Starting or expanding a business to Colombia is an attractive option in Latin America but it is important to understand the challenges.
Colombia is one of the most attractive economies in Latin America for international markets and foreign investment. However, it presents some challenges in terms of tax, accounting, regulatory and foreign exchange. As signatory to 13 commercial agreements, Colombia receives preferential access to a market of 1.5bn consumers for companies investing in the country to access Latin America.
Columbia is a member of the Pacific Alliance, which was created seven years ago, and includes Peru, Mexico and Chile. This group totals 57% of Latin America's foreign trade and 41% of total foreign investment in the region. The Pacific Alliance is an initiative of political, economic and regional cooperation and integration.
These countries' growth expectation for 2018 is higher than the average for Latin America and the Caribbean, according to the International Monetary Fund (IMF). The IMF expects the economy of Columbia to grow by 3%. But the complex fiscal and regulatory environment can make exploring the many opportunities at hand a tricky endeavour, which is why having local help on board is essential in order to make the most of your Colombian venture.
Starting a business
The first step to starting a business is to register the company at the Chamber of Commerce, National Tax Office (DIAN) and the Municipal Tax Authority (SDH). New Simplified Stock companies (SAS) must then deposit capital into a Colombian bank account within the next two years after their incorporation, the other type of companies must pay the capital immediately. Employees and employer are also required to be registered with several mandatory social security entities the same hiring date such as: Administrator of Professional Risks (ARL), Health Insurance Entity (EPS) Pension Fund Entity (AFP) and the Welfare Entity (CCF). The registration process takes 11 working days in total if the bank account is opened and if the company is dully registered at the Chamber of Commerce and the National Tax Authority.
Resourcing your business
Employment in Colombia is primarily governed by the Labour Code, which applies to all employers and employees in Colombia, regardless of their nationality. The Code regulates the terms and conditions of employment, such as the form and duration of the employment contracts, trial period, salary types, working hours...