with us today. Our team can guide you every step of the way to ensure your investment is secure from day one.