🇨🇴 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).