Top 10 Challenges Of Doing Business In Colombia - Mondaq Colombia - Blogs - VLEX 901518321

Top 10 Challenges Of Doing Business In Colombia

Published date27 October 2021
Subject MatterCorporate/Commercial Law, Government, Public Sector, Tax, Inward/ Foreign Investment, Corporate and Company Law, Corporate Governance, Contracts and Commercial Law, Money Laundering, Income Tax, Tax Authorities
Law FirmTMF Group BV
AuthorTMF Group

Starting a business in, or expanding it to Colombia is an attractive option in Latin America, but it is important to understand the challenges.

Colombia is one of the most attractive economies in Latin America for international trade and foreign investment. However, there are some challenges in terms of taxes, accounting, regulatory compliance and foreign exchange rules. In TMF Group's Global Business Complexity Index 2021, Colombia is ranked 4th out of 77 jurisdictions for the complexity of its business environment.

As a signatory of 16 international trade agreements, all of them currently in force, Colombia has access to more than 60 partner countries. In addition, Colombia receives preferential access to markets comprising 1.5 billion consumers, including the United States of America, the European Union and Mercosur. Similarly, Colombia has entered into 14 double taxation treaties, including those with Switzerland, Canada, Mexico, Spain, and the United Kingdom.

Colombia is a member of the Pacific Alliance, which was created in 2011 and includes Peru, Mexico and Chile. This group totals 56% of Latin America's foreign trade and 41% of total foreign investment in the region.

In addition, Colombia became a member of the Organisation for Economic Co-operation and Development (OECD) in 2020. Its membership was achieved after Colombia began standardising processes and adjusting legislation to the OECD standards, which will further help to open the country up to foreign investment, trade, and international relations.

2020 was an extremely complicated year for the global economy due to the Covid pandemic, which has resulted in an unprecedented slowdown across all sectors, regions, industries and social groups worldwide. Forecasts for the end of 2020 expected growth in Colombia to be around 4.9%, based on the country's solid domestic demand and the rising oil prices. If this trend is confirmed, forecasts for 2022 expect growth to be around 4.3%. Subsequent forecasts may be heavily affected if transmission of the disease rises, vaccination schemes are not completed and social distancing norms are not abided by, which could lead to additional lockdowns which halt the economy further.

Here are ten aspects to consider, for those wishing to do business in Colombia:

1. Starting a business

The first step to starting a business is to register the company or branch at the Chamber of Commerce of Jurisdiction. This process varies, depending on: which city or municipality...

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