Start a New Business in Colombia? Here’s What You Need to Know

Colombia is an attractive country for new investors for all manner of reasons. Among Latin American countries, it offers excellent infrastructure. There are nine ports along its coastline, seven of which face out onto the Caribbean. There are also eleven different airports, which means excellent accesss to international markets. The country's major cities enjoy universal fibre-optic broadband, and the energy infrastructure has been deemed the best in the region by the International Institute for Management Development.

The country benefits from some of the most competitive free trade zones in the region, as well as a host of training incentives for private companies performing research and development. With forty-seven million citizens, Colombia is the second largest Spanish-speaking country in the world (with Mexico being the largest). Its position on the north tip of the continent makes it accessible from several major cities in the United States, as well as from major South American urban centres like Buenos Aires.

What to invest in?

By far the most significant commodity in the country is crude oil and coal, which collectively make up more than half of the country's export value. Of this, the overwhelming majority of what's on offer is crude petroleum - though the Colombian oil supply is dwindling.

Colombia is also famous for being among the world's most prolific coffee-exporters. The climate and geography lend themselves to the production of high-quality arabica: the combination of mountainous terrain, equatorial temperatures, and the infrastructure needed to get the best from both, mean that Colombian coffees regularly find their way into cafes around the world. Spices, fruits, and nuts also constitute a hefty portion of the country's exports, with bananas, tropical fruits and grains being reliable investments. The popularity of these products is likely to remain consistent in the near future, particular in the united states, which swallows more than a quarter of exports from Colombia.

What are the Challenges?

New companies will need to be registered with the National Tax Office and the Municipal Tax Authority. Simplified Stock companies have two years to start paying into a Colombian bank account; others must begin immediately. There are also several social security entities to register with. The process, all in all, takes around eleven working days.

Taxation in the country also tends to be extremely complex, with a flat rate of corporation tax sitting at 33%, and other more subtle tax variations, like a municipality tax and a variable tax rate. Navigating these complexities is best done with the help of a third-party advisor like RSM, whose expertise can help new businesses to steer clear of trouble.

Trading across borders is particularly tricky in Colombia, being more expensive and time-consuming than in other countries in Latin America and the Caribbean. Overlapping trade agreements mean that exports from different parts of the country may need to pay more than ten different duties on their way from source to destination. For a minority of product's on Colombia's Harmonized Tariff Schedule, an import licence is necessary. Again, this is an area where specialist advice can be enormously beneficial.