Company Formation & Tax in Colombia
A rising Andean hub with the region's most founder-friendly vehicle — the single-shareholder S.A.S. — set against a 35% corporate tax and 19% VAT.
Colombia applies a 35% corporate income tax and a 19% VAT, but its defining feature for founders is the Sociedad por Acciones Simplificada (S.A.S.) — a single-shareholder, single-document company that can be formed without a notary and has made Colombia one of Latin America's easiest places to incorporate. Bogotá, Medellín and the free-trade zones anchor a growing services, technology and nearshoring economy.
The headline numbers
| Tax | Rate |
|---|---|
| Corporate income tax | 35% |
| Free-trade-zone corporate rate | 20% (qualifying industrial users) |
| VAT (IVA) standard | 19% |
| Dividend withholding (non-resident) | 20% |
| Dividends from untaxed profits | Grossed up at 35% + dividend rate |
IVA at 19% applies to most goods and services, with reduced 5% and exempt categories. Dividends paid from already-taxed corporate profits carry a withholding tax; where profits were not taxed at company level, an additional layer applies. A financial-transactions tax (GMF, "4x1000") also applies to bank movements.
What shapes the effective burden
- Free-trade zones (Zonas Francas) — qualifying industrial users enjoy a reduced 20% corporate rate, with customs and VAT advantages on imports.
- Surcharges — financial institutions and certain extractive sectors face additional points on top of the 35% base.
- Presumptive and minimum-tax rules — a minimum effective tax floor applies to large taxpayers.
- Treaty network — a growing set of double-tax treaties and the Andean Community regime can reduce cross-border withholding.
Forming the company
The S.A.S. is formed by registering a constitutive document with the local chamber of commerce (Cámara de Comercio), obtaining a NIT tax identification from DIAN, and opening a bank account. A single shareholder suffices, 100% foreign ownership is permitted, and there is no minimum capital requirement. A legal representative must be appointed; a resident is not strictly required but is practical for banking and compliance. Foreign investment must be registered with the Banco de la República. Annual corporate tax and VAT filings apply.
Frequently asked questions
What is Colombia's corporate tax rate in 2026?
35% is the general corporate income tax rate. Qualifying free-trade-zone industrial users are taxed at 20%, and some sectors face surcharges.
How are dividends taxed in Colombia?
Dividends to non-residents from taxed profits carry a withholding tax; dividends from profits not taxed at company level are grossed up and taxed at the corporate rate plus the dividend rate, subject to treaty relief.
What is the VAT rate in Colombia?
19% standard, with reduced 5% and exempt categories for certain goods and services.
Can a foreigner own a Colombian company fully?
Yes — 100% foreign ownership is permitted, and an S.A.S. can be formed with a single foreign shareholder. Foreign investment must be registered with the central bank.
Official sources
- DIAN — corporate income tax and VAT
- Cámara de Comercio de Bogotá — company registration
- Banco de la República — foreign investment registration
This guide is general information prepared by A.R.M. Management and is current as at July 2026. It is not legal or tax advice; surcharge and free-zone eligibility carries conditions and rules change. Confirm against DIAN, or with an advisor, before acting.
Structure a Colombian company the right way.
A.R.M. Management advises founders and investors on Colombian incorporation, S.A.S. structuring, free-trade-zone regimes and cross-border tax across the Andean region. Begin with a confidential conversation.