Fabio Osorio’s experience
Fabio Osorio helps companies do business in Latin America, he is part of the Praxity Global Alliance, which is a network that helps companies, not only in Colombia and Mexico, but also in more than 100 countries with Tax Compliance and financial services global tax focused on administrative and tax operations.
What are the top three mistakes that people make when opening a business in Colombia?
First, it is very important to know what the tax regimen in Colombia is, and which are its benefits, many people think it is like other countries in Latin America, but this can be a mistake.
Secondly, people don’t decide well the entity to use from the legal perspective, usually they chose SAS, which is the most common usual in Colombia, but not necessary the best one, it depends on the case.
Lastly, understand the market and how they are going to do work to be located. As well, if they can use free trade zones as a benefit for their operation
Do you think that they translate into also buying a business, not like opening one, but buying it one that is already settled?
Yes, I would say the first one of these cases they don’t go through pay for a due diligence to know where there may be the impacts to acquire the company. Then, they realize after their acquired make any merging something. Maybe that there’s some tax issues or financial issues they don’t take in consideration and maybe they pay more than they must.
What are the biggest perks of doing business in Colombia in terms of stack taxes specifically?
I would say that it depends on what kind of activities the company will performs, but usually in Colombia there are many. The first one I will say that if you are a manufacturing company or even a company that render services, they can use the free trade zones regimen and get an advantage for the operation because the covering contact. Rate in that thing that free trade zones is 20%, instead outside the free trade zones will be 31% nowadays, so it’s 11 points different, but the free training regimen is not for all the entities, so it depends on what kind of activity will perform.
Also, I think one that must be considered for companies as well is the orange economy, which is calling Colombia economy.
Which are many exam incomes for at least seven years to prefer businesses in Colombia depending on the activities. Normally, this orange economy was created for technological companies, or they have these kinds of services in Colombia so they will have the opportunity to not pay any taxes in Colombia for at least seven years and there is another perk for companies, but it will depend as well, of the kind of activities. There is another specific one, local energy entities and companies of renewable energy, companies that have these kind of services or activity there is as well an exemption for paying taxes and that is very important.
Colombia is tax friendly? More than other places?
Well, I would say that it can be, yeah it is ok. It is not the most expensive country talking about taxes, but it’s not the less. So, it is friendly because for international companies there are benefits, they can obtain doing business in Colombia. There are many possibilities to do business in Colombia, and you know that is the most important thing for companies work there in international law or open a company abroad is that Colombia´s location, a specific country located in Latin America at the top that can do businesses easily in Central America, North America, and South America. It is a good place to have you hope of business nowadays, for manufacturing and for companies that render IT services or technologic services, because Bogotá and Medellín still two cities that are expanding on these kinds of services and they’re free treason as well. Working with the orange economy can be really a greater bad touch for companies and so we say the Colombia could be friendly taxes if you go through the right path.
Tell us about your bit about your experience, experience with the Europa network specifically like why would you recommend someone to use Europa Network?
Yeah, I think you were open as well as the name call is such a great network for doing business for open entities as well in Colombia to have a help to understand you bit more what companies have to bear to start businesses in Colombia as the European Network has built a good network for different entities and through different advisors that they can give you not just the advice but also the point of view of other investors that already been in Colombia and they already start businesses here and so that is very important, to know what is the point of view of them and maybe to avoid the mistake they already made when starting businesses, so I think that’s the great point of being in an European network.
