Doing Business 2025 - English Version by rsmco.co

Doing Business Colombia

2025

English Version

Exemption from liability

By viewing, reading or using this Doing Business newsletter, you agree to this disclaimer.

is Newsletter has been prepared and provided by RSM Colombia SAS (RSM Co.) exclusively for your information. While RSM Co. has made eﬀorts to ensure the accuracy of the content, material and information in this Newsletter (the “Newsletter Content”), such content does not constitute tax, legal, ﬁnancial strategy or business advice or recommendations. RSM Co does not warrant that the content in this document is accurate, complete or up to date. Your use of the Newsletter or its Content is at your own risk.

e Content of this Newsletter includes information compiled by our specialists and collaborators, subject to filtering and analysis for inclusion. It may also include comments from RSM Co. specialists and allies. e information in this Newsletter may not reflect the most recent legislative, regulatory or economic changes and is provided for reference only. Users are expressly cautioned that the information provided in this Bulletin does not constitute legal, financial, accounting, investment or other professional advice. Users should consult with competent professional advisors for specific advice before making any decisions based on this information.

RSM Co does not guarantee the accuracy, completeness, timeliness or suitability of the information presented. No liability is assumed for errors or omissions, or for any loss or damage arising from the use of or reliance on this Bulletin.

e use of the information contained in this Newsletter is at the sole responsibility of the user. RSM Co shall not be liable for any consequences arising from the interpretation or application of the information provided herein.

RSM Co. does not control any websites operated by third parties or companies from which certain data was obtained or their content may link. RSM Co assumes no responsibility for the activities or operations of such websites, nor for the content or service they provide.

To the maximum extent permitted by law, RSM Co. assumes no liability for:

•Any inaccuracies or omissions in the data or its Content;

•Any loss of data, proﬁts, goodwill, anticipated savings, revenue or business, or for any special, indirect, incidental, consequential, punitive or punitive damages or wasted expense, whether in contract, tort or other legal theory relating to the Bulletin or its Content.

•Any loss, damage, cost or expense of any kind incurred in connection with the viewing, access, use or inability to use the related information, or the Content of the Bulletin.

By viewing, reading or using this document, you release RSM Co from all liability. Due to the nature of electronic publishing and the Internet, and the fact that your access to the Newsletter involves functions beyond the control of RSM Co, RSM Co shall not be liable for any technical problems you may experience with the Newsletter or its Content. RSM Co reserves the right to withdraw access or modify its use or its Content.

1.Introduction

A.Colombia, a business destination on the rise according to the World Bank - World Bank Ranking

2.Current economic and investment context

3.Table of comparative indicators

4.Key Investment Sectors 2025-2030

5.Foreign investment in Colombia - Legal framework

A.Incorporation of companies

B.Investor protection

C.Foreign investment regime

D.Insolvency resolution

E.Corporate governance

F.Registration and control of foreign companies

G.Intellectual property protection

H.Financial legislation in Colombia

I.Dispute resolution

J.Visas in Colombia

K.Transparency and anti-corruption

6.Tax Regime

A.Fiscal and tax obligations

B.National Taxes

C.Territorial Taxes (Municipal and departmental)

D.Compliance with formal duties

E.Tax beneﬁts and incentives

F.Tax Mechanisms

G.Transfer Pricing Rules

7.Key aspects of foreign trade and international trade for doing business

A.International treaties and trade agreements

B.Customs regime

C.Foreign exchange regulation

D.FTAs and double taxation elimination agreements

8. Labor Regime

A. Employment contracts and conditions

B. Labor market

C. Pension reform

D. Labor reform vs. current legislation

9. The impact of digital transformation on organizations: perspectives and challenges.

10. ESG in Colombia: Environmental, Social and Governance (ESG) Criteria

11. Authors and RSM experts

12. Bibliography

1. Introduction

Foreign direct investment in Colombia is inﬂuenced by several factors, such as political momentum, economic context, history, geography, climate, regulations and trade policies.

is document has been prepared by RSM Colombia to provide general information for reference purposes only, to assist in understanding potential business opportunities in Colombia. As such, it is not a substitute for professional advice. In addition, because market conditions and legal regulations change over time, it is recommended that it be updated annually.

Colombia, an up-and-coming business destination according to the World Bank

As of 2025, the World Bank has initiated the publication of the new “Business Ready” model, which replaces the Doing Business report issued until 2021. RSM invites readers to consult this report for further analysis.

https://www.worldbank.org/en/businessready

What is Business Ready?

Business Ready (B-READY) is a new World Bank project that assesses the global business and investment climate. It replaces and improves upon the previous Doing Business, providing an annual assessment of the business environment. e goal is to balance measurements of the legal framework and actual implementation, ensuring comparable data across economies.

is report positions Colombia as an attractive market for investment, ranking it 12th out of 50 economies evaluated. e country stands out for its agility in the creation of companies, favorable conditions for business location and access to ﬁnancial services, reﬂecting a competitive environment and a solid regulatory framework. However, there are challenges in areas such as public services, labor and taxes that entrepreneurs should consider.

On the next page you will ﬁnd the B-Ready Table where you can check Colombia's status in this ranking.

Ranking Colombia | B – Ready World Bank

Hungary

Portugal

Georgia

Slovak Republic

Colombia

Bulgaria

Romania

Greece

Mexico

Croatia

Estonia

Montenegro

Hong Kong, SAR of China

Singapore

Costa Rica

Philippines

Rwanda

North Macedonia

Peru

Togo

Morocco

Côte d'Ivoire

Bosnia and Herzegovina

New Zealand

Ghana

Viet Nam

Botswana

Kyrgyz Republic

Tanzania

Mauritius

Table of results

B-Ready 2024, by pillar

Estonia

Singapore

Croatia

Portugal

Hungary

New Zealand

Slovak

Republic

Rwanda

Colombia

Greece

Bulgaria

Costa Rica

Indonesia

Georgia

Romania

Hong Kong, SAR of China

Peru

Morocco

Mexico

Mauritius

North Macedonia

Viet Nam

Tanzania

Philippines

Paraguay

Togo

Nepal

Montenegro

Botswana

Ghana

Retrieved from https://www.worldbank.org/en/businessready

Singapore

Georgia

Rwanda

Estonia

Hong Kong, SAR of China

New Zealand

North Macedonia

Bulgaria

Kyrgyz Republic

Viet Nam

Nepal

Slovak Republic

Montenegro

Hungary

Portugal

* Bangladesh

Bosnia and Herzegovina

Mauritius

Samoa

Croatia

Botswana

Barbados

Colombia

Lesotho

Pakistan

Romania

Togo

Seychelles

Tanzania

Mexico

Quintil: Superior Segundo Tercero Cuarto Inferior

2. Current economic and investment context in Colombia

As a brief introduction to Colombia's current economic outlook, by the end of 2024, the annual inﬂation rate was reduced by 8.1 percentage points (pp.) since March 2023 and Banco de la República expects it to continue converging to the entity's proposed target of 3%.

e members of the Board of Directors of Banco de la República agreed in highlighting the progress achieved in 2024 in controlling inﬂation and its convergence towards the target, thanks to a monetary policy that, despite being restrictive, allowed for the strengthening of domestic demand and the recovery of economic growth, closing at 1.7% according to Departamento Administrativo Nacional de Estadística (“DANE”), the national department of statistics in Colombia.

In relation to the Consumer Price Index (“CPI”), DANE stated that in December 2024 the annual variation of the CPI was 5.20%, that is, 4.08 percentage points lower than that reported in the same period of the previous year, being 9.28%. us, in 2024, inﬂation experienced a constant deceleration. Considering the monetary policy and as a result of inﬂation control, the unemployment rate was reduced to 10.2% according to the Continuous Household Survey (ECH) conducted by DANE. e Board of Directors of Banco de la República decided to maintain the interest rate at 9.5%.

According to several economic sources, and derived from the challenges at global, regional and national levels, Foreign Direct Investment (FDI) in Colombia fell 17.6% in 2024, totaling US$10,808 million, equivalent to a fall of US$2,300 million form the level in 2023. e mining-energy sector, despite having suﬀered a 24.6% contraction in 2024, continues to be one of the most attractive sectors for foreign capital, representing 71.8% of total FDI received in 2024.

However, we mention the recent investment announcements made by Ecopetrol S.A. which are estimated in a range between $24 COP billion and $28 COP billion, which allows us to foresee a 2025 with better expectations for this sector.

In 2025, foreign direct investment (FDI) in Colombia is expected to continue its recovery, driven by macroeconomic stability. According to Banco de la República, FDI is projected to grow around 2.6%, driven mainly by investments in strategic sectors such as infrastructure, technology and manufacturing.

Now, according to the external debt report prepared by Banco de la República, at the end of September 2024, the balance reached USD $197,361 million (m), which represents 47.9% of GDP, and a decrease with respect to the same period of 2023.

By sector, the balance of public external debt represents 57% of the total and that of the private sector 43%. Of the total amount of external debt, 16% corresponds to intercompany loans with a direct investment relationship.

erefore, it is essential for foreign investors to comply with the legal, corporate, tax, customs and exchange requirements in order to guarantee a smooth investment process in the country.

ese regulations are intended to ensure that investors operate within Colombia's legal framework and contribute to its development and economic growth.

In addition, legal instruments, such as non-discrimination clauses in bilateral investment agreements, provide foreign investors with security and stability, which are crucial for medium- and long-term investments.

Such agreements prohibit discriminatory practices and provide investors with a fair and transparent investment environment, enabling them to make informed investment decisions.

3. Comparative table of indicators

(CPI, annual % change, eop)

(PPI, annual % change, aop)

(%, eop)

COP (per USD, eop)

* Data adapted from FocusEconomics (2025), Colombia: Economic Indicators and Forecasts*.

* Retrieved from https://www.focus-economics.com/es/countries/colombia/.

* Banco de la República (2025). Demographic projections. International Monetary Fund (2025). Global economic outlook. DANE. (2025). Production and sales indicators. Ministry of Finance and Public Credit (2025). Employment report. Banco de la República (2025). Inﬂation report. Banco de la República (2025). Monetary policy.

Obligation to appoint Statutory Auditor in 2025

By the year 2025, those entities or businesses that equal or exceed the number of tax auditors will be required to have a statutory auditor:

$ 6.500 mm $ 3.900 mm $ 42.705 mm

Other companies required to have a statutory auditor (art 203 CdeC):

• Joint stock companies

• Branches of foreign companies

• Companies in which the administration does not correspond to all the partners (when at least 20% of the capital of the company, excluding the administration, so provides).

Income Tax Return in 2025

Individuals who are required to ﬁle income tax returns for the taxable year 2024:

Gross net worth over $211,792,000 (4,500 TVU)

Total purchases and consumption over $65,891,000 (1,400 TVU)

Total bank deposits, deposits or ﬁnancial investments over $65,891,000 (1,400 TVU)

Gross income equal to or over $65,891,000 (1,400 TVU)

Purchases with Credit Cards over $65,891,000 (1,400 TVU)

Data adapted from Dirección de Impuestos y Aduanas Nacionales (2025). Tax and customs information.

4. Key Investment Sectors for 2025-2030

According to the National Administrative Department of Statistics (DANE), Colombia will focus on boosting several strategic industries between 2025 and 2030, creating signiﬁcant opportunities for international investors. Key sectors include:

• Agribusiness: Export projects for agricultural products, processed foods and sustainable value chains.

• Renewable Energy: Investments in solar, wind and biomass energy, aligned with sustainability commitments.

• Health and Life Sciences: Creation of a regional hub in health services, biomedical research and pharmaceutical production.

• Technology and Innovation: Incentives for foreign companies in software, cybersecurity, ﬁntech and process automation.

• Infrastructure: Improvement of roads, ports and airports to strengthen logistical connectivity.

• Tourism: Development of sustainable, cultural and nature tourism.

• Fashion and Textiles: Colombia has a diversified and high quality product offer, which is supported by qualified and trained human talent.

Colombia presents itself as an attractive destination for both local and foreign investment, thanks to its economic diversiﬁcation and opportunities in key sectors such as agribusiness, renewable energy, technology and telecommunications, tourism, and construction and infrastructure. With sustained economic growth projections, a favorable environment for foreign investment and an expanding market, Colombia oﬀers a promising outlook for companies looking to expand their operations.

is economic environment is a key factor in the country's economic development, ensuring a prosperous and sustainable future for all.

5.Legal framework for foreign investment in colombia

Colombia has developed a robust and attractive regulatory framework for foreign investment, based on constitutional principles such as the protection of freedom of enterprise and private initiative. is legal structure guarantees legal certainty and facilitates the entry of capital into the national territory, allowing non-resident investors to establish operations through various legal entities, each designed to respond to the speciﬁc needs of diﬀerent business models.

e main advantages and opportunities oﬀered by the country in each of these ﬁelds

It is important to highlight recent legal reforms that have positively impacted the business environment in Colombia. For example:

•Law 2294 of 2023, which promotes sustainable development and business competitiveness.

• e provisions of the Code of Commerce that regulate the permanent activities of branches of foreign companies, guaranteeing their supervision by the Superintendence of Companies.

•Colombia's adherence to international anti-corruption conventions, such as the OECD Anti-Bribery Convention, which strengthens the transparency framework.

•

Incorporation of Companies

Most commonly used types of corporate vehicles

According to Oﬃcial Letter 220-165977 of the Superintendence of Corporations, the legal framework for foreign investment is regulated by the Exchange Regime (Resolution 8 of 2000) and the International Investment Statute (Decree 2080 of 2000). In addition, Circular DCIN 83 of the Bank of the Republic establishes the registration formalities for these operations.

Foreign companies may be shareholders of Colombian companies in any percentage, even up to 100%, without affecting the nationality of the Colombian company, as long as its registered office is in the country (Oficio 220-034451 of 2024).

Likewise, foreign investors enjoy equal treatment with national investors, according to the principle set forth in Article 2 of Decree 2080 of 2000.

In Colombia, the legal structures most commonly used by foreign investors are the following:

Sociedad por Acciones Simpliﬁcada (S.A.S.)

e preferred type of company by both foreign investors and local entrepreneurs due to its

ﬂexibility in incorporation and operation. e incorporation of this type of company represents approximately 54% of the commercial companies in the country.

Its main advantages include:

•Incorporation by means of a private document, without the need for a public deed.

•Flexibility in the regulation of relations between shareholders and in the structuring of classes of shares.

•Shareholders' liability is limited to the amount of their contributions.

•Possibility of incorporation with a single shareholder, eliminating the need for a plurality of partners.

•Undeﬁned corporate purpose, allowing greater ﬂexibility in commercial activities.

Foreign investment protection under S.A.S. S.A.S. is highly attractive for foreign investors, since its regulation allows:

•Adaptability in bylaws, corporate governance structures and proﬁt distribution.

•It does not require minimum capital or the immediate constitution of the total subscribed capital, which facilitates its ﬁnancing, and its payment can be made up to two (2) years after its subscription.

•Greater ﬂexibility compared to other types of companies for the development of

• business in Colombia.

• Possibility of establishing diﬀerent classes of shares and economic rights.

Branch of a foreign company is option is commonly used by foreign investors, given the exchange beneﬁts and tax incentives that may be applicable, as well as the management from the parent companies in the companies from which the company to be executed originates.

is type of corporate vehicle oﬀers multiple legal, operational and economic advantages, which include:

• Full legal recognition

• Possibility to operate under the same corporate purpose as the parent company

• Access to a transparent tax and accounting regime

• Equal participation conditions in the local market

• Direct liability of the parent company and the ability to engage in insolvency proceedings strengthen legal certainty and trust in this structure

Foreign investment protection under branch model

Branches allow foreign investors to operate directly in Colombia without incorporating a new entity. However, the responsibility falls on the parent company, which may represent a risk in case of litigation or ﬁnancial contingencies in Colombian territory.

Sociedad

Anónima (S.A.)

Traditional structure ideal for large investment projects and companies interested in going public.

e main features include:

• Capital divided into freely negotiable shares.

• Limited shareholder liability.

• Stricter requirements in terms of supervision and control, which increases investor conﬁdence.

Foreign investment protection

By having clear rules for the issuance and negotiation of shares, the S.A. oﬀers legal certainty to foreign investors interested in participating in large-scale projects.

Its more formal corporate governance structure provides greater controls and transparency in management, which is attractive for large investments or for companies with multiple shareholders.

Other corporate forms in Colombia

In addition to the aforementioned options, there are other types of companies such as:

Sociedad de Responsabilidad LimitadaLimited Liability Company (Ltda.) :

Must be incorporated by public deed with a minimum of two (2) partners, who will be liable up to the amount of their contributions, except for obligations arising from labor or tax matters, in which case they will be jointly and severally liable.

Any amendment to the bylaws or transfer of shares must also be made by means of a public deed. Its name must always be followed by the expression "Limitada" or "Ltda".

Sociedades en Comandita - Limited Partnerships: ere are two types of partnerships (simple and joint stock) and are characterized by having two types of partners: managing or general partners with unlimited liability, and limited partners with liability limited to their contributions.

Sociedades Colectivas - General Partnerships:

All partners are jointly and severally liable for the corporate operations.

Cooperatives: Non-proﬁt organizations where workers or users are simultaneously contributors and managers of the company (only recommended in the case of investments with a view to opening a ﬁnancial institution).

However, in practice, S.A.S. companies, branches of foreign companies and S.A. companies are the most commonly used vehicles due to their ease of management and ﬂexibility for foreign capital.

Operation and statutory reforms

Operation

In general, commercial companies do not require prior authorization from any public authority in order to operate once incorporated.

As an exception, commercial companies engaged in ﬁnancial, stock market or insurance activities, as well as any other activity related to the management, use and investment of funds collected from the public, require prior authorization from administrative authorities such as the Superintendency of Finance. is is the case of banks, trust companies, stock exchanges, brokerage ﬁrms and insurance companies, among others.

Statutory reforms

As a general rule, amendments to the corporate bylaws do not require authorization from the authorities, except in speciﬁc cases:

• Corporate reorganizations: spin-off processes are subject to the verification of special publicity and call procedures, both for partners or shareholders as well as for creditors, unless the capital is sufficiently robust to provide a guarantee to the state authority.

• Reduction of capital with e ective reimbursement of contributions: Requires prior authorization by the Superintendence of Corporations.

e decision to amend the bylaws must be approved at a meeting of the board of partners or shareholders' meeting, through the preparation of minutes that include all legal and statutory requirements, and depending on the type of company, it may or may not be notarized.

Sociedades por Acciones SimpliﬁcadaSimpliﬁed Joint Stock Companies (S.A.S.)

Parent company and subordinated companies

Groups of companies and “Control”

A company is subordinated or controlled when its decision-making power is subject to the will of one or more other legal or natural persons, who are called parent company (in the case of a legal person) or controlling company (in the case of a natural person). Such control may be economic, decision-making or commercial.

Control may be exercised primarily through:

• A majority or decisive ownership interest in the subsidiary’s share capital.

• e execution of a contract or legal act that allows the dominant inﬂuence over the management bodies of the controlled company.

If the subsidiary is directly subject to such control, it is referred to as a subsidiary (“ﬁlial”). If the control is exercised with the involvement or through other subsidiaries of the parent company, it is referred to as an aﬃliate

To determine the existence of a corporate group, in addition to the control relationship, there must also be unity of purpose and direction among the various entities. Unity of purpose and direction exists when the existence and activities of all entities aim toward achieving a goal set by the parent company, by virtue of the direction it exercises over the group, without aﬀecting the individual development of each entity’s corporate

Declaration of Control Situation and/or

In accordance with the provisions of article 30 of Law 222 of 1995, if within thirty (30) days

following the establishment of the control situation and/or business group it is not declared before the Commercial Registry, the Superintendence of Companies may declare it “ex oﬃcio” or at the request of any interested party and will order its registration in the Commercial Registry.

Failure to register may result in ﬁnes of up to two hundred (200) current legal monthly minimum wages.

Financial Statements and Proﬁts

Financial Statements

e purpose of ﬁnancial statements is to serve as a means of information to understand the resources controlled, the obligations, the changes experienced, and the results obtained during the period. Commercial companies must close their accounts and produce general-purpose ﬁnancial statements at least once a year, as of December 31.

Proﬁts

Profits shall be distributed based on financial statements prepared in accordance with generally accepted accounting principles, in proportion to the paid portion of the nominal value of the shares, quotas, or ownership interests of each partner, unless otherwise validly provided in the agreement. Clauses that deprive any shareholder or partner of all participation in the profits shall be considered void.

Capital Reduction

It is possible to carry out a statutory amendment consisting of a capital reduction with a cash reimbursement of contributions subject to prior authorization request to the Superintendence of Companies, which will grant authorization when any of the following

circumstances occur:

• e company has no external liabilities.

• Once the reduction is made, the company’s assets represent no less than twice the amount of its external liabilities.

• e company’s creditors expressly and in writing accept the reduction, regardless of the amount of the company’s assets. ere is a general authorization regime for capital reductions, with exceptions for speciﬁc cases, such as companies with overdue obligations exceeding 10% of external liabilities, companies with bond issuance obligations, pension liabilities, among others.

• e same procedure applies to the reimbursement of share placement premiums.

Liquidation of Companies

When the liquidation of a company or branch is carried out at the will of its shareholders or parent company, the process includes the following stages:

Disolution

e ﬁrst stage begins when the general shareholders' meeting or the competent body of the parent company decides to dissolve the company or branch and appoint liquidators.

e legal capacity of the company is then restricted to acts aimed at immediate liquidation, and the phrase "in liquidation" must be added to the company’s name.

e causes for dissolution include:

• Expiration of the term of duration

• Impossibility of carrying out the company’s corporate purpose Initiation of judicial liquidation proceedings

• Will of the shareholders

• Causes established in the company’s bylaws

• Failure to meet the going concern assumption (a special cause that replaced the previous cause of losses)

Liquidation

e stage of a liquidation includes:

• Notices and Inventory: e liquidator must notify the DIAN (tax authority), make the process public by publishing a notice in a newspaper, request authorization from the Ministry of Labor when necessary, and prepare a ﬁnancial statement of inventory. Stock corporations and branches of foreign companies under the supervision or control of the Superintendence of Companies must submit this statement for approval if the assets do not cover external liabilities or if there are pension liabilities, bonds, or pension securities.

• Realization of Assets and Payment of Liabilities: Conversion of assets into liquid funds for the payment of obligations.

• Final Liquidation Account and Distribution of the Remainder: Preparation of the ﬁnal account indicating how the remaining assets will be distributed among shareholders or the parent company, followed by the extinction of the legal entity.

e process may vary depending on the corporate purpose and the Superintendence overseeing the company or branch.

Beneﬁts of Foreign Investment in Colombia

Colombia has implemented policies that encourage foreign investment, including:

• Ease of capital repatriation: Investors can remit proﬁts without restrictions, provided they comply with foreign exchange regulations.

• Stable regulatory environment: Legal certainty is a key factor in attracting foreign investment.

• Equal conditions: Colombian law guarantees equal treatment for both domestic and foreign investors.

Periodic Obligations

Companies and branches must comply with periodic obligations required by various Colombian authorities, including:

• Annual renewal of the commercial registration

Holding at least one ordinary shareholders’ or partners’ meeting (within the ﬁrst three months of each year or on the date stipulated in the bylaws)

• Filing of ﬁnancial statements with the Chamber of Commerce of the main domicile Reporting of ﬁnancial statements to supervisory entities when applicable

• Declaration of control situation and business group when applicable

• Registration of Beneﬁcial Owners before the National Directorate of Taxes and Customs (DIAN), in accordance with applicable regulations, and updating the information in case of any changes

Timely compliance with these obligations is essential for the proper operation of foreign investment in Colombia and to avoid administrative sanctions that may aﬀect business operations in the country.

Registro Único de Proponentes (RUP)

Sole Registry of Bidders

RUP is a legal registry managed by the Chambers of Commerce nationwide, intended for the registration of individuals or legal entities, both domestic and foreign, who wish to contract with government entities to provide works, goods, or services—except for the speciﬁc cases exempted by law.

is registry aims to verify the eligibility requirements of candidates seeking to become state contractors by assessing their experience, legal, organizational, and ﬁnancial capacity. is is done through the registration and classiﬁcation of executed contracts submitted to the corresponding Chamber of Commerce.

By registering in the RUP, bidders gain several beneﬁts:

• Public transparency regarding their eligibility for potential procurement processes Eligibility to participate in bids with government entities

• Issuance of a certiﬁcate that serves as full proof of the registered information, as long as it remains valid

e facts

Colombia oﬀers beneﬁts to foreign investment, such as ease of capital repatriation and a stable regulatory environment.

Investor Protection

Colombia has been recognized for its favorable legal framework for investor protection, ranking sixth in the world since 2020. is area includes aspects such as shareholder rights, equitable treatment of majority and minority shareholders, and the responsibilities of corporate boards regarding ﬁnancial disclosure and compliance with accounting standards.

Shareholder Rights

Shareholder rights are fundamental to ensuring eﬀective and transparent corporate governance.

ese include:

• Shareholders have the right to participate in key company decisions, especially through voting at the General Shareholders’ Meeting.

• ey are entitled to receive clear, timely, and reliable information about the company’s activities, as well as about the rights and obligations associated with each type of share prior to acquiring them.

• Shareholders have the right to share in the company’s proﬁts, or when applicable, to assume losses in proportion to their shareholding.

• In the case of preferred dividend shares without voting rights, holders are entitled to a minimum preferred dividend and preferential reimbursement of their contributions in the event of liquidation, among other rights set forth in the subscription regulations.

Equitable Treatment of Majority and Minority Shareholders

Equitable treatment of shareholders is a fundamental principle of corporate governance in Colombia.

Key aspects include:´

Companies must ensure equality in shareholders' rights, including minority shareholders, promoting their recognition and enforcement in all corporate actions.

• It is recommended that companies adopt measures to facilitate the participation of minority shareholders in key corporate decisions, such as the election of the board of directors.

• In the case of state-owned companies with minority shareholders, speciﬁc commitments have been implemented to ensure equitable treatment, such as transparency in board nominations and adherence to good corporate governance practices.

Responsibilities of Corporate Boards of Directors

Boards of directors play a crucial role in ensuring compliance with corporate governance standards and in protecting shareholders' rights.

eir main responsibilities include:

• Ensuring the timely and reliable disclosure of ﬁnancial information, in accordance with internationally recognized accounting, auditing, and reporting standards.

• Adopting policies that promote transparency and active communication with all shareholders, ensuring that information is disclosed equitably and simultaneously.

• Avoid conﬂicts of interest by implementing transparent and independent nomination processes for board members.

• Establish Internal Rules of Procedure for the General Shareholders’ Meeting, regulating aspects such as the convening and holding of meetings.

e Facts

Colombia has been recognized for its favorable legal framework for investor protection.

Foreign Investment Regime

e General Regime of International Investments in Colombia is regulated by Decree 2080 of 2000, as amended by subsequent regulations such as Decree 1844 of 2003. is regime sets forth the provisions applicable to foreign capital investments in the country, guaranteeing fundamental principles such as equal treatment, deﬁning the permitted investment modalities, and establishing registration requirements with the Central Bank of Colombia (Banco de la República). Below is an analysis of each of these key aspects.

Principle of Equal Treatment

Article 2 of Decree 2080 of 2000 establishes the principle of equal treatment for foreign investors. According to this provision, foreign capital investment in Colombia shall be treated in the same manner as investment made by resident nationals. is means that:

• No conditions or discriminatory treatment may not be applied to foreign investors in comparison to national investors.

• Nor may foreign investors be granted more favorable treatment than that granted to national investors.

• is principle aims to ensure a fair

• environment for all investors, promoting conﬁdence and transparency in foreign capital operations in Colombia.

• Permitted Investment Modalities

e international investment regime provides for various types of foreign capital investment in Colombia. According to Article 3 of Decree 2080 of 2000, these modalities include:

• Direct investment: Includes the acquisition of shares, equity interests, capital contributions in a company, mandatory convertible bonds, and the acquisition of real estate, among others.

• Portfolio investment: Includes the acquisition of securities registered in the National Registry of Securities and Intermediaries, managed by brokerage ﬁrms or trust companies.

• In-kind contributions: Such as tangible goods (machinery, equipment, etc.) or intangible assets (technology transfer, trademarks, patents) contributed to the capital of a company.

• Supplementary investments to assigned capital: ese refer to capital in foreign currency held in current accounts of branches of foreign companies, subject to the applicable foreign exchange regime.

ese modalities oﬀer ﬂexibility for foreign investors to participate in various economic sectors, with the only exceptions outlined in Article 6 of Decree 2080 of 2000:

activities related to national defense and security, and the processing, disposal, or dumping of toxic, hazardous, or radioactive waste not produced in Colombia.

Registration Obligations with the Central Bank (Banco de la República)

Registration of international investments is a

fundamental requirement to ensure the legality and traceability of foreign capital movements in Colombia. According to Decree 2080 of 2000 and the regulatory circulars of the Central Bank, the main registration obligations include:

• Exchange declaration: Foreign currency investments must be channeled through the exchange market by submitting Form No. 4.

• Initial or additional registration: Initial or additional investments must be registered within twelve (12) months from the time the investment is made.

• Registration of modiﬁcations: Changes in the investment holders, investment purpose, or receiving company must be registered within six (6) months, in accordance with the regulations of the Central Bank.

• Additional information: e Central Bank may request supplementary information, such as ﬁnancial statements of the receiving company, to properly monitor the investments.

Compliance with these obligations is essential for foreign investors to exercise rights such as:

• Remittance of proﬁts abroad,

• Reimbursement of invested capital, and

• Cancellation of the investment in the event of the company's liquidation.

Resolution of Insolvency

Law 1116 of 2006 establishes the Business Insolvency Regime in Colombia, aimed at protecting credit, facilitating the recovery and continuity of companies as economic units and sources of employment. is regime governs judicial insolvency proceedings for reorganization and judicial liquidation, based on the principle of value preservation, and is designed to assist companies facing ﬁnancial diﬃculties. Below is an overview of the key elements of this legislation.

Purpose of the Insolvency Regime

According to Article 1 of Law 1116 of 2006, the primary purpose of the judicial insolvency regime is to protect credit and recover viable businesses through reorganization or, if necessary, to ensure an orderly liquidation of companies that are no longer viable. e focus is to preserve businesses with potential to overcome ﬁnancial crisis and wind down those that cannot be saved.

Insolvency Proceedings under Law 1116 of 2006

Reorganization Process

e goal of the reorganization process is to preserve viable businesses and normalize their commercial and credit relationships. is is done through operational, administrative, asset, or liability restructuring. e debtor may enter into an agreement with creditors that outlines the terms and conditions under which obligations will be addressed, ensuring business continuity as an economic unit.

e reorganization agreement must be approved by the creditors and registered with the competent authority. According to Article

45 of Law 1116, the agreement may be terminated due to:

Fulﬁllment of obligations under the agreement,

All creditors are treated fairly, the process covers all the debtor's assets, and proceedings are public, except in cases where the law provides otherwise.

In the context of economic globalization, Double Taxation Agreements (DTAs) are essential instruments for improving the country's competitiveness and consolidating its position in international trade. By ensuring the

Basic Principles of Corporate Governance

According to the OECD

Shareholders’ Rights and Equitable Treatment

According to the OECD, one of the fundamental principles of corporate governance is to ensure a regulatory framework that protects the rights of shareholders, including minority and foreign shareholders, and that guarantees equitable treatment for all. In Colombia, legal provisions have established mechanisms to ensure the enforcement of these rights, such as active public programs, alternative dispute resolution mechanisms, and administrative courts.

However, challenges have been identiﬁed regarding the availability of information and the functioning of General Shareholders’ Meetings (AGMs). To address these weaknesses, the “Código País” (Country Code) has introduced recommendations aimed at improving the timeliness and quality of information available to

Transparency in Information Disclosure

e OECD emphasizes the importance of timely and reliable disclosure of corporate information, in line with international standards such as the International Financial Reporting Standards (IFRS) and International Auditing Standards. In Colombia, publicly traded companies have adopted these standards, while state-owned enterprises have begun implementing them. is includes the disclosure of quarterly and annual ﬁnancial reports, ownership structures, related-party transactions, and the immediate presentation of relevant information.

Although signiﬁcant progress has been made, improvements are still needed in areas such as the disclosure of board members’ qualiﬁcations, independence and nomination processes, and executive compensation. e “Código País”

addresses these shortcomings with speciﬁc recommendations, further detail are included below.

Responsibilities of Boards of Directors

Boards of directors in Colombia have legal duties of loyalty and diligence, aligned with OECD recommendations. ese responsibilities include ensuring transparency in management, overseeing the implementation of corporate policies, and preventing conﬂicts of interest. e Financial Superintendence of Colombia (SFC) has actively worked to promote better board practices through the “Código País,” which includes recommendations on performance evaluations, greater disclosure of members’ backgrounds, and aligning compensation with the company’s long-term interests.

Impact of the “Código País”

e “Código País,” introduced in 2014, is a key tool for improving corporate governance in Colombia. It provides a set of recommendations aimed at aligning corporate practices with international standards, promoting transparency, fairness, and accountability in business management. Some of the key areas addressed by the “Código País” include:

• Reducing the use of alternate directors and increasing transparency in the selection of board members.

• Greater disclosure of information regarding ownership and voting structures, especially in state-owned enterprises.

• Strengthening the oversight of related-party transactions and conﬂicts of interest.

• Improvements in the presentation of ﬁnancial and non-ﬁnancial reports, aligned with international standards.

Although the “Código País” is not legally binding,

its implementation has been monitored by the Financial Superintendence of Colombia (SFC), which has worked to promote its voluntary adoption by companies. is approach has made it possible to identify areas for improvement and develop new strategies to strengthen corporate governance in the country.

Additional Initiatives to Improve Corporate Governance

In addition to the Código País, other initiatives have contributed to strengthening corporate governance in Colombia. For example:

• e Colombian Stock Exchange (BVC) has implemented programs to improve corporate governance practices, such as the Colombia Capital program and the Investor Relations Recognition Initiative.

• e development of legislation that strengthens the SFC’s authority to supervise ﬁnancial conglomerates and obtain relevant information for decision-making.

• e adoption of codes of ethics and the promotion of corporate social responsibility in state-owned enterprises.

Registration and regulation of foreign corporations

is document analyzes the regulations governing the registration and oversight of foreign companies operating in Colombia, including the provisions related to control situations and business groups, as well as the penalties for non-compliance with these obligations, in accordance with applicable legal sources.

Registration and oversight of Foreign Companies

Foreign companies operating in Colombia are subject to the regulatory framework established by the Commercial Code and Law 222 of 1995. ese regulations stipulate that foreign companies operating in the country and creating situations of control or forming part of a business group must register such situations in the appropriate Commercial Registry. is requirement applies to both foreign parent or controlling entities and their subsidiaries domiciled in Colombia.

According to Article 30 of Law 222 of 1995, when a control situation or business group is formed, the controlling company must prepare a private document containing information such as the name, domicile, nationality, and business activity of the related entities, as well as the rationale that gives rise to the control situation. is document must be submitted for registration in the Commercial Registry within 30 days following the establishment of the control situation.

Control and Business Groups

Control situations and business groups are governed by Articles 260 and 261 of the Commercial Code, as well as Article 28 of Law 222 of 1995. According to these provisions, a

company is considered a subsidiary or controlled entity when its decision-making power is subject to the will of another company (parent or controlling company). is control may be direct, indirect, or de facto, and does not depend solely on the percentage of ownership in the share capital.

In the case of business groups, in addition to subordination, there must be a unity of purpose and direction among the aﬃliated companies. is means that the activities of the subordinate companies are carried out in the interest of the parent or controlling company.

Penalties for Non-Compliance

Failure to comply with obligations related to the registration of control situations or business groups may lead to administrative sanctions by the Superintendence of Companies. According to Article 30 of Law 222 of 1995, if the registration is not completed within the established timeframe, the Superintendence may declare the linkage on its own initiative or at the request of any interested party, order the registration in the Commercial Registry, and additionally impose the applicable ﬁnes.

ese sanctions aim to ensure transparency in corporate relationships and protect the interests of third parties, such as creditors and investors, who rely on registered information to make informed decisions.

Application to Foreign Companies

Colombian regulations do not diﬀerentiate based on the nationality of the companies involved in control situations or business groups. erefore, foreign parent or controlling companies domiciled abroad are required to comply with Colombian legal provisions, including the registration in the Commercial Registry of control situations or business

groups that arise in Colombia. Furthermore, branches of foreign companies operating in Colombia are subject to the levels of inspection, supervision, and control established in Articles 83, 84, and 85 of Law 222 of 1995, in accordance with Article 497 of the Commercial Code

e Facts

Double Taxation Treaties (DTTs) help deﬁne taxing rights, reduce withholding tax rates, and prevent tax evasion, thereby encouraging foreign investment.

e implementation of DTTs has improved Colombia’s competitiveness by providing a clear and predictable regulatory framework that reduces the tax burden and attracts foreign direct investment.

Protection of intellectual property rights

Intellectual Property is a key asset for any company seeking to expand or establish itself in the Colombian market. Proper protection of rights over trademarks, patents, industrial designs, and copyrights is essential to ensure recognition and exclusivity of intangible assets in the business environment.

As a member of the Andean Community of Nations (CAN), Colombia has a regulatory framework aligned with international standards in the ﬁeld of intellectual property. e authority responsible for administering and protecting these rights is the Superintendence of Industry and Commerce (SIC), which regulates and grants registrations for trademarks, patents, and other distinctive signs.

In addition, the country has signed international treaties that facilitate the recognition and protection of intellectual property rights in other jurisdictions.

Trademark Registration in Colombia

Registering a trademark is the most eﬀective mechanism for protecting a distinctive sign and ensuring its exclusivity in the market. In Colombia, rights over a trademark are established through its registration with the Superintendence of Industry and Commerce (SIC), which grants the holder the authority to prevent unauthorized use by third parties.

What Is a Trademark?

A trademark is any sign that allows the identiﬁcation of products or services in commerce and distinguishes them from those of competitors. According to Colombian

regulations, the following types of signs can be registered as trademarks:

• Word marks: Words or combinations of words without graphic elements.

• Figurative marks: Images, logos, or symbols without words.

• Mixed marks: Combinations of words and graphic elements.

• ree-dimensional marks: Packaging, containers, or distinctive product shapes.

• Sound and olfactory marks: Provided they can be clearly and distinctly represented.

Requirements for Trademark Registration

e process of trademark registration in Colombia follows a clear procedure before the Superintendence of Industry and Commerce (SIC). e general steps are:

• Trademark search: Before submitting the application, it is recommended to conduct a search in the SIC's database to ensure there are no prior similar or identical registrations.

• Filing the application: e relevant form must be completed, including the applicant’s information, a representation of the trademark, and the list of goods or services to be protected.

• Publication in the Industrial Property Gazette: e SIC publishes the application in the official gazette to allow third parties to file oppositions if they believe the requested trademark affects their prior rights.

• Opposition phase: If third-party oppositions are ﬁled, the applicant must respond to the arguments within the established timeframe.

• Registrability examination: e SIC evaluates whether the trademark meets the distinctiveness requirements and does not fall under grounds for unregistrability.

• Final decision: e SIC issues a resolution approving or denying the registration.

• Issuance of the registration certiﬁcate: If

• approved, the owner receives a certiﬁcate valid for 10 years, renewable indeﬁnitely.

Beneﬁts of Trademark Registration

Trademark registration grants multiple beneﬁts to the holder, including:

• Exclusive use of the distinctive sign.

• e ability to initiate legal action against third parties using it without authorization.

• Increased value of the intangible asset and enhanced corporate reputation.

• Easier expansion of trademark protection to countries with which Colombia has intellectual property agreements.

Protection of Personal Data in Colombia

In the business context, personal data protection has become a key aspect of intellectual property frameworks and digital commerce regulation. Colombia has developed speciﬁc legislation that outlines guidelines for the processing, storage, and use of personal data by companies and public entities.

Applicable Regulations

Personal data protection in Colombia is governed by Law 1581 of 2012, known as the Personal Data Protection Law, which sets out principles and rules for handling the personal information of individuals. is law is supplemented by regulatory decrees and standards issued by the Superintendence of Industry and Commerce (SIC), the entity responsible for oversight and enforcement in this area.

Principios del Tratamiento de Datos

Any company that manages databases in Colombia must ensure compliance with fundamental principles, including:

• Legality: Data processing must be carried out in accordance with current legal provisions.

• Purpose: Data must be collected for a speciﬁc and legitimate purpose.

• Security: Companies must implement appropriate measures to prevent unauthorized access or misuse of the information.

• Restricted access and circulation: Only authorized individuals with previously deﬁned purposes may access the data.

Rights of Data Subjects

Colombian legislation grants individuals several rights regarding their personal information, such as:

• Right of access: Individuals can know what data companies hold about them.

• Right to update and rectify: ey may request correction of inaccurate information.

• Right to deletion: ey may demand the removal of their data in certain cases.

• Right to revoke consent: ey may withdraw their authorization for the use of their personal data.

National Registry of Databases

Companies that manage databases containing personal information are required to register in the National Registry of Databases (RNBD), managed by the SIC.

Failure to comply with this obligation may result in ﬁnancial penalties and operational restrictions.

Penalties for Non-Compliance

Non-compliance with the Personal Data Protection Law may lead to sanctions ranging from ﬁnes of up to 2,000 Monthly Legal Minimum Wages to the suspension of data processing activities for up to 6 months or even the closure of operations.

Protection of Intellectual Property Rights

In cases of intellectual property rights infringement, Colombia provides various protection mechanisms:

• Administrative actions before the SIC: e Superintendence can order the suspension of the unauthorized use of trademarks, patents, and other protected rights.

• Civil lawsuits for damages: Compensation can be claimed for the unauthorized use of intangible assets.

• Criminal actions: In cases of counterfeiting or piracy, criminal penalties can be imposed on oﬀenders.

Companies must remain vigilant for any infringements and act quickly to prevent the dilution of their intellectual property rights.

Intellectual property in Colombia is backed by a robust protection system, enabling companies to eﬀectively register and defend their intangible assets. A proper understanding of the legal framework and the implementation of sound protection strategies can make a decisive diﬀerence in the growth and consolidation of a business in the country.

Financial Legislation

e Colombian ﬁnancial system is highly regulated to ensure economic stability and trust in the markets. Its regulatory framework allows for foreign investment in various sectors—including banking, insurance, and securities markets—but establishes strict compliance requirements.

Colombia has institutions responsible for overseeing and regulating ﬁnancial activities, ensuring that both domestic and foreign companies operate under a strict control system. Among these entities are the Financial Superintendence of Colombia (SFC), the Bank of the Republic, and the Financial Information and Analysis Unit (UIAF).

is section addresses key aspects of Colombian ﬁnancial legislation, including the regulation of ﬁnancial entities, foreign exchange regulations, restrictions and opportunities for foreign investment, and compliance mechanisms.

Regulation of the Financial System in Colombia

Supervision and Control

e Colombian ﬁnancial system is primarily regulated by the Financial Superintendence of Colombia (SFC), which supervises banks, insurance companies, pension funds, stock brokers, and other entities in the ﬁnancial sector.

Additionally, the Bank of the Republic exercises control over monetary, foreign exchange, and credit matters, ensuring equilibrium in the national economy.

Regulated Financial Institutions

In Colombia, financial entities are classified into several categories, each governed by specific regulations:

Credit institutions: Include banks, financial corporations, finance companies, and financial cooperatives.

• Insurance entities: Companies that oﬀer insurance and reinsurance policies.

• Trust companies: Manage resources and assets through trust contracts.

• Stock brokers: Act as intermediaries in the buying and selling of securities in the capital market.

• Pension and severance funds: Manage resources allocated for retirement and workers’ social beneﬁts.

Each of these entities is subject to capital requirements, operational rules, and supervisory mechanisms established in the Organic Statute of the Financial System (EOSF) and Decree 2555 of 2010.

Mergers and

Acquisitions

in the Financial Sector

Regulation of Mergers and Acquisitions (M&A)

Mergers and acquisitions in the Colombian ﬁnancial sector require prior authorization from the Financial Superintendence of Colombia, which assesses the impact of the transaction on the system’s stability. Key considerations in these processes include:

• Protection of minority shareholders. Veriﬁcation of the solvency and liquidity of the entities involved.

• Compliance with competition laws to prevent excessive market concentration.

Financial and Regulatory Due Diligence

Before completing a merger or acquisition, it is essential to carry out due diligence to assess the associated risks. is includes:

Analysis of ﬁnancial liabilities and legal contingencies.

• Veriﬁcation of regulatory and compliance status.

• Evaluation of the corporate governance structure of the target entity.

ese analyses ensure the transaction is carried out transparently and help minimize the risk of regulatory sanctions.

Regulatory Compliance and Financial Risk Prevention

Prevention of Money Laundering and Terrorist Financing (ML/TF).

El Colombia’s ﬁnancial system has a strict regulatory framework to prevent illicit activities. All ﬁnancial entities must implement Money Laundering and Terrorist Financing Risk Management Systems (SARLAFT), which include:

• Customer identiﬁcation and due diligence (Know Your Customer - KYC).

• Monitoring of suspicious transactions.

• Mandatory reporting of unusual transactions to the Financial Information and Analysis Unit (UIAF).

Non-compliance with these regulations can lead to administrative and criminal sanctions for ﬁnancial institutions and their executives.

Corporate Governance and Risk Management

Financial institutions are required to implement strong corporate governance policies, including:

• Establishing robust internal control structures.

• Implementing codes of ethics and conduct for employees.

• Periodically reporting to regulatory authorities on ﬁnancial performance and risk management.

Effective corporate governance not only reduces operational risks but also enhances investor and client confidence in the financial system.

Capital Markets and Business Financing

Securities Market Regulation

Colombia has a structured and regulated securities market, overseen by the Financial Superintendence and the Colombian Stock Exchange (BVC). Investors have access to various ﬁnancing opportunities through:

• Emisión de acciones y bonos corporativos.

• Issuance of shares and corporate bonds.

• Collective investment funds.

Publicly traded companies in Colombia must

comply with high transparency standards, including the publication of audited ﬁnancial statements and the disclosure of material information relevant to investors.

Business Financing Options

Companies in Colombia can access various ﬁnancing mechanisms, such as:

• Bank loans.

• Private debt issuance. Private equity and venture capital investment.

• Financing through ﬁntech platforms and crowdfunding.

Each option is subject to speciﬁc regulations and should be evaluated based on the company's ﬁnancial strategy.

e Colombian financial regulatory framework is designed to ensure market stability and investor protection. However, due to its complexity, companies are advised to seek specialized legal and financial counsel to navigate the regulatory environment effectively and avoid legal contingencies.

Dispute Resolution System in Colombia

Colombia’s dispute resolution system offers various mechanisms to resolve conflicts through both judicial and extrajudicial means. In a country where court proceedings can take several years, investors and businesses often look for faster and more efficient alternatives to resolve commercial, labor, and contractual disputes.

e country has developed a legal framework that allows for conﬂict resolution via ordinary courts, arbitration, conciliation, and other alternative dispute resolution (ADR) methods. Each of these has particular characteristics that make them more suitable for speciﬁc types of disputes.

is section explores the available options for dispute resolution in Colombia, with a focus on commercial, labor, and ﬁnancial litigation.

Commercial and Contractual Litigation

e Colombian judicial system allows companies to ﬁle lawsuits in cases of contract breaches, corporate disputes, or commercial conﬂicts.

Jurisdiction and Competence

Depending on the amount and nature of the dispute, commercial conﬂicts may be resolved by:

• Municipal Civil Judge: Handles low-value claims—cases involving up to 40 Monthly Legal Minimum Wages (SMMLV). Acts as court of ﬁrst instance.

e Circuit Civil Judge handles the second instance for these cases.

• Circuit Civil Judge: Can handle high-value

• claims—cases involving more than 150 SMMLV.

Acts as court of ﬁrst instance.

• e Superior Court handles the second instance.

• Superintendency of Companies: Has jurisdiction to resolve disputes between shareholders, managers, and companies in speciﬁc situations.

• e Superior Court handles the second instance for these cases.

Main Causes of Commercial Disputes

e most common corporate disputes include:

• Breach of commercial contracts. Conﬂicts between shareholders regarding company management.

• Disputes arising from mergers and acquisitions.

• Non-payment obligations between companies.

Colombian courts may take several years to resolve these disputes, which is why companies often resort to alternative dispute resolution mechanisms.

Commercial Arbitration

Arbitration is an eﬀective option for resolving commercial disputes more quickly and with greater expertise. In Colombia, it is governed by Law 1563 of 2012, which sets out the rules for its application and procedures.

Key Features of Arbitration

• Private mechanism: Parties agree to settle the dispute before arbitrators instead of going to court.

• Faster resolution: Arbitral proceedings are typically concluded within 6 to 12 months, compared to the years court proceedings

• can take.

• Expertise: Arbitrators are usually specialists in the subject matter, ensuring a more informed decision.

• Binding decisions: Arbitral awards have the same legal force as court rulings.

Types of Arbitration

ere are two main types of arbitration in Colombia:

• Arbitration in law: e decision is based on applicable Colombian law.

• Arbitration in equity: e arbitrator resolves the dispute based on general principles of fairness and justice, without strict adherence to the law.

Arbitration is especially useful in business-to-business disputes, shareholder conﬂicts, and foreign investment contract issues.

Conciliation and Mediation

Conciliation is an alternative mechanism where parties attempt to resolve their conﬂict with the help of a neutral third party. In Colombia, conciliation is often a mandatory step before initiating legal proceedings in many types of cases.

Advantages of Conciliation

• Saves time and costs.

• Greater control over the outcome: e parties negotiate directly rather than leaving the decision to a judge. Avoids the stress of a legal dispute.

Conciliation services are oﬀered by centers authorized by the Ministry of Justice, and this method is commonly used in civil, labor, and commercial disputes.

Resolution of Labor Disputes

Labor conﬂicts in Colombia can be resolved through the ordinary courts or by alternative mechanisms such as conciliation and arbitration.

Changes in Labor Procedure

e new Labor Procedural Code has introduced important modiﬁcations in how labor disputes are resolved, including:

• Mayor especialización de jueces laborales.

• Greater specialization of labor judges. Use of technology to speed up processes.

• Elimination of single-instance rulings to ensure the right to appeal.

• Expanded protection for workers with reinforced job stability.

ese changes strengthen worker protections and streamline judicial processes, but may also increase the number of lawsuits against companies.

Types of Labor Disputes

e most common disputes include:

• Unjustiﬁed dismissals.

• Claims for overdue labor payments.

• Union disputes and collective bargaining.

Companies should have preventive strategies in place to avoid these types of litigation, such as strict compliance with labor regulations and training in labor relations.

Enforcement Proceedings and Debt Collection

When a company fails to meet its payment obligations, the aﬀected party can initiate an

In this section, the main types of visas available, application procedures, general requirements, and key considerations for foreign investors and entrepreneurs wishing to settle in Colombia are detailed.

General Classiﬁcation of Visas in Colombia

e Colombian immigration system establishes three main categories of visas:

•Visitor Visa (V)

including:

•Business: For foreigners visiting Colombia to explore business opportunities, attend meetings, or participate in corporate events.

•Tourism: Allows temporary entry into the country for recreational purposes.

•Events and Fairs: For foreigners attending conventions, fairs, and academic activities.

•Technical Assistance: For foreign experts providing technical advice on speciﬁc

• remunerated activities in the country, except in authorized cases.

• Does not grant the right to residency in Colombia.

Migrant Visa (M)

e Migrant Visa is intended for foreigners who seek to settle in Colombia for a longer period. is type of visa is ideal for investors, entrepreneurs, workers, and individuals intending to reside in the country without immediately obtaining permanent residency.

Subtypes of Migrant Visa

Some of the most relevant subtypes of this visa include:

• Investor Visa in Businesses or Properties: Granted to foreigners who invest in Colombian companies or real estate.

• Company Partner or Shareholder Visa: For those who hold a signiﬁcant share in a Colombian company.

• Worker Visa: For foreigners employed by a Colombian company.

• Pensioner Visa: For retired individuals with income from abroad.

• Refugee Visa: Granted to individuals seeking protection in the country.

General Requirements

Requirements vary according to the type of visa, but the most common include:

• Proof of investment or shareholding in a Colombian company. Valid employment contract for the worker visa.

• Proof of income for pensioners.

• Certiﬁcate of criminal background check.

• Migration Movement Certiﬁcate issued by the special unit of Migración Colombia.

Duration and Conditions

• May be granted for up to 3 years, depending on the case.

• Allows the holder to engage in economic activities in Colombia. May lead to the application for permanent residency.

Resident Visa (R)

e Resident Visa is intended for foreigners who have developed a lasting connection with Colombia, whether through investment, extended stay with a Migrant Visa, or family ties with Colombian citizens.

Ways to Obtain the Resident Visa

Residency in Colombia can be obtained through various means:

• Signiﬁcant investment in the country: A minimum investment amount established by the government is required in real estate or companies.

• Continuous stay in the country: ose who have held a Migrant Visa for a speciﬁc period may apply for residency.

• Marriage or family ties with a Colombian citizen.

• Recognition as a refugee with special status.

Beneﬁts of the Resident Visa

• Allows indeﬁnite residence in Colombia.

• Authorizes the holder to engage in any legal economic activity.

• Is a prerequisite for applying for Colombian citizenship.

Visa Application Process in Colombia

General Steps to Obtain a Visa

• Complete the online form: e application must be submitted through the digital platform of the Ministry of Foreign Aﬀairs.

• Attach required documents: Depending on the type of visa, documents such as passport, proof of investment, employment contracts, or income certiﬁcates must be submitted.

• Pay the application fee: Each visa has a speciﬁc cost, which must be paid prior to the case being evaluated.

• Evaluation by the Ministry of Foreign Aﬀairs: e immigration authority reviews the application and may request additional documents.

Receipt of decision: If approved, the visa is stamped into the applicant’s passport.

Processing Time

e estimated response time for a visa application is 30 calendar days, although it may take longer in some cases if the Ministry requires additional information.

Obligations and Considerations for Foreigners

with a Visa

Visa holders in Colombia must comply with certain obligations to avoid the cancellation of their immigration status.

Visa Registration and Issuance of Foreign ID Card (Cédula de Extranjería)

• All visas valid for more than 3 months must be registered with Migración Colombia within 15 days of issuance.

• Foreigners with medium- or long-term visas must obtain a “Cédula de Extranjería”, an identiﬁcation document for foreign residents in Colombia.

Visa Validity and Renewal

• Visas must be renewed before expiration to avoid immigration issues.

• If a foreigner with a Resident Visa remains outside the country for more than 2 consecutive years, their visa may be revoked.

e Facts

Colombia oﬀers three main categories of visas: Visitor (V), Migrant (M), and Resident (R), each with speciﬁc subtypes based on the intended activity.

Migrant Visa (M): Ideal for those seeking to establish long-term residence, it includes subtypes such as investor, worker, and pensioner. It is valid for up to 3 years and may lead to permanent residency.

Application Process: e visa application is completed online, requires speciﬁc documentation, and has an estimated processing time of approximately 30 calendar days.

Impact of the Visa Regime on Businesses and Investors

e Colombian visa system facilitates the attraction of foreign talent and capital, allowing companies to hire qualiﬁed workers, attract investors, and expand operations without signiﬁcant immigration barriers. Companies seeking to establish operations in Colombia must consider the most suitable type of visa for their foreign employees and executives, ensuring compliance with immigration requirements.

e visa system in Colombia is a key instrument for business mobility and foreign investment. Having the proper legal guidance ensures that the application process is eﬃcient and complies with current regulations.

Transparency and anti-corruption

is analysis addresses the policies and regulations implemented in Colombia to prevent bribery and ensure integrity in commercial relations, with an emphasis on the provisions of the OECD Anti-Bribery Convention and national laws enacted to meet international standards in this area.

e OECD Anti-Bribery Convention

e Convention on Combating Bribery of Foreign Public Oﬃcials in International Business Transactions, adopted by the OECD in 1997, is a key instrument in the ﬁght against transnational bribery. Colombia acceded to this Convention through Law 1573 of 2012, and its implementation was enacted through Decree 369 of 2013.

e Convention establishes that bribing foreign

public oﬃcials in the context of international business operations is illegal, and requires signatory states to adopt legal, administrative, and criminal measures to punish such conduct. Under the Convention, Colombia committed to establishing the liability of legal entities for acts of transnational bribery, whether through administrative, criminal, or civil sanctions. is commitment was formalized in Law 1778 of 2016, which regulates the administrative liability of legal persons for acts of transnational corruption.

Law 1778 of 2016: Liability of Legal Entities

Law 1778 of 2016 establishes a comprehensive legal framework to sanction legal entities involved in acts of transnational bribery.

According to this law, companies may be administratively sanctioned when, through their employees, contractors, managers, or partners, they offer or give improper benefits to foreign public officials with the intention of influencing decisions related to international business transactions.

Sanctions under Law 1778 include:

• Fines of up to 200,000 current legal monthly minimum wages, imposed by the Superintendence of Companies.

• Disqualiﬁcation from contracting with the State for up to 20 years.

Extended liability to parent companies that consent to or tolerate acts of bribery committed by their subsidiaries.

In addition, Law 1778 assigns the Superintendence of Companies the role of investigating and sanctioning such conduct, as well as promoting the implementation of transparency and business ethics programs in companies under its supervision.

Anti-Corruption Statute: Law 1474 of 2011

Before Law 1778, the Anti-Corruption Statute (Law 1474 of 2011) had already introduced measures to prevent and sanction acts of corruption, including transnational bribery. is law establishes the obligation for companies to implement internal mechanisms to prevent corrupt conduct and expands administrative and criminal sanctions applicable to individuals and legal entities involved in acts of corruption.

Law 1474 also reinforces the responsibilities of statutory auditors (“Revisores Fiscales”), who are required to report any act of corruption detected in the course of their duties.

Compliance and Business Ethics Programs

As part of anti-bribery prevention measures, Law 1778 requires companies to implement transparency and business ethics programs. ese programs must include anti-bribery policies, codes of conduct, internal audit mechanisms, and systems for reporting corrupt acts. e Superintendence of Companies monitors the implementation of these programs and promotes their adoption as a key tool in preventing bribery in the corporate sphere.

Impact of Anti-Bribery Policies

e policies and regulations implemented in Colombia to prevent bribery have strengthened the country’s institutional and legal framework, aligning it with the international standards established by the OECD. ese measures aim not only to penalize transnational bribery but also to promote a culture of integrity within the business sector, bringing greater competitiveness and trust in the business environment.

Colombia’s adherence to the OECD Anti-Bribery

Convention and the enactment of laws such as Law 1778 of 2016 have been essential for ensuring transparency in international commercial relations and preventing corrupt practices that impact the country’s economy and reputation.

e facts

Anti-Bribery Convention: Colombia joined this convention in 2012, committing to sanction the bribery of foreign public oﬃcials in international business transactions.

Law 1778 of 2016 establishes administrative and criminal sanctions for companies involved in transnational bribery, including ﬁnes and disqualiﬁcation from contracting with the State.

e Anti-Corruption Statute introduced measures to prevent and sanction acts of corruption, requiring companies to implement internal prevention mechanisms. Compliance and Business Ethics Programs: Companies must implement anti-bribery policies and reporting systems, supervised by the Superintendence of Companies, to prevent corrupt practices.

Colombia presents an attractive business environment for foreign investors, supported by a series of reforms that have improved the country's legal and ﬁscal infrastructure in recent years. However, despite these advances, entrepreneurs must be aware of certain persistent challenges, particularly in areas such as bureaucratic complexity, tax burden, and the eﬀective protection of labor rights.

e Colombian legal framework has evolved to foster a more business-friendly environment, with legislation that is continually updated to promote competition, foreign investment, and the protection of intellectual property rights. Despite this progress, judicial eﬃciency and the costs associated with legal proceedings remain areas that require attention to ensure greater legal certainty.

e tax system, in turn, has undergone reforms aimed at simplifying the tax burden and creating incentives for key sectors such as technology and renewable energy. Despite these improvements, companies must maintain a proactive approach to tax compliance in order to avoid penalties.

In summary, while Colombia oﬀers a constantly improving legal framework, it is crucial for investors and entrepreneurs to stay well-informed and seek specialized legal counsel to navigate the complexities of local legislation. With a dynamic and growing business environment, Colombia remains a promising destination for investment, but success will depend on companies’ ability to adapt to regulatory challenges and seize the opportunities that arise in this context.

Law 526 of 1999 Regulations in Colombia

Regulation Descripción

to Money Laundering and Corruption is law created the Financial Information and Analysis Unit (UIAF), responsible for receiving, analyzing, and transmitting information to prevent and detect money laundering and the ﬁnancing of terrorism.

Decree 830 of 2021

Money Laundering and Terrorism Financing Risk Management System (SARLAFT)

External Circulars of the Superintendence of Companies

Regulates the management of money laundering and terrorism financing risk in the Colombian financial system, including the identification of Politically Exposed Persons (PEPs).

Implemented by the Financial Superintendence of Colombia, this system establishes the procedures and controls that supervised entities must follow to prevent money laundering and the ﬁnancing of terrorism.

Several circulars, such as External Circular 100-004 of 2009, External Circular 100-006 of 2016, and External Circular 100-005 of 2014, set guidelines for managing the risk of money laundering and the obligation to report suspicious transactions to the UIAF. Additionally, they reinforce companies’ responsibilities regarding ML/TF risk management.

National Anti-Money Laundering Policy

Based on the 40 recommendations of the Financial Action Task Force (FATF), this policy aims to strengthen the legal and operational framework to combat money laundering and terrorism ﬁnancing.

Criminal Code (Law 599 of 2000) is code includes a specific chapter on crimes against public administration, where corruption offenses such as embezzlement, extortion, bribery, influence peddling, and illicit enrichment are defined.

Anti-Corruption Statute (Law 1474 of 2011) is law strengthens mechanisms for preventing, investigating, and sanctioning acts of corruption. It includes measures to improve transparency in public management and imposes stricter penalties for corruption-related crimes.

Transparency and Access to Public Information Law (Law 1712 of 2014)

Law 1778 of 2016

Law 2195 of 2022

Regulates access to public information and establishes procedures to guarantee this right, promoting transparency in State actions.

Grants the Superintendence of Companies the authority to investigate and sanction acts of transnational bribery. is law requires companies to adopt corporate ethics programs and mechanisms to prevent corruption.

Strengthens the powers of the Superintendence of Companies to investigate and administratively sanction legal entities involved in acts of corruption. is law also promotes transparency and the adoption of preventive anti-corruption measures.

Data adapted from the page of the Superintendencia de Sociedades (Superintendency of Companies)

6. Tax Regime

e Colombian tax system is founded on a Social and Democratic Rule of Law, in which citizens are constitutionally obligated to contribute to public spending through payments to the State in the form of taxes, fees, or contributions.

In the case of foreign individuals or legal entities, it is essential to note that if Colombian territory is being used or exploited, they must contribute by fulﬁlling the tax obligations corresponding to the type of investment or economic activity carried out in the country.

Tax and Fiscal Obligations

is analysis addresses the tax obligations of commercial companies in Colombia, with emphasis on tax payments, the ﬁling of tax returns, and compliance with withholding tax regulations. It also examines the importance of double taxation treaties as a tool to promote foreign investment, in accordance with applicable legal and regulatory provisions.

Tax Obligations of Commercial Companies

Tax Payments

Commercial companies in Colombia are required to comply with the payment of national and territorial taxes, such as income and complementary taxes, value-added tax (VAT), industry and commerce tax (ICA), and other speciﬁc levies. e National Tax and Customs Directorate (DIAN) is the authority responsible for the administration, oversight, and collection of national taxes.

Filing of Tax Returns

Commercial companies must ﬁle tax returns periodically, depending on the type of tax and the calendar established by DIAN. For example:

• e income and complementary tax return is ﬁled annually, indicating income, costs, deductions, and the tax payable.

e VAT return may be monthly, bimonthly, or quarterly, depending on the tax regime to which the company belongs.

• e withholding tax return is ﬁled monthly, consolidating the amounts withheld by the company as a withholding agent.

Compliance with the ﬁling of these returns is essential to avoid penalties, late interest, and

administrative proceedings by DIAN.

Compliance with Withholding Tax Regulations

Commercial companies that act as withholding agents are required to withhold taxes on certain payments or credits, such as salaries, fees, services, purchases of goods, and other taxable concepts. ese withholdings must be declared and paid within the deadlines established by DIAN.

Additionally, companies must use the forms prescribed by DIAN and comply with electronic ﬁling requirements when applicable. Proper management of withholding taxes is essential to ensure transparency in tax collection and to avoid tax penalties.

Importance of Double Taxation Treaties

One of the main obstacles to foreign investment is double taxation, which occurs when the same income or asset is taxed in two diﬀerent jurisdictions. To mitigate this issue, Colombia has entered into international agreements to avoid double taxation (DTTs), which aim to:

• Deﬁne the taxing rights of the contracting states by establishing clear rules on which jurisdiction has the right to tax speciﬁc income.

• Reduce or eliminate withholding tax rates applicable to cross-border payments, such as dividends, interest, and royalties, thereby promoting international trade and investment. Prevent tax evasion through the exchange of tax information between the tax administrations of the contracting states.

• Provide legal certainty and stability in tax conditions, which is crucial for attracting foreign direct investment and enhancing the country’s competitiveness.

Double Taxation Treaties (DTTs) also contain provisions against discrimination between nationals and foreigners, as well as dispute

resolution mechanisms through mutual agreement procedures. ese tools help create a more favorable tax environment for international investors, promoting the ﬂow of capital into Colombia.

e Facts

Tax Payments: Commercial companies in Colombia must comply with the payment of national and territorial taxes, such as income tax, VAT, and ICA, which are administered by the National Tax and Customs Directorate (DIAN).

Double Taxation Treaties (DTTs): Colombia has signed international agreements to avoid double taxation, deﬁning taxing rights and promoting foreign investment by reducing withholding tax rates and enabling the exchange of tax information.

National taxes

e Facts

The general corporate income tax rate for companies in 2025 is 35%.

• Special rates: 9% for state-owned enterprises, 20% for industrial users in Free Trade Zones, and 15% for hotel and ecotourism services.

Financial institutions with taxable income exceeding COP 5,975,880,000 must pay a 5% surtax, resulting in a total rate of 40%.

Corporate Income Tax for Legal Entities

a. Resident companies—such as corporations, entities, and national enterprises with a Place of Eﬀective Management (PEM) in Colombia (deﬁned as the location where key commercial and management decisions necessary for the company’s day-to-day operations are made)—are subject to income tax on their worldwide income, meaning both Colombian and foreign-source income.

b. On the other hand, non-resident companies or foreign entities are subject to income tax only on their Colombian-source income.

c. For the 2025 tax year, corporate income tax is calculated on net income at a general nominal rate of 35%.

d. However, the current tax regulations allow for the application of special rates, as follows:

1. State-owned industrial and commercial enterprises: 9%

2. Industrial users of goods and services in Free Trade Zones, but only for income related to exports and subject to compliance with an internationalization agreement: 20%

3. Hotel services, theme parks, ecotourism, and/or agrotourism in certain municipalities: 15%

In addition, with respect to surtaxes on the general corporate income tax rate, the tax regulations provide the following:

1. Financial institutions, insurers, and stock market infrastructure providers with taxable income exceeding COP 5,975,880,000 or USD 1,437,077.23 during the ﬁscal year must apply an additional 5 percentage points to the income tax rate for the tax years 2023, 2024, 2025, 2026, and 2027, resulting in a total tax rate of 40%.

2. For coal mining activities, including the extraction of bituminous coal and lignite, permanent surtaxes depend on international market prices, with rates ranging from 0%, 5%, to 10%.

3. In the case of oil companies, for the extraction of crude oil, the permanent surtax also depends on international prices, with rates ranging from 0%, 5%, 10%, to 15%.

Permanent Establishment (PE) for Corporate Income Tax Purposes

El concepto de Establecimiento Permanente se utiliza únicamente para efectos del impuesto sobre la renta en Colombia. Sin embargo, no es un criterio de residencia.

e concept of a Permanent Establishment (PE) is used exclusively for corporate income tax purposes in Colombia; however, it does not constitute a criterion for tax residency.

A PE is deﬁned as a ﬁxed place of business through which a company carries out all or part of its activity (either partially or entirely), as outlined in Article 5 of the latest OECD Model Tax Convention.

In addition, the PE concept also encompasses subjective and functional presence, referring to the involvement of a dependent agent in business operations.

e Colombian Congress incorporated the PE concept in Article 86 of Law 1607 of 2012, which is currently included in Article 20-1 of the Colombian Tax Code (Estatuto Tributario).

Accordingly, a PE is subject to the corporate income tax regime, but only with respect to the worldwide income attributable to the activities of the PE.

Signiﬁcant Economic Presence (“PES”)

e ﬁgure of PES taxation was introduced to the Colombian legal system through article 20-3 of the Tax Statute, added by Law 2277 of 2022; and, its eﬀectiveness began as of January 1, 2024.

e PES taxation aims to tax digital services; therefore, it provides that income from the sale of goods and/or provision of services made by

non-resident persons or entities not domiciled in the country with PES in Colombia, in favor of clients and/or users located in the national territory are considered income of national source (numeral 17 of article 24 of the E.T).

Some examples of digital services are: online advertising, digital content services, free transmission services, including programmed TV, movies, streaming, among others.

It is understood that there is a PES in Colombia for the commercialization of goods or services when the non-resident person or non-domiciled entity deliberately and systematically interacts in the Colombian market (300,000 clients or more in the previous or current year) and receives gross income of 31,300 UVT (For the year 2025 COP 1,558,708,700) for those operations.

A non-resident has the option to pay a 3% tax on the gross income generated by its activities in Colombia. If he does not choose this alternative, the payer must apply a withholding tax of 10% on the gross income.

Minimum Tax Rate

e current tax regulations regarding the minimum tax rate rules were inspired by the global minimum tax rules of the Organization for Economic Cooperation and Development (“OECD”). However, with substantial diﬀerences.

us, a minimum tax was established for Colombian resident taxpayers through an additional tax applicable in case the income tax payable does not result in at least ﬁfteen percent (15%) of the adjusted accounting proﬁt.

erefore, the ﬁrst step will be to determine the adjusted tax of the Colombian taxpayer or the adjusted tax of the group in case the taxpayer belongs to a group, subsequently the adjusted proﬁt will be determined, and if this is less than

15% an additional tax will have to be calculated.

In addition, the minimum tax will not apply to all taxpayers, namely:

1. Companies incorporated as Special Economic and Social Zones “ZESE” during the period that their income tax rate is 0%.

2. Companies under the ZOMAC regime.

3. Companies whose economic activity and corporate purpose is exclusively book publishing, provided that they are not required to ﬁle a country-by-country report (transfer pricing regime).

4. Companies that provide hotel services, ecotourism theme parks and / or agrotourism as long as they are not required to submit a country-by-country report (Transfer Pricing Regime).

5. Industrial and Commercial Companies of the State and Economic Companies.

6. Taxpayers whose adjusted proﬁt or the adjusted proﬁt of the group is equal to or less than zero.

7. Concessionaires and public-private partnerships.

e Facts

e minimum tax for Colombian resident taxpayers applies if the income tax liability is less than 15% of the adjusted accounting proﬁt.

Personal Income Tax

Individuals are subject to income tax based on their residency status. Colombian tax residents are subject to income tax on their worldwide income.

Income is classiﬁed by source into:

Employment income

• Non-employment income

• Capital income

• Dividend income

• Pension income

e personal income tax rate is progressive, ranging from 0% to 39%, depending on the taxable net income.

e most recent tax reform approved by Congress introduced a marginal deduction of 19% on dividend income under the personal income tax regime.

Taxation of Non-Residents

Non-tax residents are subject to income tax on Colombian-source income, which must be paid as follows:

• rough withholding tax, but only if the Colombian-source income is subject to withholding as described in Articles 407 to 411 of the Tax Code (generally at a 20% rate on gross income).

• In other cases, the non-resident must ﬁle an income tax return at a ﬂat rate of 35%.

Income Subject to Capital Gains Tax

Tax on dividends is triggered upon distribution of proﬁts declared as dividends payable to shareholders, in accordance with the following rules:

Dividend Distributons Tax Rate

Distributions of proﬁts that were taxed at the corporate level:

•Individuals: 15%• Resident companies: 10% withholding.

Fiscal year 2023 and onwards

•Non-resident individuals and entities: 20%

Distributions of untaxed proﬁts:

•Individuals and entities35%

Compiled by the author

It is important to note that if dividends are distributed to foreign investors located in jurisdictions where Colombia has entered into a Double Taxation Treaty (DTT), the aforementioned rates may be lower depending on the speciﬁc treaty provisions.

Value-Added Tax – VAT

e Value-Added Tax is an indirect tax on sales, triggered by the following events:

1.Sale of tangible movable and immovable goods that have not been expressly excluded.

2.Sale or transfer of rights over intangible assets related to industrial property.

3.Services rendered in Colombia or from abroad, unless expressly excluded.

4.Importation of taxable goods.

5.Games of chance, except for lotteries and games of chance carried out exclusively via the internet.

For ﬁscal year 2025, the general VAT rate applied to many transactions is 19%. However, certain types of goods and services are subject to a reduced rate of 5%.

Financial Transactions Tax (GMF)

e GMF is triggered by ﬁnancial transactions carried out by users of the ﬁnancial system.

e tax rate will remain at 0.04% of the total value of the ﬁnancial transaction through which funds are made available.

Territorial Taxes (Municipal and Departmental)

Below is a reference to some of the most relevant departmental and municipal taxes, whose speciﬁc regulations may vary according to the provisions of each jurisdiction.

Industry and Commerce Tax (ICA)

e Industry and Commerce Tax is a municipal tax triggered by commercial, industrial, and service activities carried out within a local territory by individuals, corporations, and entities.

Rates are set locally, so they vary between municipalities and districts depending on the type of activities conducted, within the following ranges:

1. Industrial activities range from 0.2% to 0.7%.

2. Commercial and service activities range from 0.2% to 1%.

Property Tax

Owners or holders of real estate are subject to a property tax.

Currently, the rates range from 0.5% to 1.6%, depending on the municipality where the asset is located.

Motor Vehicle Tax

e tax is triggered by the ownership or possession of taxable vehicles.

Registration Tax

e incorporation of entities, capital contributions, share premiums, and others require registration with the Chamber of Commerce and are therefore subject to a registration tax of 0.7% and 0.3%, according to the law.

Cigarette and Processed Tobacco Consumption Tax is tax is levied on the consumption of cigarettes and processed tobacco within the jurisdiction of the departments.

Compliance with formal obligations

Income Tax – Legal Entities / Individuals

1. Legal entities: As a general rule, companies must ﬁle their income tax return in May. However, the Colombian Tax Authority allows two installment payments in May and July.

2. Individuals: e ﬁling and payment period runs from August to October of the year following the Fiscal Year, based on the individual’s last tax identiﬁcation number digit.

IVA - VAT (Value-Added Tax)

(VAT taxpayers (large taxpayers and legal entities) with revenues equal to or greater than COP 3.275 billion (approx. USD 862,000) must ﬁle VAT returns bimonthly.

Companies with lower revenues must ﬁle their returns quarterly.

Foreign suppliers that provide services in Colombia, as well as intangibles acquired or licensed from abroad, are deemed to be provided, licensed, or acquired in Colombia.

Within the national territory, the corresponding

tax will be triggered when the end user or recipient of the service has their tax residence, domicile, permanent establishment, or the headquarters of their economic activity in Colombia.

Foreign providers are legal entities or individuals who oﬀer digital services to users in Colombia. In Colombia, the tax obligations of foreign service providers depend on the tax status of the customer/service recipient.

Services provided from abroad

Concept Tax obligations

Services contracted by taxpayers (individuals or legal entities), who are obligated and registered for VAT purposes

Services contracted by individuals or legal entities not obligated or registered for VAT purposes

e client is required to withhold 100% of the VAT generated by the transaction, ﬁle the withholding return, and make the payment to the National Tax and Customs Authority (DIAN).

Foreign service providers must register with the Single Tax Registry (RUT), withhold, ﬁle, and pay the VAT return.

Non-residents must register with the Single Tax Registry (RUT), withhold, ﬁle, and pay VAT returns.

Annual Declaration of Foreign Assets

Colombian residents who, as of January 1st, own assets abroad must ﬁle an annual declaration only if the total value of their foreign assets exceeds COP 99,598,000 or USD 23,942.32 for 2024, in accordance with the paragraph of Article 607 of the Tax Code.

is annual declaration of foreign assets is informative, meaning the responsible person is not required to make any payment. However, penalties may be imposed for failure to report, errors, or incomplete information (Article 651 of the Tax Code).

Registro Único de Beneﬁciarios Finales (RUB)Single Registry of Final Beneﬁciaries

Corporations and non-corporate entities must report their ultimate beneﬁcial owners.

A beneﬁcial owner is:

1. An individual who, directly or indirectly, owns or controls 5% or more of the shares or interests in the legal entity, and/or beneﬁts from 5% or more of the assets, income, or proﬁts of the legal entity.

2. A client and/or individuals on whose behalf a transaction is conducted.

Digital or electronic services

Compiled by the author

As an alternative payment method, non-resident service providers may opt to have ﬁnancial institutions act as withholding agents. However, there is currently no regulation in place for its implementation.

3. is also includes individuals who, directly or indirectly, exercise eﬀective and/or ultimate control over a legal entity or another non-legal structure

Tax beneﬁts and incentives

Below are some of the tax beneﬁts provided under Colombian regulations

Colombian Holding Company Regime (CHC)

e purpose of the Colombian Holding Company (CHC) regime is to attract capital and increase Foreign Direct Investment (FDI) in the country.

e CHC beneﬁts apply to:

1. Dividends or shares distributed by non-resident companies to a CHC are exempt from income tax withholding and are considered exempt income.

2. Dividends distributed by a CHC to a non-resident individual or legal entity are considered foreign-source income, which is not taxable in Colombia.

3. Gains derived from the sale or transfer of a CHC’s interest in a non-resident entity are exempt from income tax withholding in Colombia.

If a CHC distributes dividends to Colombian residents, note that these dividends are subject to income tax at the general rate.

Requirements to qualify for the CHC regime:

1. e company must have the purpose of holding shares in Colombian and foreign companies.

2. It must hold at least 10% ownership, directly or indirectly, in the capital of two (2) or more Colombian or foreign companies for a minimum period of twelve (12) months.

3. e company must have at least three (3) employees.

4. e company must have its domicile in Colombia. Managerial and commercial decisions concerning investments and assets must be made within Colombian territory.

A formal application must be submitted to the Colombian Tax Authority (DIAN), which will verify compliance with legal requirements.

Works for Taxes

e "Works for Taxes" mechanism in Colombia allows private, public, and mixed companies to allocate up to 50% of their income tax liability to finance social and infrastructure projects in prioritized municipalities, including those under the Territorial Development Programs (PDET) and the Areas Most Affected by the Armed Conflict (ZOMAC).

Incentives for Investment in Non-Conventional Energy Projects

is incentive allows income taxpayers who directly invest in research, development, and production of energy using non-conventional energy sources to deduct 50% of the total investment from their taxable income over a period of up to 15 years, starting from the tax year following the year the investment becomes operational.

Mega-Investment Incentives

Companies that make mega-investments can beneﬁt from a reduced income tax rate of 27%, compared to the general rate of 33%.

ey may also receive an exemption from the Net Worth Tax for the related projects and are allowed to depreciate ﬁxed assets over a minimum period of 2 years, regardless of the assets' useful life.

Tax mechanisms

Tax Credit (Acreencia)

Positive balances resulting from income tax and VAT returns can be either oﬀset against other tax liabilities or requested as refunds.

Compensation of Tax Losses

Companies may oﬀset tax losses against net income earned in the following twelve (12) tax years.

e statute of limitations for such refunds is ﬁve (5) years.

Tax Credits / Deductions

1. Taxes paid abroad may be claimed as a foreign tax credit or deducted from the ﬁnal income tax liability of an individual or legal entity.

2. Donations to non-proﬁt entities.

3. Investments in environmental projects, technology, and innovation.

4. VAT paid on the acquisition of productive ﬁxed assets.

Expense Deductions

Taxpayers may deduct expenses that are necessary, proportional, and related to their income-generating activities.

Deduction Limitations

Payments made abroad are fully deductible in the income tax return only if they were subject to withholding tax. If not subject to income tax in Colombia, the deduction is limited to 15% of the taxpayer’s taxable income.

Note: e 15% limitation does not apply to payments made to jurisdictions with which Colombia has Double Taxation Treaties (DTTs).

Double Taxation Treaties (DTTs)

As of 2024, Colombia has active DTTs with: Spain, Chile, Switzerland, Canada, Mexico, South Korea, India, Portugal, Czech Republic, United Kingdom, Italy, France, Japan, and the Andean Community (Bolivia, Ecuador, and Peru).

As of 2025, Colombia has signed but not yet enacted DTTs with: Luxembourg, the Netherlands, Brazil, the United Arab Emirates, and Uruguay.

Transfer Pricing Rules

Related-party transactions occur when there is an economic relationship, such as between subsidiary entities, branches of parent companies, agencies and the entities to which they belong, permanent establishments, when one entity holds 50% or more ownership in another, or where economic control or inﬂuence exists between the parties.

Colombia follows Transfer Pricing Rules and the Arm’s Length Principle as established by the OECD. e Arm’s Length Principle states that the terms and conditions of transactions between related parties must be comparable to those made between independent parties.

Accordingly, Colombian entities that conduct transactions with related parties must ensure compliance with the arm’s length principle in relation to ordinary and extraordinary income, costs and deductions, and assets and liabilities (equity position).

As part of compliance, Colombian entities must annually submit a transfer pricing return and supporting documentation, in accordance with the following thresholds

erefore, the Colombian company is required, based on thresholds, to submit the transfer pricing return.

In addition, it will also be required to submit the supporting documentation, which will include:

1. e Master File with information about the multinational group.

2. e Local File with information about the company's operations.

e supporting documentation must be signed by the Legal Representative, Statutory Auditor, or Certiﬁed Public Accountant.

On the other hand, a Country-by-Country Report (CbCr) is required under the following circumstances:

1. e parent company is a tax resident in Colombia.

2. e parent company has aﬃliates, subsidiaries, branches, or a Permanent Establishment ("PE") abroad.

3. e parent company is not a subsidiary of another entity that is a foreign resident.

4. e parent is required to prepare, submit, and disclose consolidated ﬁnancial statements.

5. e parent has annual consolidated revenues equal to or greater than 81 million tax units.

A non-Colombian parent company may designate an entity that is a Colombian resident or a foreign resident with a PE in Colombia as the party responsible for providing the CbCr to the Colombian tax authority.

Colombian taxpayers who do not submit a CbCr must ﬁle a statement indicating which entity within the multinational group is providing the report and the jurisdiction where it is being submitted.

Penalties apply for non-compliance with transfer pricing obligations.

Penalties imposed for failing to meet ﬁling requirements, submitting incorrect or incomplete reports, or failing to comply with other requirements range from 1% to 4% of the value of the transactions

e Facts

Arm’s Length Principle: Colombian entities must conduct transactions with related parties under conditions similar to those between independent parties, following OECD transfer pricing guidelines.

Transfer Pricing Return: Entities must annually submit a transfer pricing return and supporting documentation, including the Master File and the Local File.

Country-by-Country Report (CbCr): A CbCr is required if the parent company is a resident in Colombia, has annual consolidated revenues equal to or greater than 81 million tax units, and meets other speciﬁc criteria.

7. Key aspects of foreign trade and international exchange for doing business in Colombia

Globalization has facilitated commercial relationships between companies located in diﬀerent countries. ese relationships are based on the exchange of goods and services between nations, which must be regulated by foreign trade, as it is an essential component of all economies.

Nowadays, doing business in Colombia requires knowledge of both national and international regulations governing commercial relationships, as well as awareness of the economic and political changes that aﬀect foreign trade operations (imports and exports).

International Treaties and Trade Agreements

Colombia, in order to stay at the forefront of the global economy and improve trade relations with the rest of the world, has signed Free Trade Agreements (FTAs), Agreements for the Promotion and Reciprocal Protection of Investments (APPRI), and Agreements to Eliminate Double Taxation on Income Taxes. ese agreements constitute a fundamental regulatory framework for the country's international trade.

e main objective of these agreements is to facilitate access for Colombian products to international markets by eliminating or reducing tariﬀs. Compliance with the provisions set forth in these agreements is essential to avoid additional costs arising from tariﬀs and other trade barriers.

Additionally, these treaties are subject to e

El Dato

Currently, Colombia has:

Currently, Colombia has 18 active Free Trade Agreements (FTAs), 7 active Agreements for the Promotion and Reciprocal Protection of Investments (APPRIs), and 15 active Agreements to Eliminate Double Taxation on Income Taxes.

Consult pages 28 and 29 for more detailed information on this.

regulations of the World Trade Organization (WTO), of which Colombia is a member, and which regulates the basic principles of international trade and resolves disputes between countries. ese agreements contain the obligations of treatment and protection that must be provided to investments and the mechanisms for dispute resolution.

Customs Regime

With the aim of providing legal certainty to foreign trade actors, Colombia adopted a customs statute that uniﬁes all current customs regulations.

Colombia continues to work on opening its trade borders and providing security to importers and exporters when conducting their commercial operations. For this purpose, it has the National Directorate of Taxes and Customs (DIAN), which controls the procedures for the import and export of goods.

e customs process involves several stages, such as tariff classification, determination of the value of goods, and verification of compliance with sanitary, phytosanitary, and safety requirements.

Customs obligations include the payment of tariﬀs, consumption taxes, and compliance with technical and sanitary regulations for products such as food, medicines, and chemicals.

It is imperative for companies to be familiar with the import and export requirements established in Colombian legislation; otherwise, they risk facing sanctions, ﬁnes, or the retention of products in customs. Additionally, incorrect classiﬁcation of products at customs can result in discrepancies in customs valuation and, consequently, the tax rate that must be paid.

Among the ﬁgures that can be present when importing and exporting are:

• Authorized exporter.

• Authorized economic operator - AEO.

• Special Import and Export Systems - SEIEX. Free Trade Zones.

• International Marketing Companies – IMC.

Foreign Exchange Regulation

e Colombian Exchange Regime is regulated by the Bank of the Republic (BANREP) and is subject to a foreign exchange control regime by authorities, among which we can highlight the National Directorate of Taxes and Customs (DIAN).

Under Colombian regulations, any foreign exchange transaction must comply with the guidelines established by these entities, which oversee the ﬂow of foreign currencies and the stability of the national currency. is means that companies must properly manage international currency transactions, meeting the requirements set for the purchase and sale of foreign currency.

In this regard, companies must be aware of the risks associated with fluctuations in the exchange rate of the Colombian peso against other international currencies. Variability in exchange rates can directly affect the profitability of international commercial operations, and companies must be prepared to mitigate these risks through foreign exchange hedging strategies.

For the above reasons, it is important to know which transactions are mandatory for channeling:

• IImport and export of goods.

• Foreign indebtedness operations entered

• into by residents in the country, as well as the ﬁnancial costs inherent thereto.

• Foreign capital investments in the country, as well as the yields associated with them. Investments of Colombian capital abroad, as well as the yields associated with them.

• Financial investments in securities issued abroad or investments in assets located abroad, as well as the yields associated with them, except when the investments are made with foreign currency from operations that should not be channeled through the exchange market.

• Guarantees and collateral in foreign currency. Derivative transactions.

Foreign trade in Colombia is marked by a series of challenges and opportunities that depend on companies' ability to adapt to a complex and dynamic regulatory environment. Compliance with international agreements, customs regulations, and foreign exchange control are fundamental aspects that must be properly managed to ensure the success of international business in Colombia.

Specialized legal advice in foreign trade is recommended for companies that wish to maximize international trade opportunities and minimize legal and operational risks.

Colombian residents, for foreign exchange purposes, must report mandatory channeling operations and comply with the foreign exchange regime.

e Facts

Trade treaties and agreements: Colombia facilitates foreign trade and protects investments through multiple international treaties.

Customs regime: Customs regulations unify procedures and ensure legal security and compliance with standards.

Foreign exchange regulation: e Bank of the Republic and DIAN regulate foreign currencies, and companies must manage international transactions to mitigate risks.

It is essential to keep in mind that operations such as investments, debt operations, and the import and export of goods must be reported to the Bank of the Republic, as long as the party involved is a Colombian foreign exchange resident.

1.Foreign investment in Colombia.

2.Colombian investments abroad.investments abroad

In this regard, the registration of foreign investment with the Bank of the Republic grants the holder, among other things, the right to remit abroad the amount of remittances resulting from the sale or liquidation of the investment, as well as the right to reinvest.

Keep in mind that foreign exchange transactions not regulated by the foreign exchange market are part of the free market. Such transactions can be made without the need to inform the Bank of the Republic. For example, payment in foreign currency for services rendered

e Facts

e Colombian financial system is regulated by the Financial Superintendence and the Bank of the Republic, which oversee various financial entities and control the inflow and outflow of capital to prevent money laundering and tax evasion.

Colombia Free Trade Agreements (FTAs) –

•

• Eﬀective date: 02/07/2023.

Law 2105 of 2021

• Eﬀective date: 04/09/2022. • Law 2095 of 2021

• Eﬀective date: 01/01/2022

• Law 2061 of 2020

• Eﬀective date: 07/10/2021

• Law 2004 of 2019

13/12/2019

• Eﬀective date: 06/05/2015

Law 1690 of 2013

• Eﬀective date: 30/01/2015

•

• Law 1692 of 2013

Eﬀective date: 07/07/2014

• Law 1668 of 2013

• Eﬀective date: 03/07/2014

• Law 1667 of 2013

date: 11/07/2013

12/06/2012

• Eﬀective date: 01/01/2012

Law 1344 of

• Eﬀective date: 22/12/2009

• Eﬀective date: 23/10/2008

•

• Law 1082 of 2006

date: 01/01/2005

• Decision 578 of 2004

8. Labor Regime

e legal labor framework in Colombia is based on a combination of constitutional norms, laws, regulations, and judicial decisions that govern the relationships between employers and workers. Its purpose is to ensure a balance between the protection of workers' rights and the stability of the business environment.

For foreign investors and companies wishing to operate in Colombia, it is crucial to understand the legal implications of hiring personnel, terminating employment relationships, the costs Associated with employment, and the employer's responsibilities regarding social security and labor rights.

Employment contracts and conditions

e Colombian Substantive Labor Code regulates the diﬀerent types of employment contracts, establishing rights and obligations for both employers and employees.

Open-ended (indeﬁnite-term) contract

is is the most recommended type of contract for long-term employment relationships, as it allows for continuity and job stability. Some of its main characteristics are:

• It does not have a set end date.

• It may be terminated with just cause, by mutual agreement, or without just cause with severance payment. It is presumed that the employment relationship is open-ended unless explicitly agreed otherwise.

In the event of dismissal without just cause, the employer must pay severance equal to 30 days of salary for the ﬁrst year worked, and 20 days for each additional year (or proportionally), depending on the employee's salary.

Fixed-term contract

is type of contract is set for a speciﬁc period and must comply with certain legal conditions to be valid:

• It must be in writing and cannot exceed three years, although it may be renewed.

• If the duration is less than one year, it may only be renewed up to three times for similar or shorter periods, after which the renewal must be for at least one year. Termination requires at least 30 days' prior

• notice before the contract’s expiration.

• e severance for dismissal without just cause is the amount corresponding to the remaining term of the contract.

Contract for a speciﬁc project or task

is contract is used when the employee is hired to carry out a speciﬁc task, the duration of which depends on the time needed to complete the project. It ends once the task is completed, without the need for severance.

In the event of termination without just cause, the worker is entitled to compensation equal to the remaining time required to complete the task, which must not be less than 15 days’ salary.

Service provision contract

Unlike employment contracts, this type of contract does not create a relationship of subordination, as the contractor is autonomous in carrying out their duties. Its characteristics include:

No social beneﬁts or social security contributions are paid by the hiring party; the contractor is responsible for their own contributions.

• It is essential that the hiring party requires the contractor to present proof of compliance and payment of their social security obligations.

• It does not involve subordination—there are no ﬁxed schedules or direct control by the contracting party.

Common in sectors requiring temporary consultancy or advisory services.

e main distinction between an employment contract and a service provision contract lies in the continuous subordination that characterizes

the employee. While a service provider enjoys autonomy and independence in technical, administrative, ﬁnancial, and management matters with respect to the contracting party, the employee is permanently subject to the employer’s directives regarding the time, manner, and place of the work, and cannot independently set the conditions of their activity.

Colombia does not have speciﬁc regulations that determine when each type of contract should be used. Generally, service provision contracts are used in the following situations: hiring specialized services where the expert is the contractor; non-exclusive relationships that allow the contractor to serve multiple clients simultaneously; and for services that the contracting entity does not cover with its own staﬀ under an employment contract.

Employer Obligations and Responsibilities

Employers in Colombia have multiple legal responsibilities toward their workers, including mandatory payments, compliance with social security regulations, and adherence to speciﬁc labor laws.

Salary and Social Beneﬁts

Salary is the payment a worker receives in exchange for their services. In Colombia, employers must respect the current legal minimum wage and provide the following beneﬁts:

• Severance Pay (Cesantías): One month's salary per year worked, deposited into a severance fund.

• Interest on Severance Pay: Annual payment of 12% on the accumulated severance amount.

• Service Bonus (Prima de Servicios):

• Equivalent to 15 days' salary for every six months worked.

• Vacation: 15 working days of paid leave for each year of work.

• Transportation Allowance: For workers earning less than two minimum wages, the amount is set annually by the national government.

Social Security

Employers must enroll their workers in the health, pension, and occupational risk systems and make monthly contributions:

• Health: 12.5% of the salary (8.5% paid by the employer and 4% by the worker).

• Pension: 16% of the salary (12% paid by the employer and 4% by the worker).

• Occupational Risks: Based on the risk level of the work activity.

Work Modalities and Labor Flexibility

Telework and Remote Work

Colombia has made progress in regulating telework and remote work, as detailed below:

Telework (Law 1221 of 2008)

Telework is a labor modality where paid work activities are carried out using information and communication technologies, without requiring the physical presence of the employee at a speciﬁc site. ere are three categories: autonomous teleworkers, mobile teleworkers, and supplemental teleworkers. In addition to the above, it must be considered that:

• e employee’s salary may not be lower than that of oﬃce workers with equivalent duties.

A person is not considered a teleworker

• merely for performing tasks from home; this arrangement must be formally agreed upon with the employee.

• Employers must report this type of employment relationship to the Ministry of Labor.

• A person is not considered a teleworker merely for performing tasks at home; this must be formally agreed upon with the employee.

Employers must report this type of employment relationship to the Ministry of Labor.

Remote Work (Law 2121

of 2021)

is modality involves the entire employment relationship being carried out remotely through information technologies, without physical interaction between the employer and the employee.

• e employer may exceptionally require physical presence for:

• Verifying standards of tools and equipment

• Installing or updating equipment or software Repeated non-compliance or disciplinary processes

Conditions for these modalities:

Deﬁned as a modality in which the employee performs their duties outside the company’s physical premises using technology. Key aspects include:

• Telework may involve partial in-person arrangements (supplementary), while remote work is entirely oﬀsite.

• A formal contract or agreement must establish the conditions of the remote modality.

• e employer must ensure the employee has adequate tools to perform their duties.

• e right to digital disconnection is protected

• to avoid work overload.

• If the employee earns less than two minimum wages, a connectivity allowance must be provided.

Working Hours and Rest

Colombian labor legislation is undergoing a transition to reduce the standard weekly working hours to 42, distributed over a maximum of six days, with at least one mandatory rest day.

• Overtime is subject to surcharges ranging from 25% to 100%, depending on whether it occurs during daytime, nighttime, or on holidays.

• A ﬂexible schedule is allowed, as long as it does not exceed the legal weekly limit.

Risks in Hiring Employees from Abroad

A critical aspect to consider when hiring employees through foreign parent companies is the payment of salaries or beneﬁts from abroad. In Colombia, if a foreign company directly covers the costs of a local worker and then seeks reimbursement through its Colombian subsidiary (using the Reimbursement of Expenses model, as outlined in OECD guidelines), there is a risk that a labor judge may determine that the actual employer is the foreign entity.

properly structure labor relationships to avoid this type of risk.

Mimimum age to work in Colombia

e Political Constitution of Colombia establishes As a general rule, the employment of minors under 14 years of age is prohibited in most labor activities. Minors under 18 may work in exceptional cases, provided they have the express authorization of a labor inspector or the local authority, upon request by the parents or the Family Ombudsman, as stipulated in Article 113 of Law 1098 of 2006.

For minors between the ages of 14 and 15, the law only permits participation in artistic, cultural, recreational, or sports-related activities, with a limit of 14 hours per week, in accordance with Article 35 of Law 1098 of 2006.

In the case of adolescents between 15 and 17 years old, regulations allow a maximum of 6 working hours per day and 30 hours per week. eir workday must end before 6:00 p.m., as established by Article 114 of Law 1098 of 2006. For those who have turned 17, the permitted workday extends to 8 hours per day and 40 hours per week, with a latest allowed time of 8:00 p.m.

Unions and Collective Bargaining

Colombia allows the formation of labor unions and the collective negotiation of employment conditions. Companies must be prepared for the possibility of negotiations with labor unions and potential labor disputes.

Colombia oﬀers a legal framework that ensures job stability and protection for workers, while also placing considerable demands on employers.

Compliance with these regulations is essential to avoid sanctions and legal disputes that could aﬀect the operation of companies in the country.

e Facts

Types of Employment Contracts: In Colombia, employment contracts include indefinite-term, fixed-term, project-based (for a specific task or job), and service contracts, each with specific characteristics and conditions.

Employer Obligations: Employers must fulﬁll mandatory payments such as severance (cesantías), service bonuses (prima de servicios), vacation leave, and must enroll employees in health, pension, and occupational risk systems.

Telework and Remote Work: Regulated by Laws 1221 of 2008 and 2121 of 2021, these allow work outside the company’s physical premises using technology, with speciﬁc conditions for each modality.

Working Hours and Rest: e standard weekly working hours in Colombia are transitioning to 42 hours, with surcharges for overtime and the option for ﬂexible schedules.

Hiring Personnel from Abroad: Foreign companies must properly structure labor relationships to avoid being deemed the actual employer by law, which could result in legal liabilities.

Labour Market

Colombia has shown economic recovery, driven by public policies aimed at encouraging foreign investment and strengthening employment.

e unemployment rate closed at 9.5% in 2024, a signiﬁcant decrease that reﬂects the reactivation of key sectors such as agribusiness, technology, healthcare, infrastructure, and tourism (DANE, 2024).

e minimum wage in 2025 was set at 1.6 million Colombian pesos (approximately USD 400), positioning Colombia as an attractive destination for establishing operations at competitive costs (Ministry of Labor, 2024). In addition, the government has implemented training programs to improve workforce skills and align them with the needs of the global market.

e country also oﬀers a ﬂexible labor environment, with companies adopting hybrid or fully remote models, which facilitates the hiring of talent across regions and boosts productivity (ProColombia, 2024).

Attraction of International Talent

Colombia is also positioning itself as an attractive destination for labor migration. e government has implemented policies to facilitate the attraction of foreign talent in priority sectors such as technology and healthcare. ese initiatives include special visas for highly skilled workers and labor integration programs (Migración Colombia, 2024).

e inclusion of international talent contributes to enhancing the competitiveness of the Colombian labor market and promotes knowledge transfer, further driving the growth

of strategic industries.

Minimum Wage 2025

rough Decree 1572 of December 24, 2024, the government set the minimum wage at COP $1,423,500 as of January 1, 2025. is represents a 9.53% increase, equivalent to COP $123,500, compared to the 2024 minimum wage.

Transportation allowance for the current year, with an increase of COP $38,000 compared to last year’s amount.

at being said, it can be stated that the monthly provision an employer must consider for a worker earning the minimum wage is approximately COP $2,325,821, taking into account the other labor-related ﬁnancial obligations as shown in the previous table.

It is important to clarify that this estimated monthly amount does not include the employer’s legal obligation to provide work clothing and footwear, which must be given to employees earning up to 2 monthly legal minimum wages (COP $2,847,000), three times per year, every four months.

Furthermore, considering that the integral minimum wage is equivalent to 10 monthly legal minimum wages, for 2025 it amounts to COP $14,235,000 plus 30% for the beneﬁts factor, which would be approximately COP $18,505,500.

50% of companies plan to increase their workforce, showing optimism compared to the previous year. Increase in Job Creation

71.6% of companies will opt for hybrid work schemes: remote and on-site work. Predominance of Hybrid Work Model

Demand in IT and Manufacturing

38% is the share that these sectors lead in hiring intentions.

Pension Reform

On July 16, 2024, the president enacted Law 2381, which introduces structural changes to Colombia's current general pension system. e main elements of the pension reform include the following:

1. A fundamental overhaul of the current pension system structure, which will now be called the “Comprehensive Social Protection System for Old Age, Disability, and Death of Common Origin.”

2. e system is structured around the following four pillars:

Solidarity Pillar: Aimed at elderly Colombians (men aged 65 and women aged 60), residing in the national territory, who are in conditions of extreme poverty or vulnerability. It also applies to men over 55 and women over 50 with a disability of 50% or more who do not have an income source ensuring a digniﬁed life. ey will receive a subsidy known as Basic Solidarity Income, ﬁnanced jointly by the National General Budget (PGN) and the subsistence sub-account of the pension solidarity fund.

Semi-contributory Pillar: Includes individuals affiliated with the system—men over 65 and women over 60—who have contributed between 300 and 1,000 weeks but have not met the full requirements for a contributory pension. ese individuals may receive a Lifetime Economic Benefit, financed by the PGN and their own contributions through various mechanisms adopted by the government.

Contributory Pillar: Designed for dependent and independent workers, public servants, and individuals with the ﬁnancial capacity to

make contributions to access any economic beneﬁt from the system (old-age pension, disability, survivor beneﬁts, funeral aid). is pillar consists of the following components, based on the Contribution Base Income (IBC):

Average Premium Component: Managed by Colpensiones, which will receive all contributions from aﬃliates whose IBC ranges between 1 and 2.3 times the monthly minimum wage (SMMLV).

Complementary Individual Savings Component: Managed by private pension funds (ACCAI), which will receive all contributions from aﬃliates with an IBC exceeding 2.3 SMMLV, up to 25 SMMLV.

Pension contributions will be distributed between the two components as follows: if the IBC exceeds 2.3 SMMLV, the portion up to 2.3 SMMLV must be contributed to Colpensiones, and any excess must be directed to a private pension fund.

Voluntary Savings Pillar: Comprises individuals who choose to make voluntary savings to reach the amount required to qualify for a comprehensive old-age pension.

Mandatory nature and amount of contributions

e contribution to the pension system in the pillar. e contributory rate remains at 16% of the Contribution Base Income (IBC), and the distribution of contributions between the employer and the employee will continue to be 75% and 25%, respectively. However, the additional contribution on the IBC destined for the Pension Solidarity Fund will be as follows: see table.

As a new measure, the contracting party who engages independent workers through a

People with income between 4 and 7 SMLMV

People with income between 7 and 11 SMLMV

People with income between 11 and 19 SMLMV

People with income between 19 and 20 SMLMV

People with income above 20 SMLMV

Retirees receiving a pension between 10 and 20 SMLMV

Retirees receiving a pension above 20 SMLMV

service contract is responsible for withholding fees and making the contribution to the Social Protection System.

4. e Pension and Paraﬁscal Management Unit (UGPP) will be responsible for carrying out collection actions when the employer, contractor, or contracted worker fails to pay pension system contributions (this function is currently handled by the pension fund administrators — AFPs).

5. Contribution for periods of less than a month, by days or by weeks. Contractors or dependent workers who are employed for periods of less than a month or by the day will be able to make contributions

6. Comprehensive Old-Age Pension. Once the amounts in both components have been determined, a single pension will be integrated, which will be recognized and paid solely by Colpensiones, including the payment of the 13th

annual pension installment (mesada 13).

7. Requirements to access the old-age pension. In the contributory pillar, the requirements to access the beneﬁt are uniﬁed across both components—the average premium (prima

media) and the individual savings supplement. e requirements will be: 57 years of age for women and 62 for men, and in both cases, 1,300 weeks of contributions.

However, starting January 1, 2025, the number of required contribution weeks for women to qualify for the old-age pension will gradually decrease to 1,000, according to the following table:

8. All other beneﬁts in the system arising from disability, old age, and death contingencies will also be fully assumed by Colpensiones.

9. Transitional Regime: Individuals who, at the time the Comprehensive Social Protection System for Old Age, Disability, and Death of Common Origin comes into eﬀect, have 750 weeks of contributions (for women) or 900 weeks of contributions (for men) will continue to be fully governed by Law 100 of 1993 and its related regulations.

10. Opportunity to Transfer: Individuals who have 750 weeks of contributions (women) or 900 weeks (men) and are less than ten years away from reaching pensionable age will have

Labor Reform vs. Current Legislation

On October 16, 2024, the Plenary of the House of Representatives of the Congress of the Republic approved in second debate the Labor Reform. e bill is currently being processed in the Seventh Commission of the Senate of the Republic, where it must undergo two additional debates and be signed by the President in order to become law.

Among the main proposals of the labor reform, we ﬁnd the following:

e preferred form of employment will be indefinite-term contracts. Although the possibility of entering into fixed-term or task-based contracts remains, some changes are proposed for fixed-term contracts. Specifically, their duration may not exceed 4 years, including renewals. ey may not be renewed indefinitely, so if, once this period has expired, the worker continues providing services, the contract will be deemed to have been indefinite-term from the beginning of the employment relationship.

To understand this proposal in the labor reform, it is necessary to clarify that under current labor legislation, while ﬁxed-term contracts may not exceed three years in duration, such duration may be renewed indeﬁnitely.

In this sense, if before the expiration date of the stipulated term, neither party notiﬁes the other in writing of their intention not to renew the contract with a minimum of thirty (30) days’ notice, it is deemed automatically renewed for a period equal to the one initially agreed upon, and so on.

Furthermore, if the ﬁxed term is less than one

(1)year, the contract may only be renewed for up to three (3) successive periods of equal or lesser duration, after which any further renewals must be for no less than one (1) year, and so on.

With regard to task-based contracts, the reform proposes that these must always be in writing, specifying in detail and with precision the task or project contracted. Otherwise, they will be considered indefinite-term contracts. Likewise, if after the completion of the agreed-upon task or project the worker continues providing services—unless it is for a new or different task, in which case the new task must also be agreed upon in writing—the contract will be understood as indefinite-term.

Regarding daytime and nighttime work hours, the reform proposes the following modiﬁcation: daytime work will be that performed between 6:00 a.m. and 7:00 p.m., and nighttime work will be that performed between 7:00 p.m. and 6:00 a.m.

It should be noted that current labor legislation deﬁnes daytime work as that performed between 6:00 a.m. and 9:00 p.m., and nighttime work as that performed between 9:00 p.m. and 6:00 a.m.

e potential modiﬁcation would have an economic impact for employers due to the surcharge for nighttime work, since nighttime work, by its very nature, must be compensated with a 35% surcharge over the regular daytime wage. Additionally, there would be an increase in the value of nighttime overtime, since it must be compensated with a seventy-ﬁve percent (75%) surcharge over the value of regular

daytime work, unlike daytime overtime, which is compensated with a 25% surcharge over the regular daytime wage.

Regarding work on mandatory rest days or holidays, the reform proposes compensation with a 100% surcharge over regular salary, proportional to the hours worked, with gradual implementation as follows:

a. Starting July 2025, the surcharge for working on a mandatory rest day or holiday would increase to 80%.

b. Starting July 2026, the surcharge would increase to 90%.

c. Starting July 2027, full application of the 100% surcharge would take eﬀect.

d. Current legislation provides for a 75% surcharge for work on Sundays or holidays.

erefore, if the labor reform is approved by the Congress of the Republic, there would be an increase in labor costs for the employer.

e reform also proposes the addition of the following types of leave:

• PTo attend scheduled or emergency medical appointments, including cases in which the employee experiences disabling menstrual cycles, dysmenorrhea, or abdominal tension associated with already diagnosed endometriosis.

• To attend school-related obligations as the guardian of children and/or minors who are members of the employee’s family unit.

• To address matters related to judicial, administrative, medical, or legal situations involving gender-based violence, of which any employee may be a victim, regardless of their identity or sexual orientation. e employer and employee may agree on one (1) paid rest day for every six (6) months of work, provided the employee certiﬁes that they used a bicycle as a means of transportation to and from work.

• Fathers will be entitled to four (4) weeks of paid paternity leave. Paid paternity leave applies to children born to a spouse or permanent partner, as well as to adoptive fathers. Currently, fathers are entitled to 2 weeks.

Disciplinary process. Its implementation is proposed as mandatory for the imposition of sanctions and dismissals with just cause, with the possibility for the employee to be assisted by a lawyer throughout the process. e process must include at minimum the following:

a. Formal notiﬁcation of the initiation of the process.

b. Description of the acts, conduct, or omissions of the employee.

c. Delivery to the employee of all evidence supporting the case.

d. Indication of a time period during which the employee may respond to the allegations, contest the evidence, and submit any additional evidence in their defense. is period must not be less than 5 days. If the employee’s response is verbal, a written record of their statements must be prepared.

f. A ﬁnal, properly reasoned decision clearly identifying the speciﬁc cause(s) or reason(s) for the outcome.

g. Any sanction imposed must be proportional to the facts or omissions.

h. e employee must be given the opportunity to appeal the decision.

e disciplinary process must be carried out within a reasonable period of time, in accordance with the principle of immediacy.

On this point, it is clariﬁed that although the high courts have stated that before imposing a disciplinary sanction, the employer has the duty

to respect the employee's right to a defense, current labor legislation does not establish a regulated disciplinary process with deﬁned stages. erefore, it is governed by the internal work regulations adopted by each company.

It is established that companies with one hundred (100) or more employees must hire at least one worker with a disability or recipients of a disability pension under any provisional regime. Persons with disabilities must hold the corresponding disability certiﬁcation.

Regarding apprenticeship contracts, the reform proposes that throughout the entire duration of the relationship, the apprentice receive a maintenance allowance of 60% of one Monthly Legal Minimum Wage (SMLMV) during the academic phase and one (1) SMLMV during the practical phase. Additionally, the monetary quota is increased to 1.5 SMLMV for each apprentice not hired by the company. e current regulation provides for 50% during the academic phase, 75% during the practical phase, and likewise, one (1) SMLMV.

Telework modalities: autonomous, mobile, hybrid, transnational, and temporary or emergency. Transnational telework is not currently regulated by law. It would allow the execution of contracts governed by Colombian legislation, with the worker providing services from outside national territory. In such cases, the employer must have insurance that covers at least healthcare benefits in case of accident or illness, without prejudice to the mandatory affiliation to Colombia’s social security system. Temporary or emergency telework is a modality applied in specific situations such as health emergencies or natural disasters, without affecting the existing regulation on working from home.

Lastly, it is important to mention that, under

Law 2101 of 2021, the maximum legal working hours have been gradually reduced as follows:

2023: 47 hours per week

2024: 46 hours per week

2025: 44 hours per week

2026: 42 hours per week

e reduction of the workweek to 42 hours exempts the employer from granting the semiannual family day and from dedicating 2 hours per week to recreational, sports, cultural, or training activities in companies with more than 50 employees.

During the gradual implementation period, the portion of the workday dedicated exclusively to recreational, cultural, sports, or training activities may be proportionally adjusted by mutual agreement between the employee and the employer.

e Facts

Fixed-term contracts: According to the reform, these contracts may not exceed 4 years in duration, including extensions. If this time is exceeded, the contract will be considered an indeﬁnite-term contract from the beginning of the employment relationship.

9. e Impact of Digital Transformation on Organizations: Perspectives and Challenges

In 2025, Colombia is solidifying its position as one of the most attractive economies in Latin America for foreign direct investment (FDI). With a more stable political environment, a growing middle class, and a vibrant entrepreneurial ecosystem, the country oﬀers a wide range of opportunities in sectors such as technology, renewable energy, infrastructure, healthcare, agribusiness, and ﬁnancial services.

Investment Opportunities in Colombia in the Digital

From a business perspective, Colombia is betting on digital modernization and economic openness. Reforms in digital infrastructure, tax incentives, and the promotion of tech clusters have strengthened its position as an ideal destination for innovative companies. Added to this is a young, skilled workforce that allows companies to access qualiﬁed talent with a global mindset. is combination of factors makes the country a strategic platform for accessing regional markets and scaling operations in Latin America.

Recommendations

• Implement digital management platforms from day one: cloud-based ERP, intelligent CRM, and project management tools.

• Use AI to enhance customer experience, optimize operations, and automate repetitive tasks.

• Foster a culture of innovation and continuous learning among local teams.

Digital Business Models for the Colombian Environment

Colombia features a young, digitally connected market with high technology consumption. Investors are encouraged to adapt business models based on digital platforms, on-demand services, and personalized solutions.

e growing internet penetration and widespread use of mobile devices pave the way for scalable digital initiatives. Business models such as e-commerce, ﬁntech, and digital education platforms have gained ground in the country and represent attractive investment

opportunities. Companies that understand Colombian consumer preferences—especially their desire for convenience and personalization—will have a signiﬁcant advantage in brand positioning.

Recommendations

• Adopt subscription, freemium, or pay-per-use models in sectors like health, education, and ﬁntech. Invest in e-commerce, smart logistics, and digital marketplaces.

Risks and Challenges for Foreign Investors

Develop customer-centric, data-driven value propositions. Doing business in Colombia involves challenges such as bureaucracy, regulatory variability, and cybersecurity risks. However, with solid planning and proper support, these challenges can be mitigated.

In addition to operational factors, investors should consider risks related to infrastructure, logistics, and digital security. It is essential to build strategic partnerships with local stakeholders and regulatory bodies to anticipate changes in the environment and mitigate potential contingencies. e key lies in acting proactively, implementing regulatory compliance protocols, and maintaining an active approach to business risk management.

Recommendations

• Conduct thorough due diligence on the legal and tax framework.

Design cybersecurity and data privacy strategies from the outset.

• Work with local advisors in law, accounting, and technology.

National Development Plan (PND) 2022–2026

e National Development Plan 2022–2026,

Regulatory Framework for Digital Transformation in Colombia: Implications

for Investors and Business Managers

“Colombia: Global Power of Life”, recognizes digital transformation as a cross-cutting tool to achieve the goals of equity, productivity,

sustainability, and governance. From this perspective, the PND does not view digitalization as an end in itself, but rather as a strategic enabler to close social gaps, improve institutional eﬃciency, and boost key sectors of the economy. is approach requires coordinated eﬀorts to democratize access to technology, strengthen the State’s digital capabilities, and promote open innovation across regions.

Under the “Regional Convergence” pillar, the PND aims to bring high-quality digital connectivity to rural and underserved areas through the deployment of ﬁber optic networks, wireless technologies, and the development of community digital centers. is territorial vision opens up public-private investment opportunities in ICT infrastructure, digital training, and last-mile digital services—especially in regions with agro-industrial, environmental, and tourism potential.

Additionally, the government seeks to promote digital entrepreneurship in small municipalities through digital literacy programs, funding, and business support services.

One of the most innovative pillars of the plan is the promotion of Digital Governance and Open Government. is includes a commitment to

automate administrative procedures, ensure interoperability between public platforms, and strengthen national cybersecurity. is creates a favorable environment for investment in GovTech, legaltech, and SaaS platforms for public entities, as well as partnerships with companies developing specialized software for document management, budget tracking, or citizen engagement.

e PND also aligns with CONPES 4144, which outlines strategic and ethical guidelines for the use of artiﬁcial intelligence in Colombia.

e PND sets specific digital transformation targets across productive sectors such as health, education, justice, mobility, agribusiness, and energy, offering a multisectoral portfolio for tech investors. e government plans to create innovation-friendly regulatory environments (regulatory sandboxes), enhance data protection, and expand digital inclusion—especially for women, youth, and rural populations. In this context, Colombia positions itself as a country committed to a smart and sustainable development model, where international technological and financial capital is viewed as a key ally to accelerate the transition toward an inclusive and resilient digital economy.

Digital transformation in Colombia has been driven by a set of laws, decrees, and policies that establish the regulatory framework for the adoption and use of digital technologies in the country. Understanding this regulatory environment is essential for investors and business managers looking to operate in Colombia.

Implications for Investors and Business Managers

Colombia's regulatory framework oﬀers a favorable environment for investing in digital transformation projects. e CONPES documents, along with the laws and decrees

CONPES Related to Digital Transformation Processes

CONPES documents (National Council for Economic and Social Policy) represent the oﬃcial public policy guidelines. Below are the most relevant in the digital context:

Relevance Policy

CONPES 3920 (2018)

National Data Exploitation Policy (Big Data)

CONPES 3854 (2016)

National Digital Security Policy

CONPES 3975 (2019)

National Policy for Digital Transformation and Artiﬁcial Intelligence.

CONPES 4005 (2020) National Policy on Financial Inclusion and Education

CONPES 4012 (2020)

National Electronic Commerce Policy

CONPES 4023 (2021)

Policy for Reactivation and Sustainable Growth

Objective

Promote the strategic use of data in government decision-making and the country's economic development.

Improve cybersecurity in Colombia, strengthen institutional capacities and foster digital trust.

Promote the use of emerging technologies (AI, IoT, blockchain) to modernize the productive and governmental apparatus.

Expand access to digital ﬁnancial products and services, integrating digitalization strategies for inclusion.

Strengthen the institutional, infrastructure and trust framework for the development of e-commerce.

Promote the use of data and digital intelligence to monitor and direct the post-COVID economic reactivation.

It encourages the development of business models based on open data, analytics and Big Data.

Key for investors in digital, ﬁntech, e-commerce and cloud-based services sectors.

It establishes a roadmap for the development of digital ecosystems and facilitates public-private partnerships.

Provides opportunities in ﬁntech, digital ﬁnancial education, mobile banking and alternative credit solutions.

Create an enabling environment for digital platforms, marketplaces, smart logistics and digital payment methods.

It opens space for data analytics projects, institutional intelligence, digital ﬁscal control and automated monitoring systems.

CONPES 4144 (2022)

National Artiﬁcial Intelligence Policy

Establish the principles and strategies for the development, implementation and ethical use of AI in Colombia.

It attracts investments in applied research, AI startups, centers of excellence, and automation projects.

Key laws

Law / Decree

Law 527 of 1999

Law 1341 of2009

Law 1712 of2014

Law 1581 of2012

Law 1955 of2019

Law 2106 of2019

Decree 1078 of 2015

Decree 767 of 2022

Decree 1263 of 2022

Decree 088 of 2022

Description

Establishes and regulates access to and use of data messages, electronic commerce, and digital signatures, creating a legal framework for electronic transactions in Colombia.

Deﬁnes principles and concepts related to the information society and ICTs, establishing the general framework for the development of the sector in the country.

Known as the Transparency Law and the Right of Access to National Public Information, it establishes the obligation of public entities to ensure access to information, promoting the implementation of digital platforms for its dissemination.

Enacts general provisions for the protection of personal data, establishing principles and rights that must be respected in the processing of personal information, which is essential in digital environments.

Known as the National Development Plan 2018–2022, it sets guidelines for economic and social development, including aspects related to digital transformation and the digital economy.

Simpliﬁes, eliminates, and reforms unnecessary procedures in public administration, promoting the digitization of processes and services to improve governmental eﬃciency and transparency.

Uniﬁes the regulations of the ICT sector, establishing guidelines for the provision of digital services and the use of technological infrastructures in the country.

Updates the Digital Government Policy, setting directives for digital transformation in public entities and promoting the use of emerging technologies to improve service delivery to citizens.

Deﬁnes the guidelines and standards applicable to digital transformation in the public sector, addressing aspects such as data infrastructure, interoperability, and use of cloud services.

Establishes guidelines for the digitization and automation of procedures in public administration, with the aim of improving the eﬃciency and accessibility of services oﬀered to citizens.

mentioned, promote digitalization and the simpliﬁcation of procedures, facilitating business operations and reducing bureaucratic barriers. Additionally, the protection of personal data and transparency in access to information foster trust in the digital ecosystem.

For investors, it is essential to:

• Understand the Current Regulations: Become familiar with the laws and decrees related to digital transformation to ensure regulatory compliance and take advantage of the beneﬁts they oﬀer.

• Evaluate Opportunities in Key Sectors: Identify areas where digitalization is being incentivized by the government—such as ﬁnancial services, healthcare, and education—in order to direct strategic investments.

• Consider Tax Incentives and Government Support: Explore potential tax beneﬁts and government programs aimed at encouraging innovation and the adoption of digital technologies within companies.

us, digital transformation in Colombia is not only a state priority but also a strategic window of opportunity for both domestic and international investors. e current regulatory framework not only provides clear rules but also deliberately aims to promote technological development, innovation, data protection, and the creation of new digital markets.

Stable and Stimulating Regulatory Environment

e country has built a coherent legal architecture that regulates everything from technical aspects (Law 527 of 1999, Decree 1078 of 2015) to the ethical and social dimensions of digitalization (Law 1581 of 2012,

CONPES 4144 on Artiﬁcial Intelligence). is legal clarity helps mitigate regulatory risks and allows investment scenarios to be projected with greater conﬁdence and predictability.

Relevance:

• Encourages long-term decisions in sectors such as digital ﬁnancial services, virtual education, digital health, smart cities, and GovTech.

e existence of speciﬁc strategies like CONPES 3975 (Digital Transformation and AI) and 4023 (Sustainable Recovery) demonstrates an institutional commitment to digitalization.

Investment Opportunities in Priority Sectors

Public policy prioritizes key sectors where the use of digital technologies is cross-cutting, creating space for multiple business models.

Some concrete examples we can present include the following:

Focus on Ethics, Privacy, and Cybersecurity

Regulatory compliance in Colombia incorporates international standards for data protection and cybersecurity (Law 1581 of 2012; CONPES 3854 on Digital Security). is strengthens the trust of consumers, users, and strategic partners, and represents an essential aspect for ESG-focused (Environmental, Social, and Governance) investors.ESG (Environmental, Social and Governance).

Key considerations:

• Investors should adopt robust digital compliance and data governance policies.

• Incident response protocols, digital risk management, and personal data protection

• measures are required.

Educaction

E-learning platforms.

• Artiﬁcial intelligence for learning personalization.

Automated assessment.

• Augmented reality (AR/VR) for educational simulations.

• Virtual classroom management.

Finance and Fintech

Digital Government

Digital wallets.

• Mobile banking.

Alternative credit based on digital scoring.

• Smart insurance (InsurTech).

Contactless payments.

Crowdfunding platforms.

• Digital identity for KYC.

• Automation of procedures.

Interoperability between entities.

Electronic licenses and permits.

• Citizen participation platforms.

Blockchain for public contracts and registries.

Manufacturing and Industry 4.0

Collaborative robots. Predictive maintenance.

• Real-time monitoring with IoT sensors.

Digital twins.

Artiﬁcial intelligence for production line optimization.

Health

Telemedicine.

Interoperability of clinical data.

• Electronic medical records. Connected medical devices (IoT).

• Apps for chronic disease monitoring. Blockchain for drug traceability.

E-Commerce

Local and cross-border marketplaces. Intelligent logistics solutions. Consumer behavior analytics.

Payment gateways.

• Virtual sales assistants (chatbots).

Platforms for agri-food traceability.

• Satellite monitoring of crops. IoT sensors for irrigation and soils.

• Climate prediction platforms.

Rural marketplaces.

Digital credits for small producers.

Transport

and Mobility

Energy y Environment (GreenTech)

Smart grids.

Sensors for energy eﬃciency. Emissions monitoring platforms.

• Renewable energies with AI. Circular economy technologies

Construction and Smart Cities

Intelligent mobility apps.

Urban logistics platforms.

• Autonomous vehicles (pilots). Traﬃc management systems with AI. Interoperability of means of transport.

Electric mobility

• BIM (Building Information Modeling) solutions. Domotics.

• Critical infrastructure management with IoT.

Smart cities.

Urban sensors.

Intelligent lighting.

• Predictive surveillance.

Culture and Tourism

Digital tourism.

Augmented reality for museums and heritage.

Reservation platforms.

• Data intelligence for tourism ﬂows. Personalized experience management.

Defenece

and Security

Advanced cybersecurity technologies. Drone surveillance.

• Real-time risk management. Digital command and control centers. Training simulators.

Justice and LegalTech

• Automation of judicial processes. Virtual conciliation platforms.

• Smart contracts.

Digital evidence management. Electronic court ﬁle systems.

Profesional Services & Freelance

• Talent marketplaces. Accounting, legal and audit automation with AI.

• Remote work platforms with advanced security.

• Virtual coworking

AgroTech

Competitive

Advantages rough Technology

Adoption

Colombia's legal framework does not hinder innovation; on the contrary, it encourages responsible technological disruption. CONPES 4144 on Artiﬁcial Intelligence, for instance, promotes the ethical and strategic development of AI in sectors such as justice, health, transportation, and ﬁnancial services.

Implications:

• Colombia is an ideal testing ground to pilot and scale emerging solutions like AI, blockchain, IoT, and 5G.

Investment in data centers, tech hubs, incubators, and partnerships with universities can be leveraged through government incentives.

Government Support and Incentives for Digital Investment

e Colombian government has implemented programs to promote innovation and digital transformation, such as Misión TIC, INNPULSA Colombia, Apps.co, and co-ﬁnancing funds through MinCiencias. ese initiatives help reduce the initial ﬁnancial burden for investors.

Recommendations:

Explore public-private partnerships (PPPs) for digital projects.

• Apply for government calls for startup acceleration or co-ﬁnancing programs.

• Take advantage of tax incentives for technology projects.

•

e Facts

Recommendations for Investors and Business Managers

Regulatory Due Diligence: Ensure alignment with digital laws and policies, especially in areas such as personal data, cybersecurity, and electronic commerce.

Mapping the Digital Ecosystem: Identify key stakeholders (MinTIC, DNP, MinCiencias, industry associations, universities) and regions with the greatest potential for digital adoption.

Technological Adaptability: Be prepared for future regulatory changes related to emerging technologies (e.g., regulation of AI, crypto-assets, Web 3.0).

10. EGS - Environmental, Social, and Governance (ASG)

Colombia has a robust regulatory framework for environmental protection. Law 99 of 1993 established the Ministry of the Environment and organized the National Environmental System (SINA), setting guidelines for the management and conservation of natural resources.

Additionally, Decree 2811 of 1974, known as the National Code of Renewable Natural Resources and Environmental Protection, regulates the exploitation and conservation of these resources.

ASG ESG (or ASG in Spanish) refers to Environmental, Social, and Governance criteria.

Environmental: Includes practices related to environmental protection, such as reducing greenhouse gas emissions, sustainable management of natural resources, and minimizing waste.

Social: Focuses on a company’s impact on society, including labor rights, diversity and inclusion, and community relations.

Governance: Refers to corporate governance practices such as transparency, business ethics, and board structure.

ere is no doubt that an increasingly globalized economy requires companies to continuously improve and become more competitive in the face of increasingly demanding international markets. erefore, modern organizations must not only aim for ﬁnancial strength and corporate governance but also work on their social performance and ecological balance. In other words, they must address this challenge through the ESG (Environmental, Social, and Governance) approach.

From this perspective, business sustainability must be integrated transversally across the organization, rather than being confined to a specific function or department. is allows for a significant impact throughout the corporate ecosystem and on all stakeholders, including customers, suppliers, employees, investors, and society at large.

e inclusion of ESG criteria within companies is so relevant that it has been incorporated into the world of sustainable investing (SRI), as it helps external investors assess a company’s performance and risk. is has led organizations to develop ESG strategies that enable them to measure and improve performance across each

criterion. However, it is important to note that an ESG strategy must be fully aligned with the company’s overall direction, setting tailored goals and indicators to meet ﬁnancial, sustainability, and operational objectives, while reducing risks and creating value for stakeholders. is alignment ensures practical results and supports the company’s strategic planning, signiﬁcantly impacting its long-term performance.

is approach—embedding ESG criteria into the DNA of corporate strategy—offers a way to operationalize sustainability practices and create value for stakeholders. Among the key benefits for organizations are risk reduction and increased resilience, improved efficiency and productivity, and the creation of new business opportunities.

Sustainability Regulation

Sustainability regulation at the global level is already a reality. For example, the European Union (EU) has taken a major step by requiring organizations and their subsidiaries—regardless of whether they are located outside the EU—to identify risks and opportunities related to environmental and social criteria. Likewise, public companies are required to disclose corporate information about risks and opportunities linked to environmental and social sustainability (under the Corporate Sustainability Reporting Directive – CSRD).

In Colombia, the obligation to include sustainability criteria and corporate sustainability reporting has evolved, marking an important step toward transparency and corporate responsibility. e Superintendency of Companies (SuperSociedades), recognizing that sustainability is a multidimensional issue that must be part of corporate strategy, decision-making processes, and risk management, issued External Circular

100-000010 on November 21, 2023.

is circular provides "Administrative Recommendations on the Presentation of the Sustainability Report," oﬀering guidance to supervised entities for incorporating international sustainability reporting standards, along with disclosing their performance and impacts in environmental, social, and governance (ESG), economic, and ﬁnancial matters using criteria from an international standard.

e scope of this guideline applies to:

a. Business entities under the supervision or control of SuperSociedades that had total revenues or assets equal to or greater than 30,000 legal monthly minimum wages (SMMLV) as of December 31 of the previous year; and

b. Business entities that are part of the mining and energy, manufacturing, construction, tourism, or telecommunications sectors.

It’s important to note that SuperSociedades has established that BIC companies—commercial companies that voluntarily commit to contributing to social well-being, environmental protection, and the interests of their workers—must prepare and submit this report no later than May 31, 2025, together with their ﬁnancial statements and notes.

Additionally, the regulatory authority has announced in various communications that it will begin requiring supervised business entities to submit the "2025 Sustainability Report" on dates that will be deﬁned in the coming months. erefore, companies should start preparing for the submission of these reports now—even if they are not immediately required to do so—by planning their strategy to build a sustainability culture. is approach should aim to channel opportunities in a way that presents a competitive advantage and reduces risks. After

all, there is no value in producing sustainability reports if there is no strategy to support them.

In conclusion, developing and implementing a corporate sustainability strategy that is integrated into the DNA of the organization is the best way to improve ﬁnancial performance, attract investment, and ensure compliance with current regulations (and even anticipate future ones). Because companies that do not adapt will simply disappear.

e Facts

Companies must integrate ESG criteria across the entire organization to enhance their competitiveness and long-term sustainability.

Our authors and their areas of expertise for further guidance

Víctor Gómez

Managing Partner

C: victor.gomez@rsmco.co

T: +57 318 695 4818

Mónica Bobadilla

Lead Partner BPO & Human

Capital

C: monica.bobadilla@rsmco.co

Luis Eduardo Caicedo

Legal Partner

C: luis.caicedo@rsmco.co

T: +57 321 470 7850

Lucas Giraldo

Senior Consulting Manager

C: lucas.giraldo@rsmco.co

T: +57 317 364 4548

Catherine Castro

Human Capital Supervisor

Labor Law

C: catherine.castro@rsmco.co

Mauren Daza

Financial Consultant

C: mauren.daza@rsmco.co

Óscar Bobadilla

Leading Consulting Partner

C: oscar.bobadilla@rsmco.co

T: +57 318 695 4818

Sergio Viveros

Lead Partner PCS & Tax

C: sergio.viveros@rsmco.co

T: +57 320 491 5013

José Luis Salgado

Lead Audit Partner Caribbean Zone

C: jose.salgado@rsmco.co

T: +57 315 315 0482

Lina Silva BPO Manager

C: lina.silva@rsmco.co

T: +57 310 751 4376

David Aguilar

Legal Consultant

C: david.aguilar@rsmco.co

Erwin Blanco Nagle

Customs and Foreign Trade Specialist

Blanco De Castro Abogados

12. Bibliography

Brynjolfsson, E., & McAfee, A. (2014). e Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies. W. W. Norton & Company.

Chui, M., Manyika, J., & Miremadi, M. (2017). Where machines could replace humans—and where they can’t (yet). McKinsey Quarterly.

Davenport, T. H. (2018). e AI Advantage: How to Put the Artiﬁcial Intelligence Revolution to Work. MIT Press.

Kotter, J. P. (2012). Leading Change. Harvard Business Review Press. Kotter, J. P. (2012). Leading Change. Harvard Business Review Press.

Porter, M. E., & Heppelmann, J. E. (2014). How Smart, Connected Products Are Transforming Competition. Harvard Business Review, 92(11), 64-88.

Schein, E. H. (2010). Organizational Culture and Leadership. Jossey-Bass. Tapscott, D., & Williams, A. D. (2006). Wikinomics: How Mass Collaboration Changes Everything. Portfolio. Tapscott, D., & Williams, A. D. (2006). Wikinomics: How Mass Collaboration Changes Everything. Portfolio.

Westerman, G., Bonnet, D., Ferraris, P., & Parmenter, K. (2014). e Nine Elements of Digital Transformation.

MIT Sloan Management Review, 55(3), 1-10.

Westerman, G., Bonnet, D., Ferraris, P., & Parmenter, K. (2014). e Nine Elements of Digital Transformation. MIT Sloan Management Review, 55(3), 1-10.

Zengler, T. (2019). Digital Transformation: Survive and rive in an Era of Mass Extinction. McGraw-Hill Education.

DIAN: Dirección de Impuestos y Aduanas Nacionales

MINCIT: Ministerio de Comercio, Industria y Turismo de Colombia

Banco de la República: Banco de la República de Colombia

https://www.tlc.gov.co/getattachment/acuerdos/a-internacional-de-inversion/contenido/abc-de-los -acuerdos-de-inversion/dies-abc-aiis-25-09-20.pdf.aspx

•Camacol. (2024). Informe de inversión en el sector construcción en Colombia.

•DANE. (2024). Boletín estadístico del mercado laboral en Colombia.

•IDC. (2024). Technology Trends and BPO Services in Latin America.

•Invest in Bogotá. (2024). Colombia: A Strategic Investment Destination.

•Ministerio de Trabajo. (2024). Informe sobre el salario mínimo en Colombia.

•Migración Colombia. (2024). Políticas de migración laboral y atracción de talento extranjero.

•ProColombia. (2024). Guía de inversión extranjera en Colombia.

•SENA. (2024). Programas de formación y capacitación en Colombia.

Departamento Nacional de Planeación. (2022). Plan Nacional de Desarrollo 2022-2026. Recuperado de https://www.dnp.gov.co/plan-nacional-desarrollo/pnd-2022-2026 Departamento Nacional de Planeación. (2018). CONPES 3920: Política Nacional de Explotación de Datos

(Big Data). Recuperado de https://colaboracion.dnp.gov.co/CDT/Conpes/Econ%C3%B3micos/3920.pdf

Departamento Nacional de Planeación. (2016). CONPES 3854: Política Nacional de Seguridad Digital. Recuperado de https://colaboracion.dnp.gov.co/CDT/Conpes/Econ%C3%B3micos/3854.pdf

Departamento Nacional de Planeación. (2019). CONPES 3975: Política Nacional para la Transformación Digital e Inteligencia Artiﬁcial. Recuperado de https://colaboracion.dnp.gov.co/CDT/Conpes/Econ%C3%B3micos/3975.pdf

Departamento Nacional de Planeación. (2020). CONPES 4005: Política Nacional de Inclusión y Educación Financiera. Recuperado de https://colaboracion.dnp.gov.co/CDT/Conpes/Econ%C3%B3micos/4005.pdf

Departamento Nacional de Planeación. (2020). CONPES 4012: Política Nacional de Comercio Electrónico. Recuperado de https://colaboracion.dnp.gov.co/CDT/Conpes/Econ%C3%B3micos/4012.pdf

Departamento Nacional de Planeación. (2021). CONPES 4023: Política para la Reactivación y Crecimiento Sostenible. Recuperado de https://colaboracion.dnp.gov.co/CDT/Conpes/Econ%C3%B3micos/4023.pdf Departamento Nacional de Planeación. (2022). CONPES 4144: Política Nacional de Inteligencia Artiﬁcial. Recuperado de https://colaboracion.dnp.gov.co/CDT/Conpes/Econ%C3%B3micos/4144.pdf

Departamento Nacional de Planeación. (s.f.). Normatividad Economía y Transformación Digital. Recuperado de https://www.dnp.gov.co/LaEntidad_/subdireccion-general-prospectiva-desarrollo-nacional/direccion-d esarrollo-digital/Paginas/normatividad-economia-y-transformacion-digital.aspx?utm_source=chatgpt.c om Función Pública. (s.f.). Ley 527 de 1999. Recuperado de https://www.funcionpublica.gov.co/eva/gestornormativo/norma.php?i=36913 Función Pública. (s.f.). Ley 1341 de 2009. Recuperado de https://www.funcionpublica.gov.co/eva/gestornormativo/norma.php?i=56882 Función Pública. (s.f.). Ley 1712 de 2014. Recuperado de https://www.funcionpublica.gov.co/eva/gestornormativo/norma.php?i=49981 Función Pública. (s.f.). Ley 1581 de 2012. Recuperado de https://www.funcionpublica.gov.co/eva/gestornormativo/norma.php?i=93970 Función Pública. (s.f.). Ley 1955 de 2019. Recuperado de https://www.funcionpublica.gov.co/eva/gestornormativo/norma.php?i=103352 Función Pública. (s.f.). Ley 2106 de 2019. Recuperado de https://www.funcionpublica.gov.co/eva/gestornormativo/norma.php?i=77888 Función Pública. (s.f.). Decreto 1078 de 2015. Recuperado de https://www.funcionpublica.gov.co/eva/gestornormativo/norma.php?i=186766

Ministerio de Tecnologías de la Información y las Comunicaciones. (2022). Decreto 1263 de 2022. https://www.mintic.gov.co/portal/inicio/Sala-de-prensa/Noticias/238232:MinTIC-expide-el-Decreto1263-de-2022-para-deﬁnir-los-lineamientos-y-estandares-aplicables-a-la-transformacion-digital-pub lica

Función Pública. (s.f.). Decreto 767 de 2022. Recuperado de https://www.funcionpublica.gov.co/eva/gestornormativo/norma.php?i=175866

Ministerio de Tecnologías de la Información y las Comunicaciones. (s.f.). Política de Gobierno Digital. Recuperado de https://gobiernodigital.mintic.gov.co/portal/Politica-de-Gobierno-Digital/ Departamento Nacional de Planeación. (2022). Nace una nueva política nacional de inteligencia artiﬁcial (IA). Recuperado de https://www.dnp.gov.co/Prensa_/Noticias/Paginas/nace-una-nueva-politica-nacional-de-inteligencia -artiﬁcial-ia.aspx

Bogotá

Head Oﬃce

26th Street Avenue N°. 69 C – 03

Capital Center II

A Tower, 8th ﬂoor

Financial Assurance and Consulting

Phone: +57 (601) 580 0678

Cel: +57 316 023 3253

BPO

Phone: +57 (601) 794 1761

Cel: +57 316 023 3253

North Oﬃce | Tax

16 Avenue N°. 93 A – 36

Business Center 93 Building

204 Oﬃce

Phone: +57 (601) 703 4060

North Oﬃce | Legal

16 Avenue N°. 93 - 11

402 Oﬃce

Phone: +57 (601) 580 0678

Cel: +57 310 869 1424

Cel: +57 321 470 7850

Barranquilla

77 Street B N°. 57 - 103

Green Towers Business Center

Local 1, 2203 Oﬃce

Phone: +57 (601) 580 0678

Tel: +57 (605) 385 2867

Bucaramanga

27 Avenue N°. 36 - 14

Suramericana Building

325 Oﬃce

Phone: +57 (601) 580 0678

Cel: +57 310 609 8108

Cali

North Avenue 4 N°. 7 N – 46

Centenario mall

8th ﬂoor, Local 335

Phone: +57 (601) 580 0678

Phone: +57 (602) 489 0615

Cel: +57 313 624 0093

Medellín

El Poblado Avenue N°. 5 A - 113

One Plaza Business Center

Oﬃce 805

Phone: +57 (601) 580 0678

Cel: +57 305 343 5870

Cel: +57 315 244 1407