Colombia

Last modification: 15 Nov 18
Introduction: 

The Colombian Government has stepped up efforts to reassert government control throughout the country, and now has a presence in every one of its administrative departments.

Despite decades of internal conflict and drug related security challenges, Colombia maintains relatively strong democratic institutions characterized by peaceful, transparent elections and the protection of civil liberties. The country has 32 departments and one capital district.

Colombia is home to the fourth largest automobile fleet in Latin America, only behind Brazil, Mexico, and Argentina.

Thank you to contributors to the Colombia WikiFleet page: BDO; SEPA Consultants

Chapter 1: Economic and business environment

Demographics

Population 49.6 million (December 2017 est.)

Capital

Bogota (10.2mn in metropolitan area)

Major cities

Bogota, Medellin (3.7mn), Cali (3.4mn), Barranquilla (2.3mn), Cartagena (1.0mn), Cucuta (0.8mn)

Languages

Spanish

GDP

GDP: US$286 billion
GDP per capita: US$5,766

Unemployment rate

9.5% (September, 2018)

Main industries

Agriculture – products: coffee, cut flowers, bananas, rice, tobacco, corn, sugarcane, cocoa beans, oilseed, vegetables; forest products; shrimp

Industries: textiles, food processing, oil, clothing and footwear, beverages, chemicals, cement; gold, coal, emeralds

Currency

Colombian peso (COP), USD 1 = COP 2.978 (18 Dec 2017)

Interest rate

4.25% (October, 2018)

Political key info

Presidential Representative Democratic Republic.
Colombia is a unitary republic formed by thirty-two departments and a Capital District.
Each department has a Governor (Gobernador) and a Department Assembly (Asamblea Departamental), elected by popular vote for a four-year period.

Inflation

3.33% (October, 2018)

Chapter 2 : Automotive market, segments & sales

Total Car park

5.5 million cars, approximately one car per nine inhabitants (est. 2017) 

A total of 13.3 million units registered at RUNT (more than 7mn being motorcycles)

New vehicle registrations (Cars, LCV, Trucks)

212,814 (Jan-Nov 2017):

  • Cars: 113,770
  • LCV: 85,453
  • Trucks & Buses: 13,591
     
Top 5 brands (total market)
  1. Chevrolet (46,697 units)
  2. Renault (42,167 units)
  3. Nissan (18,968 units)
  4. Kia (17,829 units)
  5. Mazda (16,468 units)

*Jan- Nov 2017 data
 

Model preference top 5 (total market)
  1. Chevrolet Spark  (11,255 units)
  2. Chevrolet Sail  (10,484 units)
  3. Mazda 3  (5,831 units)
  4. Renault Sandero  (4,925 units)
  5. Ford Fiesta (4,918 units)
     
Dealer network (including fleet dealer network)

750 car dealers around the country

Used car market/renewal cycle

According to figures from the National Traffic Registry, RUNT, as of 2017 there have been 1,047,428 transfers, compared to a total of 699,203 new registrations (including motorcycles).
There is no good used car market business in Colombia.

Chapter 3: Company car market

Total Fleet Park (company cars)/Fleet penetration in total fleet sales

This information is not available, but it’s estimated that 15% of vehicles in Colombia are fleet vehicles.
Most fleets are small. A company with 20 vehicles is considered a large fleet.

Top 5 fleet brands (fleet market)
  1. Chevrolet
  2. Renault
  3. Mazda
  4. Toyota
  5. Nissan
     
Fleet Model preference top 5 (fleet market)
  1. Chevrolet spark
  2. Chevrolet Sail
  3. Kia Picanto
  4. Renault Logan
  5. Renault Duster
     

Chapter 4: Taxation & legislation

 

Company car taxation in Colombia

The basis of company car taxation in Colombia is reflected in this overview. Different types of taxes are considered here: taxes related to the registration of the vehicle, income taxes and VAT aspects. Expected future developments are also briefly listed, if any.

1. Car taxation

1.1. Registration tax

Taxable event

 

 

 

 

 

 

 

New vehicles:

In order to get the vehicle registered it is required to have the invoice (in case of local manufacturing), the import license, taxes receipts, and the registration certificate of the National Registry of Transport (RUNT for its Spanish acronym).

 

Approximate rates in USD$ for 2017

expedición de licencia de conduccion pase vehiculo

USD $120

Car

expedicion licencia de conduccion pase moto

USD $67

Motorcycle

https://www.simbogota.com.co/images/ico/icono-maquinaria.png

USD $120

(Agricultural, Construction and Self-propelled Industrial Machinery)

https://www.simbogota.com.co/images/ico/icono-remolque.png

USD $110

(Trailers, Semitrailers, Multimodular and similar vehicles)

 

1.2. Annual circulation tax

Taxable event

 

 

 

Taxable person

 

 

Tax due

 

 

 

Taxable period

The registration of a vehicles (for private or public use) in a local jurisdiction, for example: Bogota.

 

 

The taxable basis is the amount of the vehicle

 

Annual circulation tax for 2017 Approx. USD$

a) Until USD $ 15.000 1,5%

b) Between USD $ 15.000- 33.000 2,5%

c) Above USD $ 33.000 3,5%

 

Annual

 

2. Income taxes

ü

Taxable event

 

 

 

 

 

 

 

Taxable person

 

 

 

Tax due

 

 

 

 

 

 

 

 

 

 

 

Taxable period

The income tax and its supplementary tax – the capital gains tax – are treated as a single tax. The income tax is a charge on the profits or earnings that taxpayers make in the normal course of business – to the extent these “profits” or “earnings” are income that is capable of increasing the taxpayer’s net assets. For its part, the capital gains tax is a charge on certain special transactions that taxpayers carry out outside their normal course of business.

 

Individuals or Companies who are not excluded from income tax.

 

 

The income tax rate is 33% for taxable year 2018 plus a surcharge (only for 2018) of 4% depending of the level of taxable income.

 

 

 

Capital Gains Taxes 10%.

 

 

 

 

 

 

Annual.

3. VAT

3.1. Deduction

ü

Taxable event

 

 

 

 

Taxable person

 

 

Tax due

 

 

 

Taxable period

The VAT will be deductible in full if it is a capital asset (asset used for the general business activities), otherwise it will be deductible via depreciation if it corresponds to a fixed asset (asset used in view of rendering services with it).

 

Who complete activities taxable with VAT

 

 

The general VAT rate is 19%.

 

 

 

Bimonthly: Gross income higher than approx. USD$ 100.000.

It also includes for the operations initiators, the exporters, and exempt transactions (Zero rate).

 

Quarterly: Gross income less than approx. USD $ 100.000.

 

3.2. Hire purchase

ü 19% Rate

3.3. Leasing

ü 19% Rate

4. Company car

4.1. VAT due on private use of company cars

Taxable event

 

 

N/A

4.2. Company car in personal tax returns – benefit in kind

ü In case of recurring private use, a tax revenue would be considered for income tax purposes. Additionally, if the benefit exceeds 40% of the labor income, it would also become the basis for payroll taxes and social security contributions.

5. Income taxes – drivers’ personal taxation

5.1. Private car in the personal tax return

5.1.1. Private use

ü N/A

5.1.2. Commuter traffic

ü Does not apply.

5.1.3. Business kilometres

ü Does not apply.

6. Special schemes (if any)

National Consumption Tax at 8% rate: (Art. 512-3 of the Tax Statute)

  • On the sale of automotive vehicles to the final consumer or the importation by the latter
  • Vehicles with Andean Tariff Nomenclature: 8703
  • Family or Campers category vehicles, whose FOB value or its equivalent is less than USD$ 30,000, including its accessories
  • 8704- Pick-up whose FOB value or its equivalent is less than USD$ 30,000, including accessories

 

7. Electric vehicles

ü 5% VAT rate for goods of tariff heading 87.02

ü Electric motor vehicles for the transport of 10 or more persons, including the driver, for public transport only. (Article 468-1 of the Tax Statute)

8. Future developments

ü None

Source: BDO (2018)

 

4.1 Car registration

  • Every buyer must be registered with the RUNT system (National transit register system).
  • Tax payment on motor vehicles, has three levels depending on the range of purchase price 1.5%, 2.5% and 3.5%. More expensive cars pay more tax.
  • SOAT purchase (Traffic Accident Insurance) is a mandatory accident insurance.

4.2 Car Taxation

  • All new car sales are taxed at the time of invoicing with VAT, currently at 19%. This VAT can’t be deducted, it is part of the value.

4.3 Motor vehicle tax

Private vehicles

Valuation ranges (in COP)

Rate

All cars, jeeps, vans, station wagons, freight vehicles and passenger

Up to $43,953,000

1.5%

Between $43,953,000 and $98,993,000

2.5%

Over $98,893,000

3.5%

4.4 Direct taxation – taxable persons

Company cars can also be used for personal use. Having a company car doesn’t affect the user’s income tax, and the company that owns the car can deduct it 100%.>

4.5 VAT

  • The general VAT rate is 19%. However, certain services and goods are taxed at 5% and 0%.

4.7 Company car

Vehicles can depreciate completely in the normal estimated useful life that is 10 years. A company car can be deducted by the company as an expense if the company can prove that it is needed for the use of the company.

4.8 Income taxes – drivers’ personal taxation

  • The income tax rate is 34%

4.9 Electric vehicles

  • Electric vehicles are tax free and duty free in Colombia and have a 5% VAT

4.10 Future developments

4.11 Legal background (import taxes)

  • Car import rate is up to 35%, but Colombia has Free Trade agreements with Venezuela, Ecuador, Bolivia, Mexico, the United States, the European Union and Korea. These FTAs bring these taxes to 0%.

Source:  SEPA Consultants (2018)

Chapter 5: Car policies

The title of the car rests with its owner. Therefore, if the vehicle is leased, its title and property belongs to the leasing company.

The sector that provides one of the largest numbers of fleet vehicles is the pharmaceutical industry.

General Manager and Sales Representative frequently benefit from company cars.

Reference cars:

  • Entry/junior sales level: Chevrolet Sail, Spark, Renault Logan
  • Senior sales/management level: Mazda 3, Ford Fiesta
  • Executive level: Toyota Fortuner, Ford Explorer

Chapter 6: Funding methods

6.1 Outright purchase

  • This is the most common option used by individuals. It is not very common for large companies, with the except for pharmaceutical companies as this is seen as being more convenient for their employees.
  • Colombia has 18 banks and 17 financing companies (many of them with special lines for car purchases). It also has specialized entities for the sector such as GMAC and Finandina, as well as special savings plans excusively for vehicles such as ChevyPlan (Chevrolet) ) and Plan Rombo (Renault). However, it is important to keep in mind that consumer credit is the most expensive option.
  • The ownership and the title of vehicles are held by the individual or the company buying the vehicle.

6.2 Finance lease

  • Although the first option considered is a request for a loan (traditional financial product offered by banks), there is another option thto puran many are unaware of and that is vehicle leasing with an option to purchase.This option is also more common with medium to large companies as it offers greater tax benefits.
  • The title of the vehicle belongs to the leasing company, and the contracts generally extend from 36 to 48 months.
  • At the end of the contract, the customer takes the purchase option, which is normally 10% of the initial value of the vehicle.

6.3 Full service leasing (operational leasing)

  • Operating leasing, also called "renting" in Colombia
  • Mainly, the need to reduce company costs is driving the renting business in the country. 
  • This option offers the lease of a vehicle or a fleet of vehicles, generally from 1-5 years (extendable to six or seven years). Upon expiration, the company returns the vehicle or vehicles and begins a new rental cycle with new vehicles. The renting company then sells these used vehicles on the traditional market.
  • The title of the vehicles always stays with the leasing company.

6.4 Fleet Management

Although Fleet Management is not well known in Colombia, there are companies that offer individual services that support fleet management in companies such as satellite tracking services, fuel control, among others.

6.5 Short term rental

A large number of small companies offer short-term renting, as well as the franchises of large global companies.

6.6 Other funding methods

In the last five years, programmed savings systems for vehicle acquiestion has increased significantly in the country. The market leader is ChevyPlan (91% of the market) which is made up of General Motor Colmotores and its network of Chevrolet dealers. It is followed by Autofinanciera with a 5.4% share, and Renault's Plan Rombo with 3.6%. As of March 2017, ChevyPlan has delivered more than 92,000 Chevrolet vehicles, the best-selling references being: Spark Life, Spark GT, Tracker and Onix.

Chapter 7: Fuel

Average gasoline price per liter: US$0.81 
World average: US$1.17
(est. August 1, 2018)

  •  
  • The share of fuel types used by cargo vehicles in Colombia is quite balanced between diesel and gasoline, being 50% and 49% respectively. Natual gas represents 1%. Gasoline consumption predominates in vehicles with two (2) axles, which can be explained by the fact that they are low capacity vehicles. As for public service vehicles, diesel consumption (70%) prevails as the fuel has a large impact on vehicle operation costs. Diesel is also common for large capacity vehicles. Finally, in terms of the private sector, gasoline dominates (75%) as they are primarly two (2) axles.
  • Fuel price evolution

Fuel Type

Regular Gasoline

Diesel

Regular Gasoline

Diesel

 EUR:COP (Dec)

2012

 $          8.701

 $          8.179

 €            3,73

 €            3,51

 $          2.330

2013

 $          8.361

 $          8.260

 €            3,15

 €            3,11

 $          2.653

2014

 $          8.495

 $          8.258

 €            2,94

 €            2,86

 $          2.890

2015

 $          7.818

 $          7.469

 €            2,27

 €            2,17

 $          3.448

2016

 $          8.046

 $          7.501

 €            2,55

 €            2,38

 $          3.157

2017

 $          8.889

 $          8.197

 €            2,53

 €            2,33

 $          3.516

  • Fuel card solution

Fuel suppliers such as Terpel, Esso and Mobil offer cards to buy fuel with benefits in discounts on the fuel price, or in greater accumulation of points within benefit programmes of the partner financial entities.

Chapter 8 : TCO components

Awareness and understanding about TCO and its true impact on fleet costs is quite common in Colombia. New approaches are highlighting the true costs, including maintenance (preventative and corrective), alongside insurance, fuel, fines and relief vehicles, associated with the old ways of fleet acquisition and management.

Chapter 9: Safety, insurance and telematics

Approximately 17% of the vehicles in Colombia are insured

Mandatory third-party vehicle insurance: The SOAT protects the personal injuries caused to people in traffic accidents. It is universal coverage, i.e., it covers all victims of traffic accidents.(Source: Mapfe 2017) 

 

Dec-15

Dec-17

percentage variation

Premiums issued (millions COP)

2,612,586

2,958,316

13.23%

Accrued premiums (millions COP)

2,370,507

2,644,517

11.56%

Claims incurred (millions COP)

1,624,085

1,811,223

11.52%

Claims Account Company

68.51%

68.49%

-0.02%

Premiums projected to December (millions COP)

2,620,883

2,969,600

13.31%

Average premium (thousands COP)

1,182

1,275

7.84%

Average loss (thousands COP)

5,789

5,832

0.74%

Insured vehicles (thousands)

2,216

2,329

5.06%

Number of claims

280,939

309,397

10.13%

Insurance companies in Colombia: AIG, ALFA, ALLIANZ, BBVA SEGUROS, BOLIVAR, AXA COLPATRIA, EQUIDAD, ESTADO, GENERALI, LIBERTY, MAPFRE, PREVISORA, QBE, SOLIDARIA, SURAMERICANA

Considering that about 2.3 million of the 13.3 million vehicles in the country are insured, about 17% have coverage. 

Chapter 10: Environment

Electric vehicles (EV) in the country has yet to reach desired numbers, although they are receiving government support. The Superior Council of Fiscal Policy (Confis) approved importing 46,000 electric and hybrid vehicles without tariffs or VAT in order to improve air quality in the country.

As for the private sector, Renault and Colombian automobile assembler Sofasa has jointly built a solar-powered parking facility for electric vehicles in the country. Located in Antioquia department's town of Envigado, it is considered the first of its kind for Renault in the Americas.

Chapter 11: Mobility

Traffic in the main capitals of the country has become so complicated in recent years that the vast majority of regional governments have opted to implement restrictions on mobility by using the "Pico y Placa" system. The last digit of a vehicle’s license plate determines whether or not it can enter into some parts of the city or the whole city. Therefore, many people opt for a second vehicle with a different last-digit on the license plate to avoid mobility restrictions, and this generates even more urban mobility problems. generating a greater problem for urban mobility. Public service vehicles for transporting cargo and passengers are exempt from these restrictions.

Meanwhile, ride-companies such as Uber and Cabify are operating in Colombia. Although they reduce the use of private vehicles, they have been criticised for competing with regular taxi services.
 

Chapter 12: Key trends to watch