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Understanding SEP in Colombia




🇨🇴 Significant Economic Presence  (SEP) as nexus approach 


As of January 1, 2024, Colombia has embarked on a transformative tax journey with the introduction of 'Significant Economic Presence' (SEP) regulations. This marks a significant shift, especially for foreign companies operating in Colombia.


🌐 Understanding SEP in a nutshell


  • Sale of Goods Foreign - entities activate a SEP in Colombia by surpassing USD 275,000 in annual income, coupled with regular sales to Colombian users. Specific regulations, including anti-fragmentation measures for related-party sales, come into play.

  • Digital-Based Services - SEP criteria extend to digital services, aligning with Colombian authorities' specifications in the ever-evolving digital landscape.

  • Taxation Mechanisms -  SEP-compliant companies face a 10% withholding tax, managed by entities like credit/debit card issuers or payment gateways (pending additional regulations). Alternatively, businesses can opt for an annual tax return, paying a 3% tax on gross income from Colombian sales, exempting them from the 10% withholding tax.

  • Exemptions - SEP regulations exempt entities residing in jurisdictions with a Double Tax Treaty with Colombia or if future multilateral agreements countermand Colombian SEP rules.


📍 How can Brinta help?


Staying tax-compliant in Colombia is now more critical than ever for non-resident entities. Brinta's solution is designed to keep your business seamlessly aligned with local tax laws, ensuring smooth operations within the Colombian regulatory framework (plus 18 more LATAM countries).



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