Colombia is experiencing significant growth as a favored destination for investment and business activities. The country offers attractive sectors for investment, including tourism, IT, agriculture (including the medicinal cannabis sector), and mining. As the middle class in Colombia expands, there is an increase in disposable income, resulting in greater purchasing power and a large consumer market. This growing market is a key attraction for foreign companies seeking additional revenue sources.
Bogota, the capital of Colombia, provides excellent advantages for doing business and establishing a company. For most companies, forming a Simplified Share Company (SAS) is the best legal entity when establishing operations in the region. The SAS allows for 100% foreign ownership and can be incorporated with a single shareholder, whether it be a natural or legal person. This simplified corporate structure is suitable for businesses of all sizes and permits operation in most industries in Colombia, except for banking, finance, and insurance.
Companies interested in doing business in Colombia should be aware of corporate compliance requirements. Seeking personalized support and advice from a local law firm can ensure that your business remains in good standing with local authorities.
Once the company is incorporated, it must fulfill certain minimum statutory requirements. These requirements are not overly complicated or difficult to adhere to. However, it’s crucial for companies to meet them and ensure full corporate compliance while conducting business activities in Colombia.
One requirement is appointing a company legal representative during the business registration process. This representative serves as the legal face of the company and must have a good understanding of the requirements and potential implications of noncompliance. The legal representative can be a local Colombian national or a foreign citizen with legal residency rights in Colombia. Their responsibilities include signing documents on behalf of the company, opening corporate bank accounts, signing employment contracts, providing guidance on regulations, and assisting with registrations renewals. In case of any legal violations, the company legal representative will be held individually responsible.
Another requirement is registering a fiscal address for the company. This official registered office address is mandatory for all incorporated companies in Colombia and is used to receive correspondence from governmental authorities, investors, financial institutes, shareholders, and the public.
All companies in Colombia must file monthly and annual tax declarations, regardless of their commercial activity. The correct filing of tax declarations is the responsibility of the company legal representative. Failure to submit on time or according to requirements can lead to penalties. Additionally, companies must renew their commercial license annually to continue operating.
When considering operating in Colombia, it is essential to understand corporate obligations and requirements. Noncompliance with local Colombian law poses risks for individuals and companies. Seeking assistance from a trusted local legal and accounting firm can ensure compliance. Biz Latin Hub assists foreign companies in setting up their businesses in Colombia, offering the necessary support and experience for successful market entry.
