Local business tax, property tax and other municipal taxes

Why the analysis is done municipality by municipality

Local tax rules vary with each authority. The same service can be classified under one activity in one city and a different one fifty kilometres away, with the rate that follows. Once a company has premises, works, staff or customers in several municipalities, the question stops being how much is paid and becomes where it is paid and why. We work on the local regulation applicable in each jurisdiction where the company operates.

Where income is deemed earned

This is where the most expensive problems appear. The sale closes in one city, is dispatched from another and invoiced from a third; the contract is signed in Bogotá and the works are carried out in another department. If each municipality applies its own reading, the same income can end up declared twice or nowhere at all, and both cost money.

• Determination of the municipality where income is deemed earned, according to the activity involved.
• Sales with premises, without premises and through third parties, agents or platforms.
• Construction and service contracts performed outside the main place of business.
• Review of income declared in two jurisdictions and of income declared in none.
• Criteria for allocating the base between municipalities and for documenting that allocation.

Local business tax

• Classification of the activity and the rate applicable in each municipality where the company operates.
• Review of returns filed, of the taxable base and of when the tax is triggered.
• Deductions, exclusions and preferential treatments provided for in the local regulation.
• Withholding and self-withholding of the tax, both as agent and as the party withheld from.
• Registration and updating of information before the municipal authority.
• Effect of opening, closing or relocating premises during the year.

Property tax and the other local charges

Around the local business tax sits a family of charges that appear at specific moments of the operation, almost always when there is no room left to react.

• Property tax: review of how the tax is computed and of the caps provided for in the regulation.
• Building permit tax on construction projects and extensions.
• Registration duty on acts subject to registration.
• Local levies and other territorial contributions charged on contracting.

Disputes with the local tax office

The local front has its own procedures and its own deadlines, and they do not always match those of the national authority. We take on the technical defence of the taxpayer before the municipal authority at the same stages at which we do so before the DIAN.

• Answers to information requests and attendance at inspections.
• Answers to notices proposing to amend the return.
• Appeals against official assessments and penalty decisions of the municipal authority.
• Assessment of voluntary corrections before the dispute is formalised.
• Refund and offset claims for local tax credits.

What the client receives

• A map of the company's local obligations: in which municipalities it is liable, for which activity and how often.
• A written opinion on where its income is taxed, with the criterion we support and its basis.
• Identification of the differences found in the returns filed and of the options for correcting them.
• The submissions filed with the local tax office once the matter has become a procedure.

Typical situations we handle

• A company starts operating in new municipalities and does not know where to register or file.
• Two municipalities claim the same income and the company needs a criterion it can defend.
• A developer is about to start a project and needs to anticipate the local taxes that will apply.
• A company selling online or through third parties is unclear on how to allocate its taxable base.
• An information request arrives from a local tax office about returns from earlier years.