Registration and Licensing

Every new entity must register with the Tax and Customs Administration (Direccion de Impuestos y Aduanas Nacionales) and obtain a tax identification number. Registration for municipal tax purposes is compulsory in the city where the entity will engage in business. As a rule, trading or manufacturing licenses are not required. Specific permits may be necessary for some activities, particularly if the activities affect the environment. Registration with the social security system is also compulsory. For commercial purposes, a business must be registered in the mercantile register.

Price Controls

Price controls in Colombia are placed only on interest rates, public utilities rates, and the cost of basic subsistence products.

Imports and Exports

Colombia developed an open market policy during the 1990s. Many commercial and noncommercial restrictions were eliminated, along with import and export procedures and foreign exchange controls, as a result of the open market policy.

Colombia is a signatory to economic integration agreements intended to increase international trade under favorable tariff conditions. As well as being a member of the Andean Pact (Pacto Andino), Colombia is a member of the Latin America Integration Agreement (Asociaci1/2n Latinoamerican de Integraci1/2n-ALADI), along with Argentina, Bolivia, Brazil, Chile, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela. Colombia is also a member of the Group of 3 (G-3), with Mexico and Venezuela, and a signatory to the General Agreement on Tariffs and Trade (now the World Trade Organization).

Imports

Every company importing goods into Colombia must fill out an import return and a foreign exchange currency application form. They must also register with the central bank. In certain circumstances, long-term imports are treated as a foreign indebtedness, and the importer must make a deposit with the central bank. Special imports, such as agricultural and pharmaceutical products, are subject to additional controls from the Agricultural Ministry and Public Health Ministry.

The special rules for imports are as follows:

  • Temporary imports for short or long periods may be admitted into Colombia. Under a temporary import scenario, import duties are suspended and may be eliminated if the equipment imported is reexported within a stated term.
  • The law contemplates exemptions to the imposition of value added tax and customs duties on imports. The value added tax rate is generally 16%. Customs duty rates are 5%, 10%, and 15%.
  • Drawback, allowed in Colombia's Plan Vallejo (see 2.02), permits a total or partial refund of taxes paid on the import of raw materials or capital assets that are used to manufacture finished products to be exported.

Colombia has adopted the Classification and Merchandise Coding System of the Andean Pact (Nomenclatura Arancelaria Comen de los Paðses Miembros del Pacto Andino-NANDINA). NANDINA is based on a designation system and a merchandise coding structure.

Exports

Export and foreign exchange returns are required for formalizing an export operation. The returns must be filed with the central bank.

Exporters must sell foreign currency proceeds from exports to the exchange market.

Technology Contracts

Patents, franchises, trademarks, and technical services agreements are allowed in Colombia. These contracts must be registered with the Colombian Institute of Foreign Trade (INCOMEX) to receive tax benefits and legal protection.

Copyright Law

Copyright protection can be obtained for literary, scientific, technical, and artistic works and expressions. A copyright grants the holder exclusive rights to use, exploit, and reproduce the copyrighted work.

Competition and Consumer Protection Laws

Competition law, recently enacted in Colombia, is designed to prevent unfair competition and practices in the market that may create monopolies in segments of industry or markets.

Consumer protection law also establishes procedures to protect consumers.

Environmental Concerns

Law 99 of 1993, relating to environmental protection, established controls, regulations, proceedings, and requirements that must be followed by business operators. The law created the Environmental Ministry, a government entity charged with the protection of the environment and the abatement of air, water, and soil pollution. The Environmental Ministry also reviews and controls solid waste disposal, noise control, radiation, and the disposal of toxic substances. The ministry has the authority to establish how environmental licenses are granted and to impose penalties for noncompliance with environmental laws.

Other government agencies also have environmental regulatory powers; for example, the Transportation Ministry is responsible for the control of the levels of contamination in automobile emissions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

For further information contact Mario Andrade, Deloitte & Touche, Santafe de Bogota, Colombia on Tel: +57 1 256 1548, Fax: +57 1 256 1557