COMPARING REGULATION IN 21 CITIES AND 183 ECONOMIES 74682 COMPARING REGULATION IN 21 CITIES AND 183 ECONOMIES A PUBLICATION OF THE WORLD BANK AND THE INTERNATIONAL FINANCE CORPORATION ©2010 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, D.C. 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: feedback@worldbank.org All rights reserved A publication of the World Bank and the International Finance Corporation This volume is a product of the staff of the World Bank Group. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank Group does not guarantee the accuracy of the data included in this work. Rights and Permissions The material in this publication is copyrighted. 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Doing Business in Colombia 2010 and other subnational and regional Doing Business studies can be downloaded at no charge at http://subnational.doingbusiness.org Additional copies of the Doing Business global reports: Doing Business 2010: Reforming through Difficult Times, Doing Busi- ness 2009, Doing Business 2008, Doing Business 2007: How to Reform, Doing Business in 2006: Creating Jobs, Doing Business in 2005: Removing Obstacles to Growth and Doing Business in 2004: Understanding Regulations, may be obtained at www. doingbusiness.org About the Investment Climate Advisory Services of the World Bank Group The Investment Climate Advisory Services of the World Bank Group helps governments implement reforms to improve their business environment, and encourage and retain investment, thus fostering competitive markets, growth and job creation. Funding is provided by the World Bank Group (IFC, MIGA, and the World Bank) and over fifteen donor partners working through the multi-donor FIAS platform. Contents Doing Business in Colombia 2010 is the together with the National Depart- About Doing Business and second subnational report of the Doing ment of Planning and the Ministry of Doing Business in Colombia 1 Business series in Colombia. In 2007, Trade, Industry and Tourism and are Overview 7 quantitative indicators on business regu- the following: Armenia (Quindío), Bar- Starting a business 14 lations were created for 13 cities and ranquilla (Atlántico), Bogotá (Distrito Dealing with construction permits 19 departments. This year, Doing Business Capital), Bucaramanga (Santander), Cali Registering property 24 in Colombia 2010 expands the analysis (Valle del Cauca), Cartagena (Bolívar), to a total of 21 cities and documents Cúcuta (Norte de Santander), Ibagué Paying taxes 29 progress in the 13 cities previously mea- (Tolima), Manizales (Caldas), Medellín Trading across borders 34 sured. The data for Bogotá and the rest (Antioquia), Montería (Córdoba), Neiva Enforcing contracts 39 of the world are based on the indica- (Huila), Pasto (Nariño), Pereira (Risa-Risa- tors in Doing Business 2010: Reforming ralda), Popayán (Cauca), Riohacha (La Data notes 44 through Difficult Times, the seventh in Guajira), Santa Marta (Madgalena), Sin- a series of annual reports published by celejo (Sucre), Tunja (Boyacá), Valledu- Doing Business indicators 51 the World Bank and the International par (Cesar), Villavicencio (Meta). Regu- Indicator details 54 Finance Corporation. The indicators in lations affecting six stages of the life of a Paying taxes Doing Business in Colombia 2010 are also business are measured at the subnational Trading across borders comparable with the data in other subna- level in Colombia: starting a business, Enforcing contracts tional Doing Business reports. All Doing dealing with construction permits, reg- List of procedures 58 Business data and reports are available at istering property, paying taxes, trading Starting a business 58 http://subnational.doingbusiness.org. across borders and enforcing contracts. Dealing with construction permits 83 Doing Business investigates the reg- These indicators have been selected be- Registering property 104 ulations that enhance business activity cause they cover areas of local juris- and those that constrain it. The cities diction or practice. The data in Doing Acknowledgments 121 and departments covered in Doing Busi- Business in Colombia 2010 are current as ness in Colombia 2010 were selected of July 2009. About Doing business regulation and institutions can support economic adjustment. Easy petitiveness Council. Such collaboration is part of the World Bank Group’s vision Business and entry and exit of firms, and flexibility in redeploying resources, make it easier of promoting the transfer of knowledge, in this case the project methodology for Doing Business to stop doing things for which demand Doing Business in Colombia. has weakened and to start doing new in Colombia things. Clarification of property rights WHAT DOING BUSINESS and strengthening of market infrastruc- IN COLOMBIA 2010 COVERS ture (such as credit information and collateral systems) can contribute to con- Doing Business in Colombia 2010 provides fidence as investors and entrepreneurs a quantitative measure of the national, look to rebuild. department and municipal regulations Until very recently, however, there for starting a business, dealing with con- were no globally available indicator sets struction permits, registering property, for monitoring such microeconomic fac- paying taxes, trading across borders, and tors and analyzing their relevance. The enforcing contracts—as they apply to In 1664 William Petty, an adviser to first efforts, in the 1980s, drew on per- domestic small and medium-sized en- England’s Charles II, compiled the first ceptions data from expert or business terprises. known national accounts. He made 4 surveys. Such surveys are useful gauges A fundamental premise of Doing entries. On the expense side, “food, hous- of economic and policy conditions. But Business is that economic activity re- ing, clothes and all other necessaries” their reliance on perceptions and their quires good rules. These include rules were estimated at £40 million. National incomplete coverage of poor countries that establish and clarify property rights income was split among 3 sources: £8 constrain their usefulness for analysis. and reduce the costs of resolving disputes, million from land, £7 million from other The Doing Business project, launched rules that increase the predictability of personal estates and £25 million from 8 years ago, goes one step further. It looks economic interactions and rules that labor income. at domestic small and medium-sized provide contractual partners with core In later centuries estimates of coun- companies and measures the regulations protections against abuse. The objective try income, expenditure and material applying to them through their life cycle. is: regulations designed to be efficient, to inputs and outputs became more abun- Doing Business and the standard cost be accessible to all who need to use them dant. But it was not until the 1940s that model initially developed and applied in and to be simple in their implementa- a systematic framework was developed the Netherlands are, for the present, the tion. Accordingly, some Doing Business for measuring national income and ex- only standard tools used across a broad indicators give a higher score for more penditure, under the direction of British range of jurisdictions to measure the regulation, such as stricter disclosure re- economist John Maynard Keynes. As the impact of government rule-making on quirements in related-party transactions. methodology became an international business activity.1 Some give a higher score for a simplified standard, comparisons of countries’ fi- Doing Business in Colombia 2010 way of implementing existing regulation, nancial positions became possible. Today is the second subnational report of the such as completing business start-up the macroeconomic indicators in na- series in Colombia. In 2007, quantita- formalities in a one-stop shop. tional accounts are standard in every tive indicators were compiled regarding Doing Business in Colombia 2010 country. regulations on business activity and their encompasses 2 types of data. The first Governments committed to the eco- enforcement in 13 Colombian cities and come from readings of laws and regula- nomic health of their country and op- departments. Doing Business in Colom- tions. The second are time and motion portunities for its citizens now focus on bia 2010 expands the analysis to a total indicators that measure the efficiency more than macroeconomic conditions. of 21 cities and documents progress in in achieving a regulatory goal (such as They also pay attention to the laws, regu- the 13 cities previously measured. This granting the legal identity of a business). lations and institutional arrangements time, the World Bank Group worked Within the time and motion indicators, that shape daily economic activity. jointly with a national research center, cost estimates are recorded from official The global financial crisis has re- the Center for Strategy and Competitive- fee schedules where applicable. Here, newed interest in good rules and regu- ness at Universidad de los Andes, with Doing Business builds on Hernando de lation. In times of recession, effective the collaboration of the Private Com- Soto’s pioneering work in applying the 2 DOING BUSINESS IN COLOMBIA 2010 time and motion approach first used r Doing Business does not cover all reg- FOCUSED ON THE FORMAL SECTOR by Frederick Taylor to revolutionize the ulations, or all regulatory goals, in In defining the indicators, Doing Business production of the Model T Ford. De Soto any city. As economies and technol- in Colombia 2010 assumes that entrepre- used the approach in the 1980s to show ogy advance, more areas of economic neurs are knowledgeable about all regu- the obstacles to setting up a garment fac- activity are being regulated. For ex- lations in place and comply with them. tory on the outskirts of Lima, Peru.2 ample, the European Union’s body of In practice, entrepreneurs may spend laws (acquis) has now grown to no considerable time finding out where to WHAT DOING BUSINESS IN fewer than 14,500 rule sets. Doing go and what documents to submit. Or COLOMBIA 2010 DOES Business in Colombia 2010 measures they may avoid legally required proce- NOT COVER just 6 phases of a company’s life cycle, dures altogether—by not registering for through 6 specific sets of indicators. social security, for example. It is important to know the scope and The indicator sets also do not cover all Where regulation is particularly limitations of Doing Business in Colom- aspects of regulation in the particular onerous, levels of informality are higher. bia 2010 in order to interpret the results area. For example, the indicators on Informality comes at a cost: firms in of this report. starting a business do not cover all the informal sector typically grow more aspects of commercial legislation. slowly, have poorer access to credit and LIMITED IN SCOPE employ fewer workers—and their work- Doing Business in Colombia 2010 focuses BASED ON STANDARDIZED CASE ers remain outside the protections of SCENARIOS on 6 topics, with the specific aim of mea- labor law.3 Doing Business in Colombia suring the regulation and red tape rel- The indicators analyzed in Doing Busi- 2010 measures one set of factors that evant to the life cycle of a domestic small ness in Colombia 2010 are based on help explain the occurrence of informal- to medium-sized firm. Accordingly: standardized case scenarios with specific ity and give policy makers insights into assumptions, such as that the business is potential areas of reform. Gaining a fuller r Doing Business in Colombia 2010 does located in one of the 21 localities in Co- understanding of the broader business not measure all 10 indicators covered lombia. Economic indicators commonly environment, and a broader perspective in the general Doing Business report. make limiting assumptions of this kind. on policy challenges, requires combining The report covers only those 6 areas of Inflation statistics, for example, are often insights from Doing Business in Colombia business regulation where local differ- based on prices of consumer goods in a 2010 with data from other sources, such ences exist. few urban areas. Such assumptions allow as the World Bank Enterprise Surveys.4 r Doing Business in Colombia 2010 does global coverage and enhance compara- not measure all aspects of the busi- bility, but they inevitably come at the WHY THIS FOCUS ness environment that matter to firms expense of generality. Doing Business in Colombia 2010 func- or investors—or all factors that affect In areas where regulation is com- tions as a kind of cholesterol test for competitiveness. It does not, for exam- plex and highly differentiated, the stan- the regulatory environment for domestic ple, measure security, macroeconomic dardized case used to construct each businesses. A cholesterol test does not stability, corruption, labor skills of the Doing Business in Colombia 2010 indica- tell us everything about the state of our population, the underlying strength tor needs to be carefully defined. Where health. But it does measure something of institutions or the quality of infra- relevant, the standardized case assumes important for our health. And it puts us structure. Nor does it focus on regula- a limited liability company. This choice on watch to change behaviors in ways tions specific to foreign investment. is in part empirical: private, limited li- that will improve not only our cholesterol r Doing Business in Colombia 2010 does ability companies are the most prevalent rating but also our overall health. not assess the strength of the financial business form in most economies around One way to test whether Doing Busi- system or market regulations, both the world. The choice also reflects one ness serves as a proxy for the broader important factors in understanding focus of Doing Business: expanding op- business environment and for competi- some of the underlying causes of the portunities for entrepreneurship. Inves- tiveness is to look at correlations be- global financial crisis. tors are encouraged to venture into busi- tween the Doing Business rankings and ness when potential losses are limited to other major economic benchmarks. The their capital participation. indicator set closest to Doing Business in what it measures is the Organization ABOUT DOING BUSINESS AND DOING BUSINESS IN COLOMBIA 3 for Economic Co-operation and Devel- In this sense Doing Business values Doing Business in Colombia 2010 opment’s indicators of product market good rules as a key to social inclusion. It provides 2 approaches on the data it regulation; the correlation here is 0.75. also provides a basis for studying effects collects: it presents “absolute” indicators The World Economic Forum’s Global of regulations and their application. For for each city for each of the 6 regulatory Competitiveness Index and IMD’s World example, Doing Business 2004 found that topics it addresses, and it provides rank- Competitiveness Yearbook are broader in faster contract enforcement was associ- ings of cities, both by indicator and in scope, but these too are strongly corre- ated with perceptions of greater judicial aggregate. Judgment is required in inter- lated with Doing Business (0.79 and 0.72, fairness—suggesting that justice delayed preting these measures for any city and respectively). These correlations suggest is justice denied.6 in determining a sensible and politically that where peace and macroeconomic In the current global crisis policy- feasible path for reform. stability are present, domestic business makers face particular challenges. Both Reviewing the Doing Business rank- regulation makes an important differ- developed and developing economies ings in isolation may show unexpected ence in economic competitiveness. are seeing the impact of the financial results. Some cities may rank unexpect- A bigger question is whether the crisis flowing through to the real econ- edly high on some indicators. And some issues on which Doing Business focuses omy, with rising unemployment and cities that have had rapid growth or matter for development and poverty re- income loss. The foremost challenge for attracted a great deal of investment may duction. The World Bank study Voices many governments is to create new jobs rank lower than others that appear to be of the Poor asked 60,000 poor people and economic opportunities. But many less dynamic. around the world how they thought they have limited fiscal space for publicly But for reform-minded local gov- might escape poverty.5 The answers were funded activities such as infrastruc- ernments, how much their indicators unequivocal: women and men alike pin ture investment or for the provision of improve matters more than their ab- their hopes above all on income from publicly funded safety nets and social solute ranking. As cities develop, they their own business or wages earned in services. Reforms aimed at creating a strengthen and add to regulations to employment. Enabling growth—and en- better investment climate, including protect investor and property rights. suring that poor people can participate reforms of business regulation, can be Meanwhile, they find more efficient ways in its benefits—requires an environment beneficial for several reasons. Flexible to implement existing regulations and where new entrants with drive and good regulation and effective institutions, cut outdated ones. One finding of Doing ideas, regardless of their gender or ethnic including efficient processes for start- Business: dynamic and growing econo- origin, can get started in business and ing a business and efficient insolvency mies continually reform and update their where good firms can invest and grow, or bankruptcy systems, can facilitate regulations and their way of implement- generating more jobs. reallocation of labor and capital. And ing them, while many poor economies Small and medium-sized enterprises regulatory institutions and processes still work with regulatory systems dating are key drivers of competition, growth that are streamlined and accessible can to the late 1800s. and job creation, particularly in develop- help ensure that, as businesses rebuild, ing countries. But in these economies up barriers between the informal and for- DOING BUSINESS—A USER’S to 80% of economic activity takes place mal sectors are lowered, creating more GUIDE in the informal sector. Firms may be pre- opportunities for the poor. vented from entering the formal sector by Quantitative data and benchmarking can excessive bureaucracy and regulation. DOING BUSINESS IN be useful in stimulating debate about Where regulation is burdensome COLOMBIA 2010 AS A policy, both by exposing potential chal- and competition limited, success tends BENCHMARKING EXERCISE lenges and by identifying where pol- to depend more on whom you know icy makers might look for lessons and than on what you can do. But where Doing Business in Colombia 2010, in cap- good practices. These data also provide regulation is transparent, efficient and turing some key dimensions of regulatory a basis for analyzing how different policy implemented in a simple way, it becomes regimes, can be useful for benchmark- approaches—and different policy re- easier for any aspiring entrepreneurs, ing. Any benchmarking—for individu- forms—contribute to desired outcomes regardless of their connections, to oper- als, firms or economies—is necessarily such as competitiveness, growth and ate within the rule of law and to benefit partial: it is valid and useful if it helps greater employment and incomes. from the opportunities and protections sharpen judgment, less so if it substitutes Seven years of Doing Business data that the law provides. for judgment. have enabled a growing body of research 4 DOING BUSINESS IN COLOMBIA 2010 on how performance on Doing Busi- mestic businesses. Most reforms relating who regularly undertake the transac- ness indicators—and reforms relevant to Doing Business topics were nested in tions involved. Following the standard to those indicators—relate to desired broader programs of reform aimed at en- methodological approach for time and social and economic outcomes. Some hancing economic competitiveness. The motion studies, Doing Business breaks 405 articles have been published in same can be said at the subnational level. down each process or transaction, such peer-reviewed academic journals, and The 13 cities covered in the Doing Busi- as starting and legally operating a busi- about 1,143 working papers are available ness in Colombia 2008 report introduced ness, into separate steps to ensure a bet- through Google Scholar.7 Among the reforms in at least one of the indicators. ter estimate of time. The time estimate findings: 8 In structuring their reform pro- for each step is given by practitioners grams, governments use multiple data with significant and routine experience r -PXFSCBSSJFSTUPTUBSUVQBSFBTTPDJ- sources and indicators. And reformers in the transaction. ated with a smaller informal sector. respond to many stakeholders and inter- The Doing Business approach to r -PXFSDPTUTPGFOUSZFODPVSBHFFOUSF- est groups, all of whom bring impor- data collection contrasts with that of preneurship, enhance firm productiv- tant issues and concerns into the reform enterprise or firm surveys, which capture ity and reduce corruption. debate. World Bank support to these often one-time perceptions and experi- r 4JNQMFSTUBSUVQUSBOTMBUFTJOUPHSFBUFS reform processes is designed to encour- ences of businesses. A corporate lawyer employment opportunities. age critical use of the data, sharpening registering 100–150 businesses a year judgment and avoiding a narrow focus will be more familiar with the process HOW DO GOVERNMENTS USE on improving Doing Business rankings. than an entrepreneur, who will register DOING BUSINESS? a business only once or maybe twice. A METHODOLOGY AND DATA bankruptcy judge deciding dozens of A common first reaction is to doubt cases a year will have more insight into the quality and relevance of the Doing Doing Business in Colombia 2010 covers bankruptcy than a company that may Business data. Yet the debate typically 21 cities, including Bogotá. The data undergo the process. proceeds to a deeper discussion explor- are based on national and local laws ing the relevance of the data to the and regulations as well as administrative DEVELOPMENT OF THE METHODOLOGY economy and areas where reform might requirements. For a detailed explanation make sense. of the Doing Business in Colombia 2010 The methodology for calculating each Most reformers start out by seeking methodology, see the Data notes section indicator is transparent, objective and examples, and Doing Business helps in at the end of this report. easily replicable. Leading academics col- this. For example, Saudi Arabia used the laborate in the development of the indi- company law of France as a model for re- INFORMATION SOURCES FOR THE cators, ensuring academic rigor. Seven DATA vising its own. Many countries in Africa of the background papers underlying look to Mauritius—the region’s stron- Most of the indicators are based on laws the indicators have been published in gest performer on Doing Business indi- and regulations. In addition, most of the leading economic journals. One is at an cators—as a source of good practices for cost indicators are backed by official fee advanced stage of publication. reform. In the words of Luis Guillermo schedules. Doing Business respondents Doing Business uses a simple averag- Plata, the minister of commerce, indus- both fill out written surveys and provide ing approach for weighting subindica- try and tourism of Colombia, references to the relevant laws, regu- tors and calculating rankings. Other ap- lations and fee schedules, aiding data proaches were explored, including using It’s not like baking a cake where you follow checking and quality assurance. principal components and unobserved the recipe. No. We are all different. But we For some indicators part of the components. The principal components can take certain things, certain key les- cost component (where fee schedules and unobserved components approaches sons, and apply those lessons and see how are lacking) and the time component turn out to yield results nearly identical to they work in our environment. are based on actual practice rather than those of simple averaging. The tests show the law on the books. This introduces a that each set of indicators provides new Over the past 7 years there has been degree of subjectivity. The Doing Busi- information. The simple averaging ap- much activity by governments in reform- ness approach has therefore been to work proach is therefore robust to such tests. ing the regulatory environment for do- with legal practitioners or professionals ABOUT DOING BUSINESS AND DOING BUSINESS IN COLOMBIA 5 IMPROVEMENTS TO THE web site also makes available all original METHODOLOGY AND DATA REVISIONS data sets used for background papers. Information on data corrections is The Doing Business methodology has provided in the Data Notes and on the undergone continual improvement over website. A transparent complaint proce- the years. Changes have been made dure allows anyone to challenge the data. mainly in response to country sugges- If errors are confirmed after a data veri- tions. In accordance with the Doing fication process, they are expeditiously Business methodology, all these changes corrected. were incorporated into Doing Business in Colombia 2008 and Doing Business in Colombia 2010. Doing Business in Colombia 2010 1. The standard cost model is a quantitative methodology for determining the admin- has made a methodological change for istrative burdens that regulation imposes how the trading across borders indi- on businesses. The method can be used cator is measured. In 2007 the report to measure the effect of a single law or of selected areas of legislation or to perform measured the time, cost and documents a baseline measurement of all legislation required to export and import from each in a country. of the cities through the closest port. 2. de Soto, Hernando. 2000. The Mystery This time, the trading across borders of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. New indicator measures the process to ex- York: Basic Books. port and import from the capital city of 3. Schneider, Friedrich. 2005. "The Informal Bogotá through the four largest ports in Sector in 145 Countries." Department of Colombia—Barranquilla, Buenaventura, Economics, University Linz. Cartagena and Santa Marta. Because 4. http://www.enterprisesurveys.org. only the ports rather than the 21 cities 5. Narayan, Deepa, Robert Chambers, Meera Kaul Shah and Patti Pettesh. 2000. are benchmarked, trading across borders Voices of the Poor: Crying Out for Change. is not included in the aggregate ease of Washington, DC: World Bank. doing business index. 6. World Bank 2003. Doing Business in 2004: Doing Business in Colombia 2010 Understanding Regulation. Washington, also adds a new indicator—dealing with DC: World Bank Group. construction permits—which was not 7. http://scholar.google.com. included in the previous edition. This 8. Full citations available in World Bank. 2009. Doing Business 2010: Reforming area is predominantly determined at the through Difficult Times. Washington, DC: municipal level. World Bank Group. All the methodological changes are explained in the Data Notes section of this report and on the Doing Business in Co- lombia 2010 web page (www.doingbusi- ness.org/colombia). The web site also pro- vides data time series for each indicator and city, beginning with the first year the indicator or city was included in the re- port. To provide a comparable time series, the data set is back-calculated to adjust for changes in methodology and corrections resulting from the information received in the period covered since each report. The Overview TABLE 1.1 Where is it easier to do business in Colombia—and where not? RANK Easiest RANK Most difficult 1 Manizales, Caldas 12 Bogotá, Distrito Capital 2 Ibagué, Tolima 13 Riohacha, La Guajira 3 Pereira, Risaralda 14 Montería, Córdoba 4 Sincelejo, Sucre 15 Cúcuta, Norte de Santander 5 Valledupar, Cesar 16 Medellín, Antioquia 6 Santa Marta, Magdalena 17 Barranquilla, Atlántico 7 Armenia, Quindío 18 Bucaramanga, Santander 8 Popayán, Cauca 19 Villavicencio, Meta 9 Pasto, Nariño 20 Cali, Valle del Cauca 10 Tunja, Boyacá 21 Cartagena, Bolívar 11 Neiva, Huila Source: Doing Business database. Nobody would question that Colombi- to capture these differences in 12 other services. On the other hand, these cities ans are entrepreneurial. International Colombian cities. This report updates the benefit from economies of scale and have studies confirm it.1 The development information presented in 2008 and tracks more resources at their disposal to invest of Colombia’s cut flower industry over the progress of the implementation of in administrative modernization than the last 4 decades is a telling example. reforms. It also expands the analysis their smaller neighbors. All in all, Neiva From virtually non-existent, the sector to 8 additional cities to provide a more made the most progress since 2008. After flourished, thanks to the efforts of local representative map of the ease of doing introducing reforms in business start- producers,2 and now cut-flower exports business in Colombia. The results of this up and property registration, it jumped bring in around US$ 1 billion per year.3 new 21-city comparison are presented from the bottom position to rank 11 out Colombia managed to sustain 5% annual here (table 1.1). Doing business is easi- of 21 cities. economic growth from 2002 to 2007, est in Manizales, Ibagué and Pereira and Much has changed in recent years. before it dropped to 2.5% in 2008, due to more difficult in Cali and Cartagena. This is not surprising. Colombia, rep- the global economic crisis.4 This growth Pereira and Manizales were already resented by Bogotá, has been one of was partly due to improved security con- at the top of the list in Doing Business in the top 10 reforming economies for 3 ditions in the formerly violence-prone Colombia 2008. Other cities—like Bu- consecutive years according to Doing nation. Safer conditions help entrepre- caramanga and Cali—dropped relative Business 2008, 2009 and 2010. With a neurs trust enough to do business with to their peers. Some of the changes can total of 24 reforms across the 10 Doing strangers. Also, more security offers op- be attributed to the addition of 8 new Business topics benchmarked annually, portunities to introduce new products cities—some of which have competitive Colombia has made it easier for firms to and services and expand operations to regulatory frameworks—and to changes start and operate, strengthened property new locations. In this context, the laws in the indicators that were measured in rights and improved bankruptcy proce- and regulations that govern business the final ranking. A new set of indica- dures (table 1.2). This consistent pace start-ups and operations become more tors, measuring the ease to deal with of reform allowed Colombia to move up critical than ever. construction permits, was added, while the ease of doing business ranking over Doing Business studies business reg- the trading across borders indicator for time. In the most recent report, Doing ulations from the perspective of a small- the 4 ports is no longer part of the Business 2010, Colombia ranks 37th of to medium-sized domestic firm. Bogotá aggregate ranking. Note that the rank- 183 economies—an improvement of 12 represents Colombia in the annual Doing ing may favor smaller cities where the positions from one year before. Within Business report that compares 183 econ- demand for business services is lower. Latin America, Colombia currently oc- omies globally. Yet, within Colombia, Government offices in large business cupies the number 1 position for its ease entrepreneurs face different local regula- centers—like Bogotá, Medellín, Cali or of doing business.5 tions and practices across cities. Doing Barranquilla—deal with a high volume Colombia’s start-up reforms have Business in Colombia 2008 was the first of operations, which can lead to bottle- cut 10 procedures and 40 days from the report to go beyond the capital, Bogotá, necks and higher costs for professional process to start a business in Bogotá, 8 DOING BUSINESS IN COLOMBIA 2010 TABLE 1.2 Colombia,* a consistent reformer, 2006–2009 Dealing with Trading Starting a construction Employing Registering Getting Protecting Paying across Enforcing Closing a Doing Business report business permits workers property credit investors taxes borders contracts business DB 2005     DB 2006 DB 2007   DB 2008     DB 2009      DB 2010         * Represented by Bogotá Source: Doing Business database. which now takes 9 steps and 20 days. The for consumers by allowing them to ac- more than in the previous year. In Latin successful introduction of the one-stop cess and review their data. Minority America and the Caribbean, 19 of the 32 shops at the Chambers of Commerce shareholder rights were strengthened by economies reformed, up from just half (known as Centros de Atención Empre- a decree that clarified the duties of direc- (16) the previous year. Peru followed sarial or CAEs) and subsequent CAE up- tors and the ease of challenging transac- Colombia’s steps and reformed 6 areas grades account for much of this progress. tions harmful to the company in court.10 of regulation in 2008/09. Guatemala re- Also, the time and cost to start a business Finally, the Insolvency Law 1116 of 2006 formed in 4 areas, Mexico in 2. Such dropped, thanks to legal changes that and subsequent regulation is transform- reforms are timelier than ever. Firms in allow the creation of a company with a ing bankruptcy procedures in Colombia. developing economies have been affected private document, without a notary.6 In Colombia also modernized its sys- by lower demand for their exports and a 2008, the government also issued decrees tem to pay taxes and social security drop in capital flows and remittances. At to cut the number of mandatory com- contributions. Now businesses pay all so- the same time, businesses in low-income pany books and the cost of registering cial security contributions online using a economies still face twice as many regu- them.7 Last year, improvements in cus- single electronic form—instead of sepa- latory burdens as their counterparts in tomer service at the public pension fund rate payments to health care providers, high-income economies when starting (Instituto de Seguro Social) cut the time pension funds, professional risk insurers a business, transferring property, filing to register new employees by 2 weeks. and other welfare entities. As of 2008, taxes or resolving a commercial dispute Obtaining a construction permit in income and value added taxes can also through the courts. There is more work Bogotá became easier through a new risk be paid online. to be done. categorization of construction projects Thanks to multiple reforms, the and through the strict application of time to export a container from Bogotá REFORMS IMPLEMENTED AT THE time limits.8 The latest reforms build on through the port of Cartagena fell from LOCAL LEVEL a long process that has turned Colombia’s 34 days in 2006 to 14 in 2009, while curadores urbanos—private profession- the time to import dropped from 48 to Department and municipal governments als that review and approve construc- 14 days. Customs declarations are now in Colombia have been actively reforming tion permits—into a model now being submitted online. A new system to co- over the past 2 years. Doing Business in considered by other countries.9 An elec- ordinate simultaneous inspections was Colombia 2008 identified good practices tronic single window (Ventanilla Única implemented this year. Investments in in 13 cities, pointed out bottlenecks and de Registro, or, VUR) is easing the pro- road and port infrastructure also helped provided recommendations for reform. cess of transferring property by allowing cut delays for traders. Two years later, this report tracks the re- notaries online access to information Despite the hardships imposed by forms’ progress over time. The results are about the property and its tax status. the current economic crisis on busi- impressive. All 13 cities show improve- Access to credit is also improving. nesses globally, June 2008 to May 2009 ments in at least 1 of the areas measured, A new credit information law (Ley de was a record year for regulatory reforms. thanks to local-level reforms (table 1.3). Habeas Data) regulates credit informa- Doing Business 2010 recorded 287 re- Neiva, which ranked last in Doing tion sharing and introduces protections forms in 131 of 183 economies—20% Business in Colombia 2008, set up an OVER VIE W 9 “anti-red tape” committee that brings cut 3 procedures to start a business. High business volumes and demand for together the municipality, chamber of Also, the municipal government made professional services can drive up costs commerce, business associations and registering property easier by combining and make processes slower in this city. representatives of national agencies— 2 certificates into 1, while the depart- An example is registering the deed at the such as the police and the tax author- ment government eliminated the need Registry office, which takes 8 days—35% ity. This committee meets every month to get a stamp to confirm payment of the of the total time to register a property in to propose changes to the regulatory registration tax. Some of these reforms Medellín—making it slower than the av- environment and monitor progress. are reflected in the quality of services erage Colombian city. Another example Neiva launched a CAE (one-stop shop) rather than in higher scores. For exam- is the delay to approve local water and for business registration, which con- ple, a good practice in the municipality sewer grids for construction permits: nected the municipal and department of Medellín is the inspection of all new they take 56 days in Medellín, compared governments. As a result of its reforms, buildings to ensure compliance with the to 10 days in Bogotá. The final approval Neiva eliminated 11 procedures to start construction permit requirements. Few of new constructions in Medellín, while a business—including its sanitation and other cities in Colombia do that. The being a good practice, takes long—45 fire department certificates.11 Neiva also creation of new courts to process more days on average. Bucaramanga and Cart- eliminated 2 procedures to register prop- delegation orders is already felt in faster agena also suffer from similar delays and erty. Reforms in Manizales and Pereira, resolutions to commercial disputes— high costs despite recent reforms. This top ranked cities, also cut 4 procedures they now take approximately 2 years, report can point out some areas that are to start a business. compared to 3 to 4 years in Bogotá, Cali, ripe for reform. Smart regulatory re- Medellín is also a good example of a Barranquilla or Cartagena. forms can reduce the time and cost to do local government striving to apply exist- However, Medellín is the 4th most business and make regulations accessible ing regulations more efficiently while expensive city for starting a business to all who need them. eliminating outdated ones. For example, and obtaining construction permits and All cities benefited from the roll out Medellín’s more efficient CAE and its the 6th for contract enforcement—with of nation-wide start-up reforms sum- elimination of the land use certificate total costs above 40% of claim value. marized above, although results on the TABLE 1.3 National and local reforms implemented in all cities benchmarked in 2007 City or departmental reforms Implementation of national reforms* Trading Starting a Registering Starting a Registering Paying Enforcing across City business property Paying taxes business property taxes contracts borders** Barranquilla   Bogotá   Bucaramanga    Cali   Cartagena    Cúcuta  Manizales   Medellín    Neiva   Pereira   Popayán  Santa Marta  Villavicencio  Local level National level * National reforms reflected in Doing Business in Colombia 2010 data by city ** This indicator also measures import and export procedures through the port of Buenaventura Note: The reforms took place between July 2007 and July 2009 Source: Doing Business database. 10 DOING BUSINESS IN COLOMBIA 2010 ground vary. One-stop shops (CAEs) to Trading across borders also ben- 30% in Neiva. The variation is due to start a business are now operating in the efitted from smart regulations and in- different registry tax rates and stamp du- 13 cities measured in 2008—and in 3 of vestments in infrastructure. Reforms ties levied by municipal or departmental the 8 additional cities. The 6 cities that in customs administration have helped governments. introduced a CAE after July 2007 cut the reduce the amount of time it takes to number of procedures by 5, on average, prepare documentation by over 60% for DEALING WITH CONSTRUCTION compared to the previous report. Af- exports and 40% for imports, compared PERMITS filiation to the health care plan and public to Doing Business in Colombia 2008. Im- Obtaining the approvals to build a ware- pension is now faster across Colombia— provements in the efficiency of the ports house and connect it to utilities is, on by 8 days and 13 days, respectively. How- have reduced port-handling times from 4 average, faster and cheaper in Colombia ever, enrollment time varies across cities. to 2 days in Buenaventura and from 3 to than elsewhere in Latin America, but Not all national level reforms have 2 days in Barranquilla since 2008. variations exist across Colombian cities. been implemented at the local level yet. Finally, the Supreme Council of the The number of procedures range from 11 For example, Decree 1879 of 2008 rein- Judicature has taken measures to address in Bogotá and Popayán to 19 in Cali—due forced the 2005 prohibition12 on request- the congestion in the civil municipal to the existence of certain pre-construc- ing local certificates and licenses to start courts. Enforcing contracts is becoming tion requirements and stamp duties in a business—such as the certificate of easier as a result. The most important some cities. The main delays often occur land use. Most of the 13 cities included measure was the dismissal of 43,948 when obtaining the construction permits in Doing Business in Colombia 2008 have inactive claims in civil courts (12.2% of and connecting to utilities. Time varies eliminated it. Yet, Cartagena, Villavicen- total inactive cases) through the appli- greatly—from 38 days in Popayán to 217 cio and 4 of the 8 cities benchmarked for cation of Law 1194 of 2008.13 Judges in days in Ibagué. Only a few cities carry the first time still require it. Santa Marta now refer in their writs to out the final inspection to ensure that Eleven of the 13 cities in both stud- the terms established in the law, urging the building conforms to the approved ies show improvements in property reg- plaintiffs to deliver summons to defen- construction permit, which seems like a istration. Medellín eliminated 2 proce- dants in a timely fashion. As a result, critical oversight. Reforms are needed to dures related to municipal certificates. Santa Marta cut its average filing time in improve the capacity of municipal govern- Bogotá, Cali, Cartagena and Neiva also half—from 60 to 30 days. Administra- ments to supervise construction projects. eliminated 1 procedure related to mu- tive measures—such as the creation of 2 nicipal certificates, while Bucaramanga additional courts in Medellín to process REGISTERING PROPERTY and Pereira cut their cost. Administrative administrative orders—also cut the time The number of procedures to register reforms at registry offices in Manizales, required to enforce contracts. Ongoing property ranges from 7 in Bogotá to 13 Neiva, Pereira, Santa Marta and Vil- reforms—such as the quashing (peren- in Barranquilla, Bucaramanga and Cú- lavicencio now allow for faster property ción) of enforcement procedures under cuta. Local requirements related to tax- registration. Also, in Manizales, Neiva Law 1285 of 2009—are expected to have payment certificates and stamp duties and Popayán, registry and cadastre of- even a larger impact. account for the differences in procedures fices now share information, sparing the across cities. Variations in time stem entrepreneur from having to visit the COMPARING REGULATIONS mainly from the efficiency of the regis- cadastre office in person. ACROSS CITIES try offices. In Manizales, Sincelejo and Reforms to tax payments are also Valledupar, registering property takes taking place at the municipal level. In STARTING A BUSINESS 2 weeks, compared with more than 1 2008, Barranquilla reduced the number The number of procedures to start a busi- month in Pasto and Cartagena. Costs of categories for the industry and com- ness varies from 8 to 15 across Colombia. vary from 1.9% of property value in Iba- merce (ICA) tax in order to simplify The requirement of the certificate of land gué to 4.0% in Barranquilla—mainly due the administrative burden on compa- use and other local certificates account to stamp duties and legal fees. nies. Bucaramanga revised and unified for most of the differences. An entrepre- its tax codes to provide clear and concise neur in Neiva can register a business in TRADING ACROSS BORDERS information regarding the number of just 8 days, but it would take her 43 days It is fastest to import to and export yearly payments, tax rates and payment to register the same business in Tunja. from Bogotá through the port of Santa options. Manizales and Medellín revised The cost to open a business varies from Marta—13 days to export and 11 days their municipal tax codes. 13.1% of income per capita in Pasto to to import. The ports of Barranquilla and OVER VIE W 11 Cartagena are not far behind—taking case will be resolved in 4 years. Some of in the study and the benchmarking ex- 14 days to import and export in Carta- the difference is due to a greater or lesser ercise was expanded to all 31 Mexican gena and 14 days to export and 15 days use of alternative resolution methods. states. With additional competition, the to import in Barranquilla. It takes the The resources and equipment available pace of reform accelerated. The latest longest time to trade through the port in cities’ courts also matter. Nevertheless, Doing Business in Mexico report showed of Buenaventura, 18 days to export and the main sources of delays are case back- reforms in 90% of states between 2007 19 days to import. This is largely due to logs and an increasing volume of filings, and 2009, up from 75% between 2005 the longer times for inland transporta- which include a significant percentage and 2007. Similarly, Doing Business in tion and the heavy port congestion for of constitutional protection actions (tu- India 2009 showed that 9 out of 10 Indian import inspections. Overall, the costs telas).16 There are also differences in the states benchmarked for the second time associated with trading across Colom- costs to enforce a contract. These range had introduced reforms. As a result of bia’s borders are high and regionally un- from 21% of the claim value in Manizales these reforms, the average time to start competitive. Exporting a container from to 52.6% in Bogotá and are mainly due to up a company dropped from 54 to 35 days Bogotá through the port of Barranquilla legal and expert fees. and the time to obtain a building permit costs US$ 1,600 (Colombia’s cheapest) was reduced by 25 days, on average. while it costs US$ 1,890 to do the same LEARNING FROM EACH OTHER In Colombia, the example of Neiva through Buenaventura (Colombia’s most highlights how reform-minded govern- expensive). Inland transportation repre- Benchmarking exercises like Doing Busi- ments can use Doing Business indicators sents the lion’s share of the costs. ness inspire governments to reform. They to motivate and sustain reform efforts. point out potential challenges and iden- The example shows that there is no need PAYING TAXES tify where policy makers can look for to reinvent the wheel: it is sufficient to The national government collects 58.4% good practices. Comparisons between start by introducing reforms success- of all the taxes paid by businesses. For cities within the same country are even fully implemented in other cities. In municipal taxes, the national govern- stronger drivers of reform as local gov- fact, Colombian cities have a lot to gain ment establishes the floor and ceiling for ernments have a hard time explaining from adopting the best regulations and tax rates and each municipality defines why doing business in their city may be practices that are working elsewhere in the actual rate within that range. Thus, harder than in neighboring cities. The the country. A hypothetical city adopting the variations in the effective municipal good news is that sharing a national legal all the best practices identified in this tax rates (ICA and property tax) create framework facilitates the implementa- report would rank 17th of 183 countries local variations in total tax burdens.14 In tion of existing good practices within a globally—20 places ahead of Colombia’s Pereira, entrepreneurs pay the equivalent country. National governments can also position in Doing Business 2010 (table of 6.01% of their commercial profits as use Doing Business data to monitor how 1.4).17 Reducing start-up procedures to ICA tax,15 while entrepreneurs in Santa changes in national regulations and ad- the 8 procedures and 8 days of Neiva Marta pay 17.68% for the same tax. The ministrative practices are implemented would make opening a business faster statutory property tax rate also varies by local branches of their agencies. In a than the OECD average. Fast approval of significantly from 0.0002% in Bogotá to world where locations compete against construction permits, like in Popayán, 0.2% for entrepreneurs doing business each other to attract investment, sub- would mean that dealing with construc- in Medellín. In addition to the tax rates, national Doing Business data allow local tion permits would be as speedy as it is in the number of tax payments also varies governments to review the conditions Finland (38 days). To register property, across cities facing entrepreneurs in their cities from only 12 days, like in Manizales, would be a comparative perspective. Subnational required—similar to the United States. ENFORCING CONTRACTS data are now available for almost 300 Fewer municipal tax payments, like in The number and type of procedures to locations in 41 countries. Armenia, would put the total number enforce a contract are the same across The example of Mexico is telling. of tax payments at 15—1 less than in all Colombian cities. However, the time After the first subnational Doing Busi- Germany. Importing a container to this and cost to resolve a commercial dispute ness report was published in 2005, the 12 hypothetical Colombian city would take through the courts vary greatly from city benchmarked states competed to reform. 11 days, comparable to Spain, and ex- to city. In Armenia and Montería, it takes One year later, 75% of them had imple- porting would take 13 days, similar to less than 1 year to enforce a contract, mented reforms, a subsequent report Taiwan, China. Finally, resolving a com- while in Barranquilla and Pasto, the same found. More states asked to be included mercial dispute would be as speedy as it 12 DOING BUSINESS IN COLOMBIA 2010 is in Armenia (293 days), faster than in duce that rate over the years. Regulatory ample, studies show that when the cost France and the United States. reforms can help create the conditions of entry is low, firms benefit the most A recent study showed that only and incentives for formalization. from trade openness.19 Third, consistent 17% of new companies—started within The reform strategy in Colombia reformers are inclusive, involving all rel- the previous 42 months—operate in the follows the pattern of consistent reform- evant actors and institutionalizing the re- formal sector in Colombia. This number ers globally. First, they follow a long-term form effort. Finally, they stay focused by is low, but it’s better than the 13.9% seen agenda and continually push forward. setting specific goals and regularly moni- in 2007. For those companies older than The top ranked economy on the ease of toring progress. The national and local 42 months, the rate of formality is 48%.18 doing business, Singapore, introduces governments in Colombia can continue Programs undertaken by the national and reforms every year. Second, the reforms to follow similar strategies to further im- local governments, as well as the cham- are comprehensive, thus increasing the prove their regulatory environment. bers of commerce, have contributed to re- chances of success and impact. For ex- TABLE 1.4 Best practices in Colombia, compared internationally Global ranking (183 economies) Number of procedures to start a business: 93 Armenia, Pereira, Neiva (8 procedures) Days to start a business: 29 Neiva (8 days) Cost to start a business: 90 Pasto (13.1% of income per capita) Number of procedures to build a warehouse: 13 Bogotá, Popayán (11 procedures) Days to build a warehouse: 3 Popayán (38 days) Cost to build a warehouse: 60 Valledupar (79.7% of income per capita) Number of procedures to register property: 114 Bogotá (7 procedures) Days to register property: 24 Manizales (12 days) Cost to register property: 37 Ibagué (1.9% of the property value) Days to export: 38 Bogotá - Santa Marta (13 days) Cost to export: 139 Bogotá - Barranquilla (USD 1,600) Days to import: 25 Santa Marta - Bogotá (11 days) Cost to import: 120 Santa Marta - Bogotá (USD 1,562) Total tax rate: 166 Sincelejo (66.1 % of the profit) Tax payments: 48 Armenia, Sincelejo (15 payments per year) Days to enforce a contract: 18 Armenia (293 days) Cost to enforce a contract: 50 Manizales (21.4% of the claim value) Source: Doing Business database. OVER VIE W 13 1. Global Entrepreneurship Monitor. 2008. 14. The fuel tax rate, while collected by the Reporte Anual Colombia 2008. http:// municipalities, is the same across the 21 www.gemcolombia.org/doc/GEM- benchmarked cities. Colombia08.pdf; IMD. 2009. World Com- 15. Following the Doing Business meth- petitiveness Yearbook. Lausanne. odology, the tax rate described here is 2. Mendez, Jose A. 1991. “The Development designed to provide a comprehensive of the Colombian Cut Flower Industry.” measure of the cost of the ICA tax a busi- Policy Research Working Paper Series ness bears. It differs from the statutory 660. World Bank. Washington DC. tax rate, which merely provides the factor 3. National Statistics Office (Departamento to be applied to the tax base. For more Administrativo Nacional de Estadística, information, see the detailed description or DANE). http://www.dane.gov.co/ of the standard case in the Data notes daneweb_V09/index.php?option=com_c section. ontent&view=article&id=76&Itemid=56 16. The tutela is regulated in Art. 86 of the 4. World Bank. World Development Indica- Constitution, which determines a fast- tors. track and preferential procedure for the protection of fundamental rights. 5. Doing Business rankings are recalculated every year to account for the inclusion of 17. This calculation is based on Doing Busi- new countries and changes in methodol- ness 2010 data under the assumptions ogy. that data for all other economies remain unchanged. 6. Law 1014 of 2006 and, more recently, Law 1258 of 2008. 18. Global Entrepreneurship Monitor. 2008. Reporte Anual Colombia 2008. http:// 7. Decree 1868 of May 29, 2008 and Decree www.gemcolombia.org/doc/GEM-Co- 1878 of May 29, 2008. lombia08.pdf. 8. Decree 1272 of April 16, 2009. 19. Chang, Roberto, Linda Kaltani and Nor- 9. Espinosa, Alejandro. 2009. Private Help man Loayza. 2009. “Openness Can Be for a Public Problem. Doing Business Re- Good for Growth: The Role of Policy form Case Study. http://www.doingbusi- Complementarities.” Journal of Develop- ness.org/reformers/CS09-Colombia.aspx ment Economics 90:33-49; Helpman, 10. Decree 1925 of May 28, 2009. Elhanan, Marc Melitz and Yona Rubin- stein. 2008. “Estimating Trade Flows: 11. Acuerdo 003 de 2008 and Decreto 00233 Trading Partners and Trading Volumes.” de 2008; Convenio de Cooperación Inter- Quarterly Journal of Economics 123 (2): institucional No. 275 of 2007. 441-87; Freund, Caroline and Bineswaree 12. Law 962 of 2005. Bolaky. 2008. “Trade, Regulation and In- 13. Superior Council of the Judicature (CSJ). come.” Journal of Development Economics 87: 309-21. Starting a TABLE 2.1 Where is it easier to start a business—and where not? business RANK 1 Easiest Armenia, Quindío RANK 12 Most difficult Cali, Valle del Cauca 2 Pereira, Risaralda 13 Sincelejo, Sucre 3 Manizales, Caldas 14 Valledupar, Cesar 4 Pasto, Nariño 15 Bucaramanga, Santander 5 Santa Marta, Magdalena 15 Villavicencio, Meta 6 Bogotá, Distrito Capital 17 Riohacha, La Guajira 6 Neiva, Huila 18 Popayán, Cauca 8 Ibagué, Tolima 19 Montería, Córdoba 9 Cúcuta, Norte de Santander 20 Cartagena, Bolívar 10 Medellín, Antioquia 21 Tunja, Boyacá 11 Barranquilla, Atlántico Note: The ease of starting a business is a simple average of the city rankings on the number of procedures, the associated time and cost (% of GNI per capita) required at the start of the business. See the data notes for details. Source: Doing Business database. Cecilia loves cooking. She used to bake ously part of the informal economy. presarial or CAEs) in 6 cities, new firm bizcochos de achira for her family in their Business registration is the first con- registration increased by 5.2%.2 These hometown of Neiva. Eventually, Cecilia tact a new entrepreneur has with govern- findings are confirmed by additional turned her baking passion into an in- ment regulators. In some countries, the studies in other countries.3 formal business and brought in her son process is straightforward and afford- Business registration also relates to Sergio, who delivered the goodies. Cecilia able, while in others it is so cumbersome informality and productivity. Requiring had not thought of formalizing her activ- that entrepreneurs either bribe officials fewer procedures to start a business is as- ity because registering a business in Neiva to speed up the process or simply run sociated with a smaller informal sector.4 used to be a complicated affair. In July their business informally. In addition, formally registered busi- 2007, it took 19 procedures, 32 days and Research shows that the number nesses grow larger and more productive cost the equivalent of 38% of income per of new firms increases and employment than informal ones. In a recent study on capita to open a new business. Thanks to grows when starting a business becomes informality in São Paulo, entrepreneurs several reforms passed during the past easier. In Mexico, after the introduction reported that they could double opera- two years, Cecilia registered her business of a one-stop shop for business registra- tions after registering.5 Upon formal in August 2009 with just 8 procedures tion, the number of new firms increased registration, entrepreneurs could access over 8 days (figure 2.1). Now her bakery by 5% and employment grew by 2.8%.1 courts and credit, supply more impor- stands near the Cathedral. It pays taxes In Colombia, after the introduction of tant customers and avoid harassment and employs 3 people who were previ- one-stop shops (Centros de Atención Em- from government inspectors or the po- lice. Reforms that ease new firms’ entry FIGURE 2.1 are relatively simple and inexpensive to Introduction of a one-stop shop speeds starting a business in Neiva implement,6 and often do not require Time (days) 30 major legislative changes. New Zealand is the top performer in Before reform starting a business among the 183 econo- mies ranked by Doing Business. It takes 20 only 1 procedure, 1 day and a cost of US$ Time cut 112 (or 0.4% of income per capita) to start from 32 days to 8 operating a business. Other economies in 10 North America and the Caribbean are not far behind: in the United States, it takes 6 procedures and 6 days to start a business, Procedures cut from 19 to 8 After reform while in Jamaica opening a business can 0 be accomplished in 8 days. 1 8 19 Procedures While there is no minimum capital Source: Doing Business database. STARTING A BUSINESS 15 What is measured? time, an all-star Colombian city, which one-stop shops (CAEs) for business reg- Doing Business records all procedures that are would include the best practices found istration. CAEs simplified considerably officially required for an entrepreneur to start among the 21 cities, would require 8 pro- the requirements to open a business. and formally operate a business. These include cedures, 8 days, costing 13.1% of income Typically, officials within a CAE provide obtaining the necessary licenses and permits and completing all required notifications, veri- per capita and it would rank 43rd among advice to entrepreneurs who want to fications and registrations with the relevant the 183 economies. open a new business. They also handle authorities for the company and its employ- It is easier to start a business in business registration for the Registry ees. The standard company analyzed by the Armenia than in any other Colombian of Commerce, let entrepreneurs register report is small- or medium-sized and performs general industrial or commercial activities. See city measured in this report (table 2.1): their accounting books and company the detailed description of the standard case in it only takes 8 procedures, 12 days, and statutes and issue the certificate of ex- the Data notes. a cost equivalent to 14% of income per istence and legal representation. CAEs capita. By contrast, in Tunja it takes connect the business registration pro- 15 procedures, 43 days, and it costs cesses of municipal, departmental and requirement, starting a business in Co- equivalent to 15.4% of income per capita. national agencies in order to save the lombia is still a relatively burdensome Despite a national legislative framework entrepreneur from visiting each agency process compared to other countries that regulates business registration across personally. For example, local CAEs (figure 2.2). Among the 21 Colombian Colombia, there are marked differences connect with the national tax author- cities studied, starting a business takes, across cities. These differences stem from ity (DIAN, for its initials in Spanish7) on average, 10 procedures, 20 days and the performance levels of local branches to provide entrepreneurs with the Tax costs 16.3% of the national income per of national agencies as well as variations Identification Numbers. capita. An average Colombian city would in departmental taxes and fees. By July 2007, CAEs operated within rank 80th among the 183 economies In 2001, the Chamber of Commerce the Chambers of Commerce of 6 Colom- measured by Doing Business. At the same of Bogotá launched an initiative to open bian cities: Barranquilla, Bogotá, Bucara- manga, Cali, Cartagena and Medellín. FIGURE 2.2 Time and cost to start a business in Colombia Currently, CAEs operate in 16 of the 1 21 cities analyzed in this report—the 5 New Zealand 0.4 excluded are Montería, Riohacha, Sin- United States 0.7 6 celejo, Tunja and Valledupar. In 2009, Jamaica 8 5.3 Tunja started the implementation of the Neiva 8 30.0 Manizales 10 15.1 CAE. In theory, all regional CAEs oper- Santa Marta 10 15.5 ate the same way. In reality, CAEs oper- Time (days) Pereira 11 15.1 ate with varying degrees of integration Armenia 12 14.0 with municipal agencies. For example, Medellín 12 16.4 Cost (% of income per capita) in Cúcuta entrepreneurs still need to pay Malaysia 13 14.7 Cali 13 15.3 the departmental registry tax separately. Cúcuta 13 15.6 In all other cities where a CAE operates, Barranquilla 17 15.7 the entrepreneur is allowed to pay de- Ibagué 17 15.0 partmental taxes directly at the CAE. In Pasto 17 13.1 Ibagué and Popayán, entrepreneurs will Villavicencio 17 18.4 go to the municipal finance office (Secre- Montería 19 15.8 Bogotá 20 15.1 taría de Hacienda Municipal) to register Sincelejo 20 15.2 the company for local taxes. In the other Valledupar 24 15.0 cities, the CAE will notify the municipal- Cartagena 27 20.2 ity without requiring a visit. Chile 6.9 27 The introduction of CAEs cut Popayán 28 15.6 Bucaramanga 16.4 38 start-up procedures at an accelerated Riohacha 15.4 38 pace. In fact, cities that introduced a CAE Tunja 15.4 43 after July 2007 removed an average of 5 Latin America 62 36.6 procedures, compared to the Doing Busi- and Caribbean Average time Average cost ness in Colombia 2008 results (table 2.2). 20 days 16.3% of income per capita Source: Doing Business database. 16 DOING BUSINESS IN COLOMBIA 2010 TABLE 2.2 All 13 cities measured in 2007 reformed starting a business Mainstreamed Accelerated Accelerated the Eliminated the Lowered cost use of private the Accelerated the affiliation to Eliminated the requirement for for registering documents affiation to affiliation to Family Completed the Combined requirement Lowered Fire company for companies health care public pension Compensation implementation procedures for land use stamp Department books constitution plan fund Fund of CAE into CAE certificate duty certificate Barranquilla   Bogotá  Bucaramanga   Cali   Cartagena   Cúcuta   Manizales   Medellín   Neiva     Pereira   Popayán   Santa Marta   Villavicencio  Reforms making it easier to do business  Reform making it more difficult to do business National level  Local level Note: The reforms took place between July 2007 and August 2009. Source: Doing Business database. Cities that already had a CAE in 2007 plicitly named in the previous laws.10 current one. Manizales and Medellín re- removed an average of 3 procedures over Since then, Santa Marta has eliminated duced the time required to register a the 2 years between reports. In Neiva an 3 procedures connected to the certificate business by 36 days. entrepreneur had to go through 19 pro- of land use. At the same time, Popayán Three national reforms contributed cedures that took 32 days to open a busi- eliminated 2 procedures connected with to the reduction of time: (1) the intro- ness in July 2007. The municipal govern- the same certificate. duction of a new public-private health- ment passed a reform the year after that Post-registration procedures con- care provider (called Nueva Entidad Pro- introduced a CAE8 and connected it with tribute heavily to the final number of motora de Salud, or, Nueva EPS) that the Department of Huila for the payment requirements in Colombia. Currently, an replaces the old public healthcare service of the departmental registration tax.9 entrepreneur has to visit up to 6 differ- provider (called the Instituto de Seguro As a result, 11 start-up procedures were ent agencies to register employees to the Social, or, EPS-ISS); (2) an easier process removed and the process takes now 24 social security system.11 In 2004, an in- to sign up with the public pension sys- fewer days. tegrated form for online social contribu- tem; and (3) procedural changes within While the red-tape reducing Law tion payments known as PILA facilitated Colombia’s Family Compensation Funds 232 of 1995 (Ley Antitrámites) clearly de- payments to all these agencies12 but the (Cajas de Compensación Familiar). fined the certificates and documents that affiliation to each agency still needs to be Aiming to offer more efficient can be requested from an entrepreneur done separately. healthcare, Nueva EPS began operat- during business registration, many cities The time to open a business varies ing in August 2008, after transferring still require redundant certificates—such from 8 days in Neiva to 43 days in Tunja. affiliates from the old EPS-ISS.13 The as a certificate for land use, a permit to In Tunja, obtaining the required certifi- new agency operates like a traditional operate from the fire department and a cate from the fire department alone takes insurance company, without its own clin- sanitary inspection from the municipal- 20 days, and obtaining the certificate for ics, but using those existing within the ity. In response to this practice, the na- land use takes another 9 days. The good network of the old EPS-ISS. The Nueva tional government passed a new decree news is that the average time to open a EPS reduced the average time required in 2008 prohibiting any authority from business was cut by more than half—or, to sign up employees to a compulsory requesting certificates that were not ex- 23 days—from the 2008 report to the healthcare plan by almost 8 days. In STARTING A BUSINESS 17 Cartagena, Cúcuta, Medellín, Pereira and to 30% in Neiva. Sixteen cities show just a Court,14 entrepreneurs now establish Santa Marta, it used to take 14 to 15 days, small variation from the national average their companies through a private deed on average, to enroll. Now it takes only 1 cost of COP$ 1,675,989 (or US$ 761). In 3 and the identity is certified at the time to 2 days in those cities. cities, however, start-up costs are signifi- of registration, thus saving precious time Enrolling employees in the public cantly higher than average. In Neiva, for and money. No notary is required. pension system through the Institute for example, the departmental registration The recent introduction of a new Social Security (ISS) has also consider- tax is 0.7% of the initial capital of the com- “simplified stock company” (Sociedad ably improved since the last report. In pany, in alignment with the national aver- por Acciones Simplificada, S.A.S.) is rap- fact, the time required for registering age. However, the Department of Huila idly changing the way that entrepreneurs employees to the ISS dropped by 13 days, requires an additional 1.5% of the initial register their small- and medium-sized on average. In Barranquilla, Cúcuta and capital of the company for the payment of enterprises. Law 1258 of December 2008, Medellín, where affiliation used to take 4 duty stamps. As a result, the cost of busi- which created this new type of company, 30 days, it now takes only 1 to 5 days. ness registration is almost 130% higher in allows entrepreneurs greater flexibility In March 2008, Colombia’s Superinten- Neiva than it is in Pasto. Villavicencio and in starting their business: companies can dency of Finance authorized the creation Cartagena have start-up costs over 40% now be created by a private deed and of a new tool to enable pre-enrollment higher than those in Pasto. they can have an undefined corporate through the ISS website. A year earlier, in In 2008, the national government purpose. This reform does not directly February 2007, the ISS had outsourced its introduced 2 decrees that substantially impact the Doing Business start-up indi- enrollment to a third-party service, au- reduced costs and simplified require- cator, but it does represent an important tomating and improving forms submis- ment for accounting books across the change in Colombian company law. sions and standardizing other enrollment country. Decree 1868 of 2008 lowers the features. In this area, the differences be- cost to register accounting books at the WHAT TO REFORM? tween cities are now due to the irregular Chamber of Commerce to 1.74% of the implementation of the ISS’s changes, in minimum daily wage, which is approxi- COMPLETE THE IMPLEMENTATION OF CAE addition to varying technical and human mately COP$ 8,600 for each book (about capacities in local branches of the ISS. US$ 4). Decree 1878 of 2008 establishes The municipalities of Montería, Riohacha, Also, a “silence is consent” rule govern- the specific accounting books needed for Sincelejo, Tunja and Valledupar should ing applications is unevenly followed by a commercial company—the inventory accelerate the implementation of the CAE. Colombian cities. and balance sheet book, the minutes Tunja has been working on the implemen- The Family Compensation Funds book and the shareholders book (libro tation for several months now. The intro- now offer a faster registration process. de balance, libro de actas and libro de duction of a one-stop shop for business After the 2004 introduction of the inte- socios). This new decree is far from being registration is associated with increased grated payment form, the Funds started applied uniformly: entrepreneurs regis- entrepreneurship and employment. to accept every new business requests ter 3 to 6 accounting books depending on for enrollment, provided they paid the the city where they operate. UNIFY THE AFFILIATION TO SOCIAL SECURITY AGENCIES family subsidy and complied with the In July 2007, starting a business in legal minimum monthly wage regula- all Colombian cities required submitting The introduction of a single online sys- tion and its statutes. Now the Funds will the new company’s statute to a notary tem for paying all social security contri- only issue an official notice if a request is before registration could occur. This bur- butions reduced paperwork for firms. A rejected. As a result, the average time to densome process required 3 to 7 days and similar type of reform could allow an en- register employees decreased by 3 days. cost COP$ 21,094 (almost US$ 10). While trepreneur to enroll employees in all so- Differences are considerable among cit- Law 14 of 2006 explicitly allowed the cial security agencies through a unified, ies: in Armenia, Barranquilla, Bogotá, creation of companies with fewer than standardized form. The different entities Bucaramanga, Cartagena, Cúcuta, Pasto 10 employees through a private deed, would then share the information—and and Sincelejo it takes an average of 10 the practice persisted that entrepreneurs 6 procedures would be combined into days to complete the registration, while first visited a notary to legally certify the 1. The government has already rallied in Cali, Santa Marta, Tunja and Villavi- owners’ signatures. But thanks to a suc- ample support for the proposed reform cencio it takes only 1 day. cessful public campaign carried out by from both public and private providers The cost to start a business varies local Chambers of Commerce, in addition of social benefits. That support should from 13.1% of income per capita in Pasto to a 2007 decision by the Constitutional accelerate its approval and acceptance. 18 DOING BUSINESS IN COLOMBIA 2010 CENTRALIZE REGISTRATION registration fee and receive the certifi- 6. The introduction of a fast-track system to start a business in Portugal cut the After unifying enrollment with the social cate of incorporation via the Internet. In time by 46 days in 2006. The reform was security agencies, entrepreneurs could addition, Colombia’s government could implemented in 5 months and cost USD submit this standardized form directly allow entrepreneurs to keep electronic 350,000. World Bank. 2005. Doing Busi- to the CAE during the registration pro- accounting books, instead of requiring ness 2006: Creating Jobs. World Bank, Washington, DC. cess, and the CAE could then submit the the purchase of paper-based books. In 7. Dirección de Impuestos y Aduanas Nacio- application form to all the agencies. In Colombia, where only 38% of the popula- nales. Neiva, Armenia, and Pereira—where it tion currently has access to the Internet15 8. Municipal Agreement 003 and Decree currently takes 8 procedures to start a CAEs would do well to offer Internet sta- 233 of 03/10/2008. business—an entrepreneur could start tions where entrepreneurs would go and 9. Convenio de Cooperación Interinstitucio- up with only 2 procedures: registering expedite the procedures online. nal 275 of 2007. the company at CAE and opening a bank 10. Decree 1879 of 05/29/2008. account. 11. These agencies are: Family Compensation Fund (Caja de Compensación Familiar); the Government Learning Service (Servi- PUBLICIZE REFORMS 1. Bruhn, Miriam. 2008. “License to Sell: cio Nacional de Aprendizaje, SENA); the The Effect of Business Registration Colombian Family Institute (Insitituto The law explicitly states that entrepre- Reform on Entrepreneurial Activity Colombiano de Bienestar Familiar, ICBF); neurs should not be required to submit in Mexico.” Policy Research Working the Administrator of Professional Risks certificates or inspections like the certifi- Paper 4538, World Bank, Washington, (Administradora de Riesgos Profesionales, DC. Bruhn obtained the results after ARP); the Institute of Social Security cate of land use, the certificate of sanitary controlling for GDP per capita, number (Instituto de Seguro Social, ISS) or a pri- conditions or undergo inspections from of economic establishments per capita, vate pension fund; Health Care Provider the fire department. Nevertheless, entre- fixed assets per capita, and investment (Entidad Promotora de Salud, EPS); and a per capita in the benchmarked mu- severance fund (fondo de cesantía). preneurs in many cities still go through nicipalities. Kaplan et al. (2007) found a these procedures during business regis- smaller effect on new firms’ registration. 12. Planilla Integrada de Liquidación See Kaplan, David, Eduardo Piedra and de Aportes (PILA): Decree 3667 of tration due to their lack of knowledge of Enrique Seira. 2007. “Entry Regulation 11/08/2004. recent changes in the law. Municipalities and Business Start-Ups: Evidence from 13. Nueva EPS was initially authorized should better publicize reforms once new Mexico.” Policy Research Working Paper by the Decrees 055 (01/15/2007), 781 decrees are enacted. 4322, World Bank, Washington, DC. (03/13/2007) and 2713 (07/16/2007); it 2. Cardenas, Mauricio, and Sandra Rozo. was subsequently established by Resolu- 2007. “La informalidad empresarial y tion 371 (04/03/2008) of the National PROMOTE ELECTRONIC SERVICES sus consecuencias: ¿Son los CAE una Health Superintendence. Its initial capital Decree 1151 of 2008 promotes the use solucion?” Documento de Trabajo 38, was COP$ 100 million and its sharehold- of electronic services and establishes Fedesarrollo. Bogotá, Colombia. ers include various family compensation funds (Cafam, Colsubsidio, Compensar, guidelines to further Colombia’s infor- 3. See, for example: Fisman, Raymond and Confandi, Comfenalco Antioquia and mation and communication technolo- Virginia Sarria-Allende. 2004. “Regula- Comfenalco Valle) with 50% of the shares tion of Entry and the Distortion of Indus- plus one, and the public sector through gies (ICT) agenda within government trial Organization,” NBER Working Paper La Previsora Vida S.A. that holds the re- agencies. Entrepreneurs can now go W10929, Cambridge, MA. maining shares. online (www.crearempresa.com.co) to 4. Djankov, Simeon, Rafael La Porta, Flor- 14. Judicial Decision C-392 of the Colombian review requirements for opening a busi- encio López-de-Silanes, and Andrei Shle- Constitutional Court (05/23/2007). ifer. 2002. “The Regulation of Entry.” The ness and download forms. The reform Quarterly Journal of Economics 117 (1): 15. International Telecommunication Union could go further by offering all CAE ser- 1-37, MIT Press. (2009). vices online—including payment of the 5. Bertrand, Marianne, Simeon Djankov, departmental tax. New Zealand offers Sendhil Mullainathan, and Phillip Schnabl. 2006. “Who Runs Informal an online one-stop shop: entrepreneurs Businesses in São Paulo?” Harvard Uni- file all necessary information, pay the versity, Department of Economics, Cam- bridge, MA. Dealing with TABLE 3.1 Where is it easier to deal with construction permits—and where not? construction RANK 1 Easiest Popayán, Cauca RANK 10 Most difficult Neiva, Huila permits 2 3 Valledupar, Cesar Santa Marta, Magdalena 13 14 Armenia, Quindío Pereira, Risaralda 3 Tunja, Boyacá 15 Medellín, Antioquia 5 Montería, Córdoba 16 Cartagena, Bolívar 6 Riohacha, La Guajira 16 Ibagué, Tolima 7 Bogotá, Distrito Capital 18 Cúcuta, Norte de Santander 8 Barranquilla, Atlántico 19 Bucaramanga, Santander 8 Sincelejo, Sucre 20 Cali, Valle del Cauca 10 Manizales, Caldas 21 Villavicencio, Meta 10 Pasto, Nariño Note: The ease of dealing with construction permits is a simple average of the city rankings on the number of procedures, and the associ- ated time and cost to build a warehouse. See the Data notes for details. Source: Doing Business database. Jaime is a young entrepreneur who owns Tunja. In contrast, if he set up a ware- to get a construction permit than in the a fashion boutique in Bogotá. He is plan- house in Cúcuta, Bucaramanga, Cali or average OECD country (where it would ning to open more stores across the Villavicencio, he’d spend a lot more time take an average of 157 days). However, country. As a first step, he decided to and money (table 3.1). Colombia’s permits are more expensive visit different cities, in order to find out As a whole, construction require- relative to earnings: the average OECD where it is cheapest and fastest to build ments in Colombia tend to be less onerous country’s permits cost just 56.1% of in- a warehouse to store clothes. He asked than those found in other Latin American come per capita. construction professionals for advice and countries. Doing Business found that an Finding the right balance between they recommended taking into account entrepreneur in Colombia needs an aver- safety and efficiency is important in a the different regional requirements— age of 109 days, 14 procedures and an sector like construction. Good, smart such as building permits, inspections, investment of COP$17,393,160 (169.6% regulations ensure both public safety and local taxes and utility connections. of income per capita) to build a ware- revenues for the government, while mak- After six months of intensive re- house and connect it to public utilities, ing the process easier for entrepreneurs search in 21 Colombian cities, Jaime according to regulations. In the average like Jaime. A complex and confusing discovered that it would be easiest to deal country in Latin America, it would take regulatory framework hurts businesses with construction permits and utility 225 days, 17 procedures and cost 210.8% and can be a seedbed for corruption. connections for warehouses in 4 cities: of income per capita (figure 3.1). In fact, Instead of promoting public safety, overly Popayán, Valledupar, Santa Marta and in the average Colombian city, it is faster rigid rules and regulations may push BOGOTÁ 403 construction into the informal economy, FIGURE 3.1 undermining their intent. According to a Some cities have more efficient construction permits approval process recent survey of countries belonging to LAC the Asia Pacific Economic Cooperation PERU AVERAGE LAC Range AVERAGE (APEC), the time and procedures for in Colombia IBAGUÉ 217 PERU CALI 19 dealing with construction permits are CHILE OECD 170 considered the “biggest regulatory im- LAC AVERAGE CHILE pediment” to doing business.1 Also, the MEXICO Colombia OECD PERU World Bank Enterprise Surveys found 21-city 109 average 14 MEXICO that firms perceive higher levels of cor- CHILE ruption in countries where dealing with MEXICO VALLEDUPAR 80 construction permits is more difficult BOGOTÁ 11 POPAYÁN 38 POPAYÁN OECD (figure 3.2). The ease of obtaining construc- Procedures Time Cost tion permits in Popayán is remarkable (days) (% of income Note: LAC denotes the Latin America and Caribbean region. per capita) enough to rank it higher than 94% of the Source: Doing Business database. 20 DOING BUSINESS IN COLOMBIA 2010 What is measured? tax), 5) connecting to public utilities and bian norms. After construction, the law Doing Business looks at construction permits 6) passing inspections. Yet regional vari- mandates a final inspection by municipal as an example of the licensing regulations that ations are significant. In Popayán, Jaime authorities to determine if the building is businesses face. This indicator measures the would have to complete 11 procedures in full compliance with all requirements. procedures, time and cost to build a commer- cial warehouse, hook it up to basic utilities and for his warehouse; in Cali, he would have However, in most cities, this final inspec- register it. The recorded procedures include: to complete 19 for the same project. tion is random or absent due to a lack submitting project documents (building The regional differences are mainly of administrative capacity. Within our plans, site maps), obtaining clearances and due to special inspections, land-use cer- sample, Medellín was the only city where permits, passing inspections and obtaining connections from electricity, water, sewerage tificates and local stamp duties (which the municipal government could review and telephone providers. The time and cost need to be paid separately) that are re- all projects and coordinate with the local to complete each procedure under normal quired in certain cities and not others. utility companies to verify the soundness circumstances are calculated. All official fees associated with completing the procedures are For example, in Cali, an entrepreneur of the project. Yet, the approval of the included. It assumes that the warehouse will would have to undergo an inspection final construction takes on average 45 be used for storage of nonhazardous goods by the local fire department, obtain an days, and public service connections may and is located in the peri-urban area of the benchmarked city. See the detailed description additional land-use-authorization cer- be suspended during that time. While of the standard case in the Data notes. tificate and pay special stamp duties—on ensuring the compliance of the final top of the standard taxes and fees—in construction with building regulations is order to build. On the other hand, in important, the inspection and approval 183 economies ranked by Doing Business Barranquilla and Bogotá, a simple con- should be fast and with clear criteria. worldwide. That is to say, Colombia’s struction project, like the one analyzed On average, Colombian business stand-out city of Popayán would rank by Doing Business, does not require an owners may spend 109 days to obtain all 11th among 183 economies on the ease inspection from the fire department. the approvals for warehouse construction of dealing with construction permits— Furthermore, “urban curators”—that is, projects, as measured by Doing Business. ahead of such OECD countries as the private professionals who review and ap- But our subnational study found that a United Kingdom and France. prove construction permit applications boutique owner like Jaime could save Some procedures are common in Colombia—can put through an online about two months by going through the across most Colombian cities. These permit application with the certificate of process in Popayán or Santa Marta (mea- include: 1) obtaining land ownership existence and legal representation and sured at 38 and 43 days, respectively). If documents, such as the certificate of free evidence that there are no outstanding he set up his warehouse in Ibagué, he transferability and evidence of property property tax payments, among other pre- might have to double the time allotted to tax payment, 2) obtaining a certificate of construction requirements.2 Since 2009, the project, because there it could take existence and legal representation, 3) ob- this electronic filing has been mandated up to 217 days (figure 3.3). taining a construction license, 4) paying by law in all cities with over 500,000 Obtaining a building permit and the urban alignment tax (or construction inhabitants and it is gradually being utility connections are the main causes implemented. As a result, the number of of delays. But, once again, regional varia- FIGURE 3.2 required procedures should fall in cities tion is significant. For example, Jaime Difficulty in dealing with construction permits is associated with corruption with populations above 500,000 in the would need just 20 days to obtain the Share of firms that expect to give gifts next two years. building permit in Popayán or Santa in exchange for construction permits (%) Most inspections of public utilities Marta, compared to 60 days in Ibagué. 30 and building construction are mandated The minimum time required in any city by national laws, so little to no regional is 12 days, which is the time the urban 20 variation is found here. In fact, inspec- curators must allow to inform neighbors tions of electricity, water and sewerage about new construction. The time to issue 10 are strictly implemented. Moreover, there the building permit is also related to the 0 is a mandatory electricity inspection construction volume—small cities like Least Most made by a private company certified by Popayán and Riohacha have lower levels difficult difficult the national government. This company of construction activity. In fact, due to its Economies ranked by ease of dealing with construction permits, quintiles checks internal electrical wiring instal- small size, Riohacha is the only city in Note: Relationships are significant at the 1% level and remain lations and issues the so-called “RETIE”3 the subnational study without urban cu- significant when controlling for income per capita. Source: Doing Business database; World Bank Enterprise certificate if they comply with Colom- rators. There, the Local Planning Office Survey database. DEALING WITH CONSTRUC TION PERMITS 21 FIGURE 3.3 the private domain. Private professionals Dealing with construction permits—Popayán is the fastest and Valledupar the least costly known as “urban curators” (curadores Popayán 38 85.5 urbanos) became responsible for the Santa Marta 43 125.5 complete and timely review of building Riohacha 48 106.1 permit applications. By 1996, the system Bogotá 74 402.8 of private urban curators was up and Montería 116.2 75 running and today, with the exception of Sincelejo 141.5 85 Time (days) Riohacha, all the cities analyzed in this Tunja 104.9 86 Valledupar 79.7 89 study have it. Barranquilla 91 186.9 Cost Before this reform, construction 96 208.1 (% of income per capita) Cúcuta companies dealing with the Planning Manizales 98 209.6 Office rarely interacted with the authori- Cartagena 107 293.7 Pereira 171.6 121 ties reviewing their cases. If documents Armenia 122.0 123 were missing, or if something needed to Neiva 112.8 127 be corrected, the wait could be daunting. Pasto 147.2 140 In contrast, builders in cities like Bogotá Cali 175.1 146 and Medellín can now submit documents Villavicencio 269.0 151 126.8 and then follow up on their progress on- Bucaramanga 160 Medellín 231.3 181 line. There is a case management system Ibagué 144.8 217 to keep customers up-to-date on the status of their permit. In 1995, obtain- Source: Doing Business database. ing a building permit in Bogotá took on issues building permits. Meanwhile, the Colombian cities (figure 3.4). On aver- average 1,080 days—or, approximately 3 time required to get utility connections age, the building permit represents 61% years. By 2009, this wait dropped to just depends on the availability and proxim- of total costs across the 21 cities. The 33 days—less than 1/17th of the old wait. ity of inspectors at the local public utility building permit cost is calculated accord- The average time savings: about 2 years companies. For instance, in Valledupar, ing to a formula established by national and 10 months.4 the time required for electricity inspec- law that includes a local factor—depend- Recently, more improvements and tions is up to 30 days because approval ing on the size and income level of the innovations have taken place. Colombia’s from the electricity company offices over city—which accounts for the regional Decree 1272 of 2009 categorizes con- in Santa Marta is required. variations seen above. Meanwhile, the struction projects based on their com- Small business owners like Jaime construction tax is determined by mu- plexity and risk. With this regulation, also care how much money they must nicipal governments and varies greatly. In a simple warehouse like the one used spend on construction permits. On aver- Bogotá for example, the construction tax by Doing Business would have a faster age, entrepreneurs need to pay 169.6% of rate is 2.6% of the building costs, which approval process than a more complex the country’s average income per capita. accounts for 53% of the total cost. In con- building. Prior to the decree, there was This cost places Colombia 97th out of trast, Valledupar does not have such a tax no distinction between a skyscraper and 183 economies globally. If Jaime looked at all. Another important source of cost a simple warehouse; both types of struc- for the cheapest place within Colombia differences is the existence of additional tures had a legal approval time of 45 in our study, he would decide to build local taxes and stamp duties. In cities working days. In contrast, today simpler in Valledupar—where construction per- like Pereira, Villavicencio, Cúcuta and structures have a legal approval time of mits cost just 79.7% of income per cap- Cartagena such taxes represent between just 25 working days. Bogotá already im- ita. Jaime would probably want to avoid 20% and 40% of total costs. plemented this faster procedure. Cities the most expensive cities—Cartagena, Colombia has been a pioneer in like Bucaramanga, Cali and Cartagena at 293.7% of income per capita, and Latin America on construction regula- are working towards this goal. Bogotá Bogotá, at 402.8% of income per capita tions; it became the first country in the also cut 10 days from the time to obtain (figure 3.3). region to privatize its building-permit the water connection by introducing a The building permit and the urban review process. In 1995 it moved the new process that includes performance- alignment or construction tax are the administration of building permits out based payments to the providers that main source of cost differences among of the state-run Planning Offices into install the connection. 22 DOING BUSINESS IN COLOMBIA 2010 FIGURE 3.4 for a construction project, Denmark re- Taxes account for over half of construction permit costs in Bogotá quires only one. This does not imply that Valledupar buildings in Denmark are less safe. In Popayán Colombia, a critical factor today is that Tunja the final inspection is absent or random Permit Other Construction Riohacha fees tax in most municipalities. Colombia should Neiva Montería implement reforms to guarantee that at Armenia least one inspection is performed. One Santa Marta way to make inspections more efficient Bucaramanga is to change from a system of random Sincelejo inspections to risk-based assessments, in Ibagué Pasto which inspections are performed at criti- Pereira cal phases of the construction process. Cali In addition, local planning and building Barranquilla offices should increase and adapt the ca- Cúcuta pacity of their staffs to ensure quality of Manizales service, reduce waiting times and enforce Medellín Villavicencio time limits. Cartagena Another popular approach among Bogotá the best-performing economies is the 0 100 200 300 400 privatization of the inspection process. Cost Source: Doing Business database. (% of income per capita) The Czech Republic adopted this method, creating a new and independent profes- WHAT TO REFORM? sion: authorized inspectors. In Colombia, information and information regarding there is already an example of private ALLOW ONLINE APPLICATIONS FOR application procedures. As a next step, electricity inspections. While these pri- BUILDING PLAN APPROVAL AND UTILITIES CONNECTIONS making it possible for individuals and vate inspectors can speed up the process, firms to apply online for new connections they tend to be more expensive than the In Singapore, builders submit permit ap- would save time for both applicants and inspections made by the local electric- plications electronically. Developers in utility companies. ity provider. In any case, these private Austria, Denmark, Iceland, Malaysia, inspectors should be complemented with Norway and the United States also com- RATIONALIZE TAXES AND SHARE BEST strong governmental regulation and en- plete their applications online. In Co- LOCAL PRACTICES forcement. lombia, a recent law mandates that the Municipalities should do a cost-benefit urban curators verify some requirements analysis of their local taxes and stamp du- INVOLVE STAKEHOLDERS IN THE online in cities over 500,000 inhabitants. ties to assess how much is collected versus REFORM PROCESS However, in most of the country building the administrative costs of these proce- In dealing with construction permits, applications are still processed manu- dures. The findings could be shared with there are a great number of stakehold- ally. In the future, the system could be other municipal governments to arrive at ers involved—namely, the national and further computerized, so that building in- best practices. In addition, electronic tax local governments, urban curators, the formation would be easily accessible and filing and payment, which have been suc- chambers of commerce, the public utili- new permit applications could be cross- cessfully implemented in Bogotá, would ties providers and private inspectors. checked for ownership, compliance, per- benefit other areas. There is also room Some municipalities—like Bogotá, Bar- mits and inspections. A first step would for improvement regarding construction ranquilla, Bucaramanga, Cali, Cartagena, be to offer application forms online. Sev- tax: It could be more homogeneous and Medellín, and Neiva—have created con- eral municipalities have websites in place, transparent across the country. sulting boards for stakeholders to discuss but they do not offer services related to new reforms and improve the system’s ac- building permits online. Utility providers RATIONALIZE INSPECTIONS countability. These boards could be set up also have well-established websites where While Colombian municipal and na- across the country in order to share best an entrepreneur can easily access contact tional laws require several inspections practices and promote new reforms. 23 DOING BUSINESS IN COLOMBIA 2010 DEALING WITH CONSTRUC TION PERMITS 23 STRENGTHEN THE URBAN CURATOR SYSTEM The introduction of the urban curators system has been a success, but improve- ments in oversight and accountability could strengthen the system further. A robust governance structure for profes- sional oversight should be developed. Currently, supervision is scattered among a number of local and national entities (e.g., it may be the Procuradoría, Con- traloría or Personería) and citizens may not know where to go with a complaint. The creation of a construction board or commission could help define and coor- dinate governance issues. Liability rules should also be further clarified and risks should be appropriately covered through insurance schemes. As it stands now, urban curators are liable for negligence or misconduct, but they often pay penal- ties with their own resources. 1. Singapore Business Federation. 2009. “Key Findings from ABAC ‘Ease of Doing Business’ Survey.” Presentation at the Singapore Business Federation session, “Removing Barriers for business growth in APEC,” Singapore, July 9, 2009. 2. Decree 1272 of April 16, 2009. 3. Reglamento Técnico de Instalaciones Eléc- tricas. 4. Espinosa, Alejandro. 2009. Private Help for a Public Problem. Doing Business Re- form Case Study. http://www.doingbusi- ness.org/reformers/CS09-Colombia.aspx. Registering TABLE 4.1 Where is it easier to register property—and where not? property RANK 1 Easiest Ibagué, Tolima RANK 12 Most difficult Neiva, Huila 2 Manizales, Caldas 13 Cali, Valle del Cauca 3 Sincelejo, Sucre 13 Pasto, Nariño 4 Valledupar, Cesar 15 Popayán,Cauca 5 Pereira, Risaralda 16 Villavicencio, Meta 6 Bogotá, Distrito Capital 17 Bucaramanga, Santander 7 Tunja, Boyacá 18 Montería, Córdoba 8 Riohacha, La Guajira 19 Cúcuta, Norte de Santander 9 Armenia, Quindío 20 Barranquilla, Atlántico 10 Santa Marta, Magdalena 21 Cartagena, Bolívar 11 Medellín, Antioquia Note: The ease of registering property is a simple average of the city rankings on the number of procedures, and the associated time and cost (as % of property value). See the Data notes for details. Source: Doing Business database. Isidro is a rice trader from Ibagué. Rice modern registration system was first es- moving up 27 places in the global study. is one of the most important staple foods tablished in 1790 during Spanish colo- Currently, it takes 7 procedures, 20 days for Colombians. With a comfortable level nization. After winning independence and costs 2% of the underlying property of reserves from last year’s sales and from Spain in 1819, the Colombian value to register a property in Bogotá. promising crop predictions, Isidro has government began adjudicating public However, registering a property is not great expectations for the season ahead. lands. In the early stages, titling was easy everywhere in the country. Pro- As a result, he wants to open up a whole- costly—it involved hiring lawyers and cedures, time and cost vary substan- sale rice store in Ibagué to expand his surveyors, putting up fencing and more. tially among the 21 Colombian cities in business. Unfortunately, his savings are Only the wealthiest Colombians were this report—due to local regulations, not sufficient to fulfill his plans. How- able to register public lands, thus turn- municipal administrative practices and ever, a local bank accepts his house as ing themselves into powerful landown- local taxes.6 Registering a property is collateral for a loan. ers. Indeed, land prices skyrocketed over easier in Ibagué, Manizales and Sincelejo Entrepreneurs, like Isidro, are aware the next century, due to the high prices and harder in Cúcuta, Barranquilla and that an efficient property registration of primary products as world markets Cartagena (table 4.1). Despite some great system has real benefits. In fact, property expanded from 1870 up to early 20th reforms, challenges remain. registration should be a priority in every century.3 In order to take full advan- As a starting point, Colombia’s top society. When there’s a formal deed, en- tage of the business opportunities offered performing cities provide good examples trepreneurs have an incentive to invest by the global markets, titling became a from which other cities in the country in their properties and can use their must for agricultural producers. There could learn. If all cities were to adopt the immovable assets to obtain credit and were several occasions when terrains al- existing best practices found in these 3 grow their businesses. A recent study in ready occupied by peasants were claimed cities, Colombia would move up 8 posi- Peru suggests that property titles are as- by somebody wealthier. Consequently, tions to 43rd out of 183 economies on sociated with a 10% increase in loan ap- the “unfair” land allocation system and proval rates for construction materials.1 weakness in property rights enforcement What is measured? Indeed, banks in countries lacking ad- led to agrarian conflicts and legal dis- Doing Business records the sequence of pro- equate creditor information prefer land putes4 over land between peasant settlers cedures, time and costs necessary to transfer a property title from one local business to titles as collateral since land is difficult to and landowners up to the 1940s.5 another, when a company purchases land move or hide.2 Property registration also Isidro´s country, Colombia, repre- and a building. All procedures are recorded benefits governments, as more property sented by Bogotá, ranked 51st of 183 until the buyer can house his business in registered translates into greater prop- economies on the ease of registering the property, sell the property to another company, or use the property as collateral to erty tax revenues. property in Doing Business 2010. It also obtain a loan. It is assumed that the property The importance of securing prop- ranked 6th (out of 17 countries) in Latin is registered and free of title dispute. See the erty rights was recognized early on in America. Between 2008 and 2009, Co- detailed description of the standard case in the Data notes section. the “New World.” In fact, Colombia’s lombia has been an important reformer, REGISTERING PROPERT Y 25 FIGURE 4.1 of Commerce.9 Some cities have more efficient property registration In contrast, some local initiatives BARRANQUILLA add steps and expenses. For example, BUCARAMANGA 13 MEXICO LAC CÚCUTA LAC AVERAGE local stamp duties (estampillas) increase AVERAGE MEXICO the number of procedures in cities like Colombia 11 21-city OECD average Barranquilla, where an entrepreneur BARRANQUILLA 4.0 must first obtain an invoice for the stamp LAC PERU BOGOTÁ 7 AVERAGE 38 duty (which goes to financing public hos- PASTO CHILE CHILE 2.3 pitals) at the municipal finance office and MEXICO OECD OECD IBAGUÉ 1.9 then the next step is to pay it at a com- 22 PERU CHILE mercial bank. In addition, in 9 cities— MANIZALES 12 PERU Barranquilla, Bucaramanga, Cartagena, Cúcuta, Montería, Pereira, Sincelejo, Procedures Time Cost Santa Marta, and Villavicencio—it is still (days) (% of property value) Note: LAC denotes the Latin America and Caribbean region. common practice for an entrepreneur to Source: Doing Business database. personally notify the local cadastre office the ease-of-registering-property ranking history; 2) the certificate of property (Instituto Geográfico Agustín Codazzi, or worldwide. tax payment (Certificado de Paz y Salvo IGAC) about a change in ownership, de- The number of procedures required Predial) stating that the municipal prop- spite the fact that, in theory, the registry ranges from 7 in Bogotá to 13 in Barran- erty taxes were duly paid to the Urban accomplishes the same thing. quilla, Bucaramanga and Cúcuta. Natu- Development Institute (IDU) and 3) the The overall time it takes to register rally enough, local requirements account certificate declaring the payment of other a property varies considerably across for the differences in procedures across taxes related to increases in the value of the 21 cities. In Manizales, Sincelejo cities (figure 4.1). For instance, during the property due to constructions, roads and Valledupar—the 3 fastest cities—the October 2007, the national government or the like (Certificado de Paz y Salvo de process takes about two weeks. This span launched an electronic single window for Valorización). In addition, in Bogotá, it is similar to the United States, but still 6 registries—known as “VUR” for Venta- is also possible to access the certificate times longer than in Saudi Arabia or New nilla Única de Registro. The first VUR was that confirms the legal existence and Zealand (where it takes only 2 days). In located in Bogotá. By accessing the VUR7 representation of the buyer and seller of contrast, in Pasto or Cartagena an en- website, notaries can now download, the property (Certificado de Existencia y trepreneur must wait over a month—38 free of charge, 3 necessary documents: Representación Legal) at the website of and 33 days, respectively. 1) the certificate of free transferability Bogotá’s Chamber of Commerce.8 These Although the time to register the (Certificado de Libertad y Tradición), reforms made 2 procedures easier and public deed is regulated by a national de- which displays 20 years of ownership eliminated 2 others altogether. cree that set a 3-business-day time limit, Other cities have taken measures not every city abides by this rule.10 In FIGURE 4.2 to improve efficiency and save money. fact, only 7 of the 21 cities comply with Registry offices: the main bottleneck In Manizales, the latest property tax re- this limit. In the other cities, the main Time to register property 38 Total days ceipt is sufficient proof of payment—no bottleneck continues to be the registry separate certificate is required. In Ibagué, offices, despite some improvements. This once the entrepreneur pays the property procedure takes, on average, 35.4% of 55% Registry office tax, she receives the corresponding cer- the total time required to complete a title 22 tificates showing that the property is up transfer (figure 4.2). Regional delays are to date on municipal taxes (Certificado caused by the lack of qualified person- 35% 12 de Paz y Salvo Predial y Valorización), nel, inadequate or outdated data, and/or 25% free of charge. In April 2009, Riohacha’s increasingly high transaction volumes. municipal authorities signed an agree- A major cause of delays within the ment with the local Chamber of Com- registry offices, as mentioned in Doing Manizales Colombia Pasto merce to allow an entrepreneur to obtain Business Colombia 2008, has been, par- 21-city the local registration tax invoice and pay adoxically, the implementation of the average it in a single procedure at the Chamber System of Registry Information (Sistema Source: Doing Business database. 26 DOING BUSINESS IN COLOMBIA 2010 de Información Registro, or SIR), which (3.8%) and Paraguay (3.5%). In Bar- erty registration over the past 2 years intends to create a single electronic data- ranquilla, the municipal stamp duty to (table 4.2). Nine cities have eliminated base of registered property titles for the finance public hospitals (estampilla pro- at least 1 procedure, with the top 3 re- nation. Since 2007, improvements have hospitales) accounts for 1.5% of the un- formers—Bogotá, Medellín and Neiva— been made to the system. At the moment, derlying property value alone. In Neiva, each eliminating 2. The best practices 52 registry offices around the country are high costs are due to a 1.5% stamp duty seen for the simplification of procedures linked online, allowing an entrepreneur levied to finance the expansion of the are: 1) accepting the latest property tax to obtain the certificate of free transfer- electricity grid, public universities and receipt (Impuesto Predial) as sufficient ability/ownership history (Certificado de cultural and developmental activities. proof of payment, as seen in Cartagena Libertad y Tradición) which displays a Stamp duties make property regis- and Pereira; 2) issuing a single certificate registered property’s ownership history tration costly in Colombia. Departments including the information found in both for the past 20 years in any office con- and cities take advantage of this tool to tax certificates (Paz y Salvo Predial and nected to the SIR. boost regional or municipal tax revenues Paz y Salvo de Valorización), as seen in Ibagué has the lowest cost to reg- when they may face fiscal imbalances or Medellín; 3) obtaining the tax certificates ister property—totaling just 1.9% of when there is a perceived need to pro- in a single window office, as seen in the underlying property value—due to mote local investments. In addition to Cali and Neiva; and 4) allowing the pre- relatively low lawyers’ fees charged there Barranquilla, Armenia and Santa Marta liminary deed to be prepared by notaries for the study of the property title and also charge stamp duties to finance public instead of lawyers, as seen in Pereira and for the preparation of the preliminary hospitals at 0.5% and 0.35% of property Barranquilla. deed. Ibagué entrepreneurs like Isidro value, respectively. Moreover, in Cúcuta From all 13 cities measured in our also benefit from the absence of addi- an entrepreneur incurs an extra local 2 studies, 10 reduced the time to register tional local taxes—such as stamp duties cost (COP$ 2,100) above and beyond the property. Neiva, Pereira, Manizales and (estampillas). For costs, Ibagué performs national fee (COP$ 3,500) when obtain- Santa Marta each cut at least 7 days from almost as well as Canada (where registra- ing the certificate confirming the legal the registration process. The most com- tions cost an average of 1.8% of property existence and representation of the buyer mon administrative improvement was value). Barranquilla and Neiva are the and seller at the Chamber of Commerce. the modernization of the local registry cities where registering property is most Looking back to Doing Business in offices, which included updating com- expensive—at 4.0% and 3.4% of prop- Colombia 2008, we find that 11 out of puter systems and hiring skilled staff. erty value, respectively. These cities costs the 13 cities assessed in 2007 have im- Manizales, Neiva, Pereira, Santa Marta are similar to those found in Nicaragua proved at least 1 aspect related to prop- and Villavicencio were among the cities to modernize their registry offices. In TABLE 4.2 addition, cities like Manizales, Neiva and Combining procedures for tax compliance certificates—the most popular reform Popayán effectively linked their registry Improved the Combined or cut administrative Linked the Property procedures for offices to their local cadastre offices. efficiency of the Registry and the Ca- Cut fees and/or special Meanwhile, some municipal au- Property Registry dastre rates certificates Barranquilla thorities are now housing several prop- Bogotá  erty registry services under one roof to Bucaramanga  improve tax collection, reduce taxpayers Cali  commuting costs, fight corruption and Cartagena  remove the need to hire external inter- Cúcuta mediaries (tramitadores) to run between Manizales offices. For instance, in Cali there are the Medellín  SiCali offices, where an entrepreneur may Neiva  pay stamp duties and request certificates Pereira  of property tax payment in one stop. Popayán In addition, competition between Santa Marta local notaries has spurred efficient and Villavicencio expanded services—including payment National level  Local level of the registration tax. Notaries in Bar- Note: The reforms took place between July 2007 and August 2009. ranquilla and Cúcuta cut the time to pre- Source: Doing Business database. REGISTERING PROPERT Y 27 pare the public deed from 6 and 8 days in notaries or lawyers. In Barranquilla, no- example, in 2008, Egypt adopted a re- 2007, respectively, to just 3 days a piece taries can access the City Tax Informa- duction in property registration fees. The in the 2010 report. Notaries in Cúcuta in- tion System (Sistema de Información y reform paid off: property registration creased staff and upgraded equipment in Tributario Distrital) online to obtain the and local revenues rose 6 months after order to serve growing lists of clients. In property tax certificate.12 implementation.14 Pereira and Barranquilla, notaries began providing free legal assistance to entre- COMBINE PROCEDURES AND ALLOW IMPROVE THE IMPLEMENTATION preneurs preparing their public deeds, FOR ELECTRONIC PAYMENTS OF THE SYSTEM FOR REGISTRY INFORMATION (SIR) AND EXTEND THE reducing their need to hire lawyers. Some cities—like Barranquilla, Ibagué, SINGLE WINDOW FOR REGISTRIES Medellín and Pereira also reduced Santa Marta and Villavicencio—have (VUR) TO OTHER CITIES costs by simplifying the procedures combined the departmental registry tax The SIR and the VUR must continue to mentioned previously. In addition, Bu- and the registration fee into a single improve and expand. During the next caramanga reduced the fee for the 2 tax payment. Government agencies can also few months, 39 registry offices will be certificates (Paz y Salvo Predial and Paz link their systems to exchange informa- linked to the SIR. In 2011, all 192 reg- y Salvo de Valorización).11 tion and create online portals in order istry offices in Colombia are expected to make certificates and their payments to be part of the information-sharing WHAT TO REFORM? available online. Guatemala, for example, system. The VUR results in Bogotá are is linking its land registry to its munici- outstanding: it simplified 2 procedures ELIMINATE THE NEED FOR SPECIAL palities in order to automatically update and eliminated 2 others. In light of this CERTIFICATES (SUCH AS PAZ Y SALVO PREDIAL AND PAZ Y SALVO property value and ownership. Another good experience, the VUR should extend DE VALORIZACIÓN) OR MAKE THEM time-saving alternative is to implement its services to other cities in the country. ELECTRONICALLY AVAILABLE fast-track procedures, which speeds up In the future, the VUR’s services are Making property registration simple, fast service for an extra fee. The Mexican expected to include 1) a single payment and cheap allows entrepreneurs to focus state Michoacán implemented this sys- unifying registry taxes and registration on their businesses. Moreover, cutting tem and the total time to register a prop- fees, 2) a preliminary deed format avail- unnecessary procedures not only reduces erty fell from 1 month to 2 weeks. able online (Minuta Virtual) and 3) all delays but also discourages corruption. payments centralized with the notaries. Eliminating the requirement to obtain INTRODUCE LOW, FIXED FEES AND a formal certificate that the property is TRY REDUCING MUNICIPAL STAMP IMPROVE THE EFFICIENCY OF DUTIES REGISTRY OFFICES AND LINK THEM up to date on property tax payments TO THE CADASTRES (Paz y Salvo Predial) and the separate Stamp duties tied to transactions are not certificate that declares that there are necessarily the best choice for financing Extra work is required now in order no outstanding contributions owed re- the expansion of a local electricity grid to reduce the time it takes to register a garding property value increases due to or other basic public goods. Transactions public deed over the long term. In some public infrastructure works (Paz y Salvo are unpredictable; hence, their revenue is cities, registration takes more than the de Valorización) would cut, on average, 2 also unpredictable. Municipalities would statutory 3 days—the legal time limit set procedures per city. The receipts issued have a hard time to plan for long-term by law. Efficiency is increasing in some once the property tax and contributions projects based on these funds. Besides, cities. For example, in Bogotá, Cali and are paid should be sufficient as proof. high stamp duties charged on a per- Medellín, once a property is registered Manizales already eliminated these pro- centage of property value can encourage at the registry office, its new ownership cedures. Alternatively, allowing online fraudulent declarations of the property is automatically updated in the cadastre. access to certificates and other informa- value. Furthermore, in some cases, the However, this does not occur immediately tion is an effective way to reduce the time management costs of collecting munici- in 9 cities. In those cities, an entrepre- and costs. Bogotá serves as a positive ex- pal stamp duties may turn out to be neur, perhaps doubting the communica- ample of a city with certificates available higher than the total tax revenues.13 Re- tion between agencies, often personally through its VUR website. In the global ducing stamp duties—or replacing them visits the local cadastre himself to update context, out of 72 economies that have with a fixed fee—makes registration information. Keeping cadastres updated electronic records for encumbrances, 14 more attractive. Moreover, the rise in and linked with the registry office gives of them (including France) only allow registrations may offset the municipal- governments more accurate information access to authorized parties—such as ity’s financial loss due to duty cuts. For and also helps increase tax collection. 28 DOING BUSINESS IN COLOMBIA 2010 1. De Soto, Hernando. 2000. The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. New York: Basic Books. 2. World Bank. 2009. Doing Business 2010: Reforming through Difficult Times. Wash- ington, DC: World Bank Group. 3. O’Rourke, Kevin and Jeffrey Williamson. 1999. Globalization and History: The Evo- lution of a Nineteenth-Century Atlantic Economy. Cambridge, MA: MIT Press. 4. One, 69, 137 and 241 agrarian conflicts were registered between 1827-1869, 1870-1900, 1901-1917 and 1918-1931, respectively, according to LeGrand, Cathe- rine.1988. Colonización y Protesta Campe- sina en Colombia: 1850–1930. Bogotá D.C: Universidad Nacional de Colombia. 5. Sánchez Fabio, Antonella Fazio, María del Pilar López. 2008. “Land Conflict, Property Rights, and the Rise of the Ex- port Economy in Colombia, 1850-1925.” Faculty of Economics, Universidad de los Andes, Documento CEDE 16. 6. World Bank 2007. Doing Business in Colombia 2008. Washington, DC: World Bank Group. 7. www.registratupropiedad.com. 8. http://serviciosenlinea.ccb.org.co/ 9. More information at: http://www. camaraguajira.org/comunication/ bolprensa/2009/ABRIL/29.htm. 10. According to Article 22, Decree 1250 of 1970. 11. In Bucaramanga the Paz y Salvos fee was reduced from COP$ 28,000 to 14,500. 12. The on line access to the city tax informa- tion system can be found at www.barran- quilla.gov.co. 13. World Bank. 2007. Doing Business 2008. Washington, DC: World Bank Group. 14. When Egypt adopted the reduction in property registration fee, 90% properties were either not registered or declared undervalued. World Bank. 2007. Doing Business in Egypt 2008. Washington, DC: World Bank Group. Paying TABLE 5.1 Where is it easier to pay taxes –and where not? taxes RANK 1 Easiest Sincelejo, Sucre RANK 12 Most difficult Manizales, Caldas 2 Ibagué, Tolima 12 Valledupar, Cesar 3 Cúcuta, Norte de Santander 14 Montería, Córdoba 4 Pereira, Risaralda 15 Barranquilla, Atlántico 5 Pasto, Nariño 16 Medellín, Antioquia 5 Tunja, Boyacá 17 Riohacha, Guajira 7 Popayán, Cauca 17 Santa Marta, Magdalena 8 Bucaramanga, Santander 19 Bogotá, Distrito Capital 8 Neiva, Huila 20 Cali, Valle del Cauca 10 Armenia, Quindío 21 Cartagena, Bolívar 11 Villavicencio, Meta Note: Rankings are the average of the city rankings on the number of payments, time and total tax rate. See the Data notes for details. Source: Doing Business database. Last year, María Elena started a shoe and pay taxes in Bogotá (208 hours a and Sincelejo to 26 in Cartagena, Vil- manufacturing company in Bogotá. Now year) than in the average Latin Ameri- lavicencio and 4 other cities. Seven cit- that the young business is up and run- can country (the regional average is 385 ies, including Barranquilla, Bogotá and ning, the stressful time has come to pay hours a year). In contrast, the region’s Neiva sit in the middle with 20 payments taxes. María Elena knows it is important total tax rate, an average of 48.3% of a year (figure 5.1). to support government, as it provides profits, remains significantly below Bo- The size of the tax burden on for infrastructure, education and other gotá’s 78.7%.1 To compare, Ireland col- businesses matters for investment and amenities that are key to achieving the lects 26.5% of companies’ gross profit in growth. Where taxes are high and cor- common goal of a prosperous, functional just 9 payments per year.2 responding gains seem low, the incentive and orderly society. The good news, for María Elena for businesses to opt out of the formal While acknowledging her obligation and other entrepreneurs, is that tax re- sector increases. A recent study shows to pay taxes for society overall, María quirements are not equally cumbersome that higher tax rates are associated with Elena is concerned about having to part in all Colombian cities. It is easier for lower private investment and fewer for- with 78.7% of her company's profits on taxpayers to comply with tax require- mal businesses. A 10 percentage point 20 different payments to comply with all ments in Sincelejo, Ibagué and Cúcuta— increase in the effective corporate tax tax requirements in Bogotá. Her coun- especially when compared to Bogotá, rate is associated with a reduction in try, Colombia, ranked 115th out of 183 Cali and Cartagena (table 5.1). Why such the ratio of investment to GDP of up to economies on the ease of paying taxes in differences? two percentage points and a decrease in Doing Business 2010. She wonders what Some cities require fewer payments the business entry rate of about one per- the situation would be like if she were than others. Most taxes are collected by centage point.3 Other research suggests doing business elsewhere. Indeed, taxes the national government, but some— that a one percentage point increase in are lower and less cumbersome in other like the industry and commerce (ICA), the statutory corporate tax rate would countries around the world—and even in property or fuel tax—are levied at the reduce the local profits of existing invest- other cities around Colombia. local level. Even municipalities with the ments by 1.31 percentage points on aver- Paying taxes in some of Colombia’s same municipal tax rate may require age4 and lead to an 18 percentage point neighboring countries would be easier different numbers of payments. For ex- increase in average debt-to-asset ratios and cheaper for María Elena. In Mexico, ample, in the city of Armenia, the ICA is (part of the reason for the lower reported she would spend, on average, 51% of her paid once a year; in Bucaramanga, it’s 3 profits).5 A one percentage point increase company’s profits on just 6 payments times a year; in Barranquilla, it’s 6 times in effective corporate tax rates reduces over the course of a year. If she were a year and, in Cartagena, the ICA is paid the likelihood of establishing a subsid- doing business in Chile, she would spend on a monthly basis—12 times a year. iary in an economy by 2.9 percentage just 25.3% of her company’s profits on Due to local fiscal structures and varied points.6 10 payments. Even though 20 payments tax requirements, the total number of In addition to the taxes paid, there are required, it is faster to prepare, file payments ranges from 15 in Armenia are costs associated with complying with 30 DOING BUSINESS IN COLOMBIA 2010 FIGURE 5.1 paying taxes easy tend to focus on lower What is measured? The number of tax payments varies across Colombian cities tax rates accompanied by wider tax Doing Business records all taxes and mandatory bases, simpler and more efficient tax contributions that a medium-sized company Tax payments (number per year) administration and one tax per tax base. had to pay in fiscal year 2008. It also measures Latin America the administrative burden of paying these & Caribbean average They also tend to provide electronic fil- taxes and contributions. In doing so, Doing 30 ing and payment systems, which reduce Business goes beyond the traditional definition the tax burden for firms while lightening of a tax: as defined for the purposes of govern- ment national accounts, taxes include only their administrative requirements. compulsory, unrequited payments to general Since April 2008, national taxes— government. Doing Business differs from Cali, Cartagena, Manizales, Montería, the corporate income tax, the value added this definition because it measures imposed Riohacha, Villavicencio charges that affect business accounts, not gov- tax and social security contributions— ernment accounts. The main differences relate can be prepared, filed and paid online to labor contributions and value-added tax. via predefined online forms, saving en- Doing Business measure includes government- 20 mandated contributions paid by the employer Barranquilla, Bogotá, Neiva, Pereira, trepreneurs around 50 hours per year.8 to a requited private pension fund or workers’ Santa Marta, Tunja, Valledupar In contrast, most municipal taxes are insurance fund. It excludes value-added taxes Medellín prepared manually and paid in person at because they do not affect the accounting Bucaramanga, Cúcuta, Ibagué profits of the business—that is, they are not Pasto, Popayán the treasury offices of each municipality. reflected in the income statement. See the Armenia, Sincelejo On average, entrepreneurs spend 208 detailed description of the standard case in the hours a year in order to meet their fiscal Data notes. obligations in Colombia.9 10 The time to prepare, file and pay Chile, Brazil taxes across municipalities is also depen- dent upon the availability of account- Elena would pay the equivalent of 66.0% ing software, the reach and sophistica- of her commercial profits in taxes and Mexico tion of the local banking system, the labor contributions, compared to 78.4% information available to taxpayers and in Armenia.11 Drilling down to the local the number of forms to be filled out. numbers, in Pereira, entrepreneurs pay 0 In Armenia and Barranquilla, entrepre- the equivalent of 6.01% of their com- Source: Doing Business database. neurs are encouraged to pay at their mercial profits as ICA tax, while entre- local banks; in Ibagué, the municipal preneurs in Santa Marta pay 17.67% for government introduced online tax filing the same tax.12 The local property tax tax and of managing the revenue author- and enabled payments by direct transfer rate varies from 0.0002% in Bogotá to ity. Worldwide, on average, a standard from the company´s checking account 0.2% for entrepreneurs doing business in small to medium sized business still (or by check at a local bank). In Bucara- Medellín (figure 5.2). spends three working days a month com- manga, the local tax authority provides The administrative complexity of plying with tax obligations as measured free courses to teach entrepreneurs how municipal taxes can also add to entre- by Doing Business. Where tax compliance to fill out and file forms efficiently. The preneurs’ burdens, depending on the imposes heavy burdens of cost and time, major bottleneck in most cities is created city. For example, the ICA tax rate may it can create a disincentive to investment by the local ICA tax, which requires, in depend upon the activity of the busi- and encourage informality.7 Particularly many municipalities, frequent payments ness. Specifically, in Cúcuta, Ibagué and in developing countries, like Colombia, and multiple forms. For example, to file Pereira, entrepreneurs pay different tax large informal sectors contribute to the and pay the ICA tax every year, 27 forms rates depending on their activity, while creation of an uneven playing field for must be filled out in Cúcuta, compared to in Manizales, Popayán and Santa Marta, formal small and medium sized enter- 108 forms in Villavicencio. the same ICA tax rate applies to all prises, squeezed between smaller infor- Although the national govern- activities. Furthermore, local property mal competitors and larger competitors ment has the sole authority to create tax rates vary depending on land use whose greater resources can help win or eliminate local taxes, municipalities and if the property has a building or a more effective audience with govern- set the local tax rates.10 As a result, not. For instance, in Bucaramanga, the ment and thus greater tax concessions. variations in cities’ tax burdens are ob- statutory property tax rate for a commer- Worldwide, economies that make served. For example, in Sincelejo, María cial building is 0.0084% of the property PAYING TAXES 31 FIGURE 5.2 Since 2007, Colombia has imple- Tax burden among Colombian cities National Industry and Property Fuel mented several important tax reforms. It National tax tax Commerce tax tax tax 58.4% reduced tax rates: the corporate income Sincelejo tax rate was cut from 35% to 33% while Ibagué the equity tax rate was cut from 1.2% Pereira to 0.6%. Following Ireland’s example, Tunja Cúcuta Colombia simplified the process of pay- Manizales ing taxes by unifying all contributions Villavicencio to social security into a single payment Montería (called PILA, for Plantilla Integrada de Neiva Liquidación de Aportes). That reform re- Pasto Popayán duced the number of payments by 35; Riohacha labor risk insurance and welfare security Bucaramanga (so called “aportes parafiscales”) are now Valledupar paid jointly with social security contribu- Cali tions. It also upgraded and improved its Barranquilla Cartagena electronic filing and payment of national Medellín taxes (with a system called MUISCA, Santa Marta that stands for Modelo Unico de Ingresos, Armenia Servicio y Control Automatizado.) Bogotá Reforms have also been made at the 50 60 70 80 Total tax rate (% of profit) municipal level. In 2007, Ibagué reduced Source: Doing Business database. the number of ICA payments required annually. In 2008, Barranquilla limited value while the property tax rate for a izales, the local authorities established the number of tax categories for ICA piece of land is 0.033% of the property an exemption from the ICA back in 2001 in order to simplify tax payment and value. In Cartagena, property tax rates that was renewed in August 2008. To administration. In 2008, Bucaramanga are 0.0105% for a commercial building benefit from the tax holiday, Manizales and Manizales revised and unified its and 0.0255% for a piece of land. firms are required to create a minimum tax codes to provide clear and concise In addition to money, businesses in of 5 jobs and maintain them until 2018.15 information about the number of yearly Colombia spend a lot of time complying In Sincelejo, new companies that create payments, tax rates and payment op- with tax regulations. Complex tax rules and maintain more than 15 new jobs get tions. Also in 2008, Medellín and Pasto for businesses are unlikely to bring more a 50% discount on ICA.16 In contrast, reduced their ICA tax rates,18 while Sin- revenue—quite the opposite. “The Co- Cartagena eliminated its tax exemption celejo reduced the number of ICA pay- lombian municipal tax laws are obscure, on ICA for firms founded in or relocated ments to just one per year. Table 5.2 complicated and sometimes contradic- to this municipality. summarizes the reforms undertaken by tory,” says a local tax expert in Medellín. Some municipalities are also offer- the 13 cities benchmarked in Doing Busi- “For instance, cities charge different ICA ing discounted rates to foster growth in ness in Colombia 2008. tax rates for the same activity. Why?” the critical sectors. Armenia reduced some Municipalities are also innovating expert asked rhetorically. International of its ICA tax rates to encourage tex- with incentives to encourage tax pay- evidence shows that having a clear tax tiles, tourism and shoe manufacturing ment. Medellín, Montería, Pasto and code increases tax revenue by 6% on businesses. Ibagué is offering an 80% Valledupar are offering entrepreneurs average.13 discount on the property tax for new that pay 100% of their fiscal debts up to A number of exemptions apply to buildings. Montería reduced its property 50% off late fees. Sincelejo went a step businesses in certain locations. Ibagué, tax rates to compensate for increasing further to encourage payments. It cre- Manizales and Sincelejo offer tax exemp- property values. Finally, Sincelejo estab- ated the “Plan Papayaso” that offers up tions to help promote employment. In lished a 90% discount on its property to 100% off late fees to entrepreneurs Ibagué, entrepreneurs that create and tax to companies building new com- that pay the total of their debts with the maintain up to 100 new jobs are entitled mercial facilities; the discount is valid municipal tax authority.19 to a 70% discount on the ICA.14 In Man- until 2018.17 32 DOING BUSINESS IN COLOMBIA 2010 TABLE 5.2 Cities revised their tax codes, eliminated and consolidated taxes and simplified the process in 2007–9 Reduced Consolidated labor Simplified profit tax Introduced online taxes and social Consolidated Lowered property process of Simplified tax rates payment contributions tax code tax rates paying taxes rates Barranquilla  Bogotá Bucaramanga   Cali Cartagena  Cúcuta Manizales   Medellín  Neiva Pereira Popayán Santa Marta Villavicencio National level  Local level Note: The reforms took place between July 2007 and July 2009 Source: Doing Business database. WHAT TO REFORM? MAKE COMPLIANCE EASIER THROUGH costs as tax compliance becomes easier. BROAD-BASED REFORMS Municipalities across Colombia can look PROVIDE MORE TRANSPARENT Many tax reforms are aimed at simplify- to the example of Ibagué. Ibagué simpli- INFORMATION TO FACILITATE COMPLIANCE ing tax law and making it easier for firms fied its ICA categories and its adminis- to comply with regulations. A complex tration. Bucaramanga´s efforts to revise Many cities benchmarked in Doing Busi- tax administration is costly, both for and unify its tax code are another good ness in Colombia 2010 could make their entrepreneurs (who spend time dealing example of how to ease compliance re- municipal tax systems more transparent with paperwork) and for the government quirements for all businesses. by following the example set by Bu- (whose fiscal revenues get eroded by When considering the burden of caramanga and Manizales, where recent tax evasion). Fiscal complexity can also taxes on business, it is important to reforms were made to improve tax trans- encourage corruption and rent-seeking look at all the taxes that companies pay. parency. Ideally, governments should behavior. Corporate income tax is only one of the aim for simple tax systems. Having a A bold step to this end would be to many taxes with which business has to transparent tax system is a good step for- eliminate tax exemptions, tax holidays comply. In a recession, company profits, ward. In Colombia, different rates apply and other types of special treatment for and therefore corporate income tax pay- to identical businesses in different cities. certain businesses in order to achieve ments, may fall, but the cost of taxes for In order to find out how much is owed, equal treatment for all. Eliminating tax business may still increase where other entrepreneurs must either hire a tax ex- exemptions can be difficult, because they taxes paid are not linked to profitability. pert or look in several tax codes. Clearly, are often used as incentives with specific this increases the costs of paying taxes. objectives. Tax exemptions may also be MAKE SYSTEMS ELECTRONIC Local governments can make more hard to reform because they face stiff Many economies are eager to make use tax information available to businesses. opposition from constituencies that have of technology to ease the paying of tax- Simple guidelines regarding the forms, benefited from them. However, rational- es—and with good reason. If properly timeline and locations to pay taxes can izing the tax incentive policy regime can implemented, electronic tax systems can especially help small businesses. With reduce its complexity, which businesses speed up processing times, improve data more relevant information at their dis- may find more attractive than specific collection and reduce errors. However, posal, entrepreneurs may find paying exemptions or special treatment. More- its successful implementation requires taxes less stressful. over, the benefits often outweigh the the buy-in and trust of taxpayers with re- 33 DOING BUSINESS IN COLOMBIA 2010 PAYING TAXES 33 gards to the tax payment system, as well nesses that benefit from the MUISCA. 10. The fuel tax rate, while collected by the municipalities, is the same across the 21 as the availability of technology. If small-businesses face capacity con- benchmarked cities. To expand the benefits of online pay- straints and find it difficult to take the 11. The total tax rate measures the amount of ments, ease-of-use is critical. Although time to switch to electronic filing and taxes and mandatory contributions borne the introduction of online payments payment, it may be worthwhile making by the business in the second year of op- benefits many businesses, learning a new it optional for them. eration expressed as a share of commercial profit. Doing Business in Colombia 2010 system or filing new forms may dis- reports the total tax rate for fiscal 2008. courage entrepreneurs from making the 12. Following the Doing Business meth- switch from paper. In Colombia, the new odology, the tax rate described here is MUISCA system for online payments 1. World Bank. 2009. Doing Business 2010: designed to provide a comprehensive Reforming through Difficult Times. Wash- measure of the cost of the ICA tax a busi- requires entrepreneurs to prepare an ad- ington DC: The World Bank Group. ness bears. It differs from the statutory tax ditional form (called medios magnéticos) 2. Ibid. rate, which merely provides the factor to and in it provide detailed information be applied to the tax base. For more infor- 3. Djankov, Simeon, Tim Garsen, Caralee mation, see the detailed description of the regarding the business’s interactions with McLiesh, Rita Ramalho and Andrei standard case in the data notes section. suppliers and clients. Preparing this form Scheleifer. Forthcoming. “The Effect of Corporate Taxes on Investment and 13. World Bank, World Development Indica- takes an additional 70 hours, on average. Entrepreneurship.” American Economic tors database. More taxpayers could benefit from the Journal: Macroeconomics. Available at 14. Agreement 031 of 2008 establishes in- MUISCA system if it worked with the SSRN: http://ssrn.com/abstract=1091238. centives for the industrial, commercial 4. Barrios, Salvador, Harry Huizinga, Luc and services that foster economic de- information entrepreneurs already have. velopment increase on investment and Laeven and Gaëtan Nicodème. 2008. “In- Another issue may be access to ternational Taxation and Multinational employment generation in Ibagué. The an electronic system. To encourage the Firm Location Decisions.” CESifo Work- Council of Ibagué, October 22, 2008. use of new technology, Peru and South ing Paper 2503, CESifo Group, Munich. 15. Agreement 521 of 2008, which establishes Available at IDEAS: http://ideas.repec. an exemption schedule for which any Africa provide free software that helps org/p/sol/wpaper/08-037.html. firm that creates more than 5 jobs has a automate the filing process. In Chile, 20% discount on the ICA payment until 5. Huizinga, Harry, Luc Laeven, and Gaëtan taxpayers can use their universal identifi- Nicodème. 2008. “Capital Structure and 2018, plus 4% for each additional job cation number and a password to access International Debt Shifting.” Journal of with a limit of 100%. forms. In Colombia, many entrepreneurs Financial Economics 88:80-118. Available 16. Agreement 023 and Agreement 041 of at IDEAS: http://ideas.repec.org/p/sol/ 2008 grants firms that create more than are not taking advantage of online pay- wpaper/07-015.html. 15 jobs a 50% exemption from the ICA ments because they are only available 6. Nicodème, Gaëtan. 2008. “Corporate for five years. to certain businesses, as determined by Income Tax and Economic Distortions.” 17. Agreement 042 of 2008 grants a 90% the national tax authority (DIAN) in ac- CESifo Working Paper 2477, CESifo discount on property tax for companies Group, Munich. building new commercial facilities from cordance with the number of employees 2008 to 2018. 7. Everest-Phillips, Max, and Richard San- and annual revenues. If online payments dall. 2009. “Linking Business Tax reform 18. Updates in tax rates are not considered were available to all businesses, regard- to Governance: How to measure success.” as reforms in table 5.2 as they are a less of the number of employees or an- In Practice note series, Investment Cli- response to inflation and not an effort mate Department, World Bank Group, on behalf of the government to ease the nual revenues, the impact of Colombia´s Washington, DC. process of paying taxes for their constitu- national reforms would be significantly 8. World Bank. 2009. Doing Business 2010: ents. higher. Reforming through Difficult Times. Wash- 19. Agreement 023 of 2008 establishes a Faster processing times and faster ington, DC: The World Bank Group; schedule for entrepreneurs to pay off World Bank. 2008. Doing Business 2009. their debts with the municipal tax au- refunds for electronic transactions are Washington, DC: World Bank Group. thority. Discounts range from 50 to 100% key incentives to encourage online pay- 9. Time is recorded in hours per year. The of the late fees. ment of taxes. Also, France introduced indicator measures the time taken to tax credits for individual taxpayers fil- prepare, file and pay three major types of taxes and contributions: the corporate ing returns electronically (though in the income tax, value added or sales tax and future this will apply only to first-time labor taxes, including payroll taxes and electronic filers). Sharing the rewards social contributions. In Colombia, these reaped from administrative efficiency taxes are collected by the national gov- ernment. Thus, we do not observe differ- encourages taxpayers to use a new, bet- ences at the municipal level. ter system. Colombia could learn from France and expand the number of busi- 34 DOING BUSINESS IN COLOMBIA 2010 Trading across TABLE 6.1 Where is it easier to trade— borders and where not? RANK 1 Santa Marta 2 Barranquilla 3 Cartagena 4 Buenaventura Note: Rankings are the average of the port's rankings on the documents, time and cost required to export and import from/ to Bogotá. See Data notes for details. Source: Doing Business database. Ximena is the commercial manager for Santa Marta is that the small size of its important to businesses large and small. a small manufacturing business based in cargo holding area can cause delays and The more time-consuming the export or Bogotá that produces backpacks, brief- limits its potential for growth. Finally, on import process, the less likely it is that a cases, handbags and wallets made from the Pacific coast, there is Colombia’s larg- trader will be able to reach international recycled rubber inner tubes. Ximena is est port, Buenaventura, with access to markets in a timely fashion. There are trying to expand her business and sell China, other large markets in East Asia many successful entrepreneurs like Xi- products abroad, but she is afraid of the and the West Coast of the United States. mena who would be more encouraged to time and cost it might take to export. Her But accessing Buenaventura comes with expand their activities abroad if they could cargo would have to be transported from risks and security concerns, too, as the expect to spend less time and money on Bogotá to one of the 4 major ports in single lane road from Cali is notoriously paperwork, clearance procedures, port Colombia—Barranquilla, Buenaventura, dangerous and slow. activities and inland transportation. Ob- Cartagena or Santa Marta—crossing nu- Ximena faces a burdensome envi- stacles to trade affect entrepreneurs’ abil- merous checkpoints, which could delay ronment to export to overseas markets. ity to expand their businesses and create shipment. Once at the port, the cargo Exporting a container for textiles from jobs. A recent study of 126 economies could be delayed further because of con- Bogotá through the port of Cartagena calculates the loss from export delays at gestion and administrative procedures, requires, on average, 6 documents, 14 around 1% of trade for each extra day. adding to the cost and uncertainty. days and costs US$ 1,770. Meanwhile, in For perishable agricultural products, the Each of Colombia’s 4 major ports Singapore, the best performer in Doing cost is nearly 3% of the volume of trade provides competitive advantages and Business 2010, it takes only 4 documents, for each day’s delay.1 disadvantages. On the country’s Atlantic 5 days and costs US$ 456 to complete all The administrative requirements, coast, the port of Barranquilla is based in export requirements. time and cost to import and export goods a large and growing industrial center and To produce the handbags, Ximena is a hub for the export of manufactured needs to import aluminum buckles from What is measured? goods. Yet, Barranquilla’s river entrance China, where they are manufactured at Doing Business measures procedural require- for cargo ships (23 km from the Carib- the most competitive prices. She needs to ments—including necessary documents bean Sea) can delay exports, when sea- receive the material on time and cheaply and the associated time and cost (excluding trade tariffs)—for exporting and importing sonal changes in the water level make it to keep her costs low. Importing a con- a standardized shipment of goods by ocean too shallow for ships. The port in Carta- tainer from China to Bogotá through transport. For exports, procedures range from gena with its modern infrastructure is the port of Buenaventura requires on packing the goods at the warehouse to their second to none in Colombia. However, average 7 documents and 19 days with a departure from the port of exit. For imports, procedures range from the vessel’s arrival at it is the furthest port from Bogotá— cost of US$ 1,990. In Denmark, the same the port of entry to the cargo’s delivery at the more than 1,000 km away by road. The process requires 3 documents and takes factory warehouse. See the detailed descrip- smaller port of Santa Marta is efficient 5 days to complete at a cost of US$ 744. tion of the standard case in the Data notes section. and well managed. The problem with The ease of international trade is TRADING ACROSS BORDERS 35 FIGURE 6.1 lombia’s paper-pushing adds a significant Colombian ports are competitive on the time to export and import, but could still improve amount of time to the export process. Days CARACAS, The same is true for document prepara- 70 VENEZUELA tion for imports—which takes between 60 42%, in Buenaventura, to 54% (in Bar- ranquilla) of the total time to import. 50 CARACAS, Transporting the goods from Bogotá to VENEZUELA the port is the second major source of 40 delays. It takes 5 to 6 days to transport a container by truck from Buenaventura to 30 Bogotá and 2 to 3 days from the 3 closer Colombian ports Colombian ports 20 LAC AVERAGE ports on the Atlantic coast. Road delays Buenaventura LAC AVERAGE Buenaventura Barranquilla, Barranquilla are exacerbated by official and unofficial 10 Cartagena OECD AVERAGE Cartagena OECD AVERAGE checkpoints along the principal trade Santa Marta SANTO DOMINGO, Santa Marta SANTO DOMINGO, DOMINICAN REPUBLIC DOMINICAN REPUBLIC routes, in particular just outside of the 0 port gates. Time to export Time to import The good news is that infrastruc- Note: LAC denotes the Latin America and Caribbean region. Source: Doing Business database. ture investments across all ports—such as the purchase of straddle carriers and vary among the 4 ports measured in Co- tura’s slower inland transportation and stacking cranes—seems to have paid off: lombia (table 6.1). It is fastest to import the congestion of containers in the port the time for port handling, customs and and export to and from Bogotá through for import inspections. Nevertheless, all inspections is minimal in comparison to the port of Santa Marta: 13 days to ex- 4 ports in Colombia are faster than the the other delays. Port handling accounts port and 11 days to import. This would regional average for Latin America and for less than 25% of the total time, while make Santa Marta similar to the OECD the Caribbean and significantly faster customs and inspections take 15% or average, but still slightly slower than the than neighboring Caracas, Venezuela, less. This suggests the largest delays for fastest port in Latin America and the where it takes 49 days to export and 71 traders are not at the ports but before Caribbean—Santo Domingo, Dominican days to import (figure 6.1). and after the cargo has left their gates. Republic, where it takes only 9 days to A breakdown of the export process As mentioned above, inland trans- export. Barranquilla and Cartagena are into its different stages sheds light on the portation—an important component of not far behind: It takes 14 days to import main bottlenecks. Preparing documents trading—is one of the main sources of and export in Cartagena and 14 days to represents between 36% and 40% of the delays among the 4 Colombian ports export and 15 days to import in Bar- total time to export (figure 6.2). Despite (figure 6.2). The time it takes to transport ranquilla. Trading in Buenaventura takes efforts to digitize required documents for cargo to the seaport could be reduced longer: 18 days to export and 19 days to online access, a reliance on paperwork through improvements in road infra- import. This is largely due to Buenaven- still prevails in Colombia. In fact, Co- structure and security. A World Bank re- port published in 2006 found that many FIGURE 6.2 trunk roads connecting major cities to Colombian exporters spend most time with paperwork the ports of Colombia would reach an Time (days) unstable service-level flow by 2010 with- 20 out major infrastructure investments.2 Most of these needed investments have 15 Ports and terminal not yet happened. In addition, a sub- handling stantial portion of inland transporta- 10 Customs clearance and tion delays also stem from inspections technical control Inland transportation and random police checkpoints, which 5 and handling take place outside of the port. Several 40% 36% 36% 38% Documents preparation respondents to our survey said that po- 0 Barranquilla Buenaventura Cartagena Santa Marta lice checkpoints directly outside of the ports of Buenaventura and Cartagena Source: Doing Business database. 36 DOING BUSINESS IN COLOMBIA 2010 FIGURE 6.3 import (or export) declarations docu- Cost to export and import above the regional average in all Colombian ports Cost (US$ per container) ments—is also relatively expensive. Spe- 3,000 cifically, it costs US$ 325 to prepare the CARACAS, VENEZUELA documentation for importing a 20-foot 2,500 CARACAS, container through Buenaventura. To VENEZUELA compare, in Santiago, Chile and Lima, Colombian ports Colombian ports Peru—two of Buenaventura’s principal 2,000 Buenaventura Buenaventura Cartagena Cartagena competitors on the Pacific coast—it costs Santa Marta Barranquilla 43% less, or US$ 185, for the same pro- 1,500 Barranquilla Santa Marta LAC AVERAGE LAC AVERAGE cess. The good news is that costs associ- OECD AVERAGE OECD AVERAGE SANTO DOMINGO, ated with inspections, customs and port 1,000 DOMINICAN REPUBLIC SANTO DOMINGO, handling—which are controlled by the DOMINICAN REPUBLIC port authorities—together represent less 500 than a quarter of the total costs and are regionally competitive with the top ports 0 in Latin America. Cost to export Cost to import Note: LAC denotes the Latin America and Caribbean region. Since 2008, when the last subna- Source: Doing Business database. tional Doing Business report for Colom- bia was published, the country has be- sometimes check paperwork in just half the cost to export is US$ 1,890 and to come a top reformer on the global stage. an hour, but sometimes they delay the import is US$ 1,990, making it one of For trading across borders, the national process by 4 or 5 days by demanding the most expensive ports for trade in the government and port authorities have physical inspections off site. Streamlin- region. Buenaventura even approaches made a lot of improvements to make ing those inspections would not require a the extremely high costs of trade seen in it easier for businesses like Ximena’s to significant investment and would reduce Caracas Venezuela, Latin America’s most trade and thrive. Together, a new elec- transportation time significantly. expensive (figure 6.3). tronic customs system (called MUISCA) The costs associated with trad- Far and away the biggest cost for for submitting export and import docu- ing across borders from Colombia are importers in Colombia is inland trans- mentation, online payments for import relatively high. Exporting through the portation. In all 4 ports of Colombia, duties and more efficient letter-of-credit port of Barranquilla is the least expen- inland transportation represents more processing by banks have reduced the sive option—US$ 1,600 for a 20-foot than half of traders’ total expenses (fig- amount of time it takes to prepare docu- container—but this is still higher than ure 6.4). In Buenaventura this cost rep- mentation by over 60% for exports and the regional average of US$ 1,2443 and resents 63% of the total associated with over 40% for imports. significantly higher than the OECD aver- importing a 20-foot container. Docu- In January 2009, Colombia’s Min- age of US$ 1,090 per container (figure mentation preparation—which includes istry of Trade, Industry and Tourism 6.3). Through the port of Buenaventura, acquiring and filling out customs and issued a “Simultaneous Inspection Manual” to regulate inspections at the FIGURE 6.4 seaports by the technical control au- Inland transportation is the biggest cost for Colombian importers thorities. The one-pass inspection by the Cost (US$ per container) agriculture department (ICA), the sani- 2,000 tation department (INVIMA), the tax and customs department (DIAN) and the 1,500 63% antinarcotics police aims to reduce the 59% 57% Inland transportation time spent on customs clearances and 58% 1,000 and handling inspections inside all Colombian ports. Ports and terminal handling However, in practice, respondents re- 500 Customs clearance and port that the technical control authorities technical control Documents preparation are not using simultaneous inspections 0 consistently, given Colombia’s increase Barranquilla Buenaventura Cartagena Santa Marta in risks related to drug trade. Several Source: Doing Business database. TRADING ACROSS BORDERS 37 FIGURE 6.5 storage areas, which could be expanded. REDUCE AND STREAMLINE Cartagena—export time cut by 10 days DOCUMENTATION REQUIREMENTS Congested storage space is also com- Time (days) monly caused by traders’ long storage While significant improvements have 25 24 times, which could be limited. been made, Colombian traders continue Taking a closer look at exports from to spend too much time complying with 20 Bogotá through Cartagena, the process burdensome paperwork. Traders cur- has been sped up by 10 days over 2 rently need 6 separate documents to 15 14 years—from 24 days in 2008 to 14 days in export, and 7 to import. With an elec- 2010 (figure 6.5). Meanwhile, the amount tronic customs declaration form already 10 of time it takes to import along the same available, Colombian ports could simply route has dropped 6 days—from 20 days consolidate other information onto the 5 in 2008 to 14 days in 2010. There have form, in line with systems in Antwerp Document preparation cut from 15 days to 5 been significant improvements for en- or Panama. 0 trepreneurs like Ximena. However, these 2007 2009 improvements are not enough. The costs IMPLEMENT INVESTMENTS Source: Doing Business database. TO IMPROVE INLAND ROAD associated with importing and exporting INFRASTRUCTURE respondents reported that not all of the in Colombia remain high—too high to agencies are keeping the inspection point be truly competitive. The focus of the Colombia’s Ministry of Transportation, open for 24 hours, as directed in the next round of reforms should be cost its National Planning Department (DNP) manual. In one case, a respondent stated reduction for cross-border trade. and the International Finance Corpora- that antinarcotics police shuts down at tion (IFC) have put together a package 5pm and that the wait for cargo trucks WHAT TO REFORM? of US$ 2.5 billion to rehabilitate exist- at inspections often lasts several hours. ing roads. The plan is to add a second If this is the case, and a truck does not CONTINUE TO STREAMLINE lane and construct new segments for the AND INCREASE THE USE OF make it to the front of the line before SIMULTANEOUS INSPECTIONS 900 km “Ruta del Sol” that runs from 5pm, the cargo must wait until the next Bogota to the port of Santa Marta.5 The day for the inspection to take place. The agencies performing the simultane- trunk road from Cali to Buenaventura Another common problem is that ous inspections could be better coor- is also being worked on to create double physical or intrusive inspections are still dinated to work 24 hours a day. Also, lanes, but this has taken too long and very common. In fact, since Septem- physical, intrusive inspections can cause construction itself has created addition ber 2009 after a series of large busts significant delays for compliant traders. delays to transport cargo.6 These projects uncovered containers filled with US$ Investing in modern scanner technology are desperately needed as inland trans- 22 million,4 the percentage of physical could better detect and identify cargo portation remains the largest obstacle inspections has increased from 40% to which needs a physical inspection. (in time and cost) for sea cargo trade in 60% of all cargo handled across the 4 Colombia. However, many more road ports. As a net result, the time required INCREASE CONTAINER CAPACITY investments—such as adding or widen- AT PORTS for customs clearance and inspection ing lanes—are critical to maintain a level has not changed significantly since 2008, Congestion problems can be addressed of acceptable service because 80% of despite the “Simultaneous Inspection with an effective storage-management all Colombian cargo must pass through Manual” reform. system—such as the one in operation in these inland roads.7 In the meantime, improvements in Cartagena—or through expanding con- the efficiency of port handling have cut tainer storage space—as is underway in REDUCE AND STREAMLINE INFORMAL INLAND CHECKPOINTS the time required in Buenaventura from Santa Marta. Another practical option 4 to 2 days and in Barranquilla from 3 to is to introduce and enforce storage time Cargo is often significantly delayed be- 2 days since 2008. However, many ports limits and raise fees for longer storage cause of the number of official and unof- and container deposits continue to suf- at ports and container deposits. Cargo ficial checkpoints on the principal trade fer from congestion, leading to delays should be held at ports and container routes, in particular just outside the port (particularly for exports in Barranquilla deposits for as short a time as possible; in gates. Official checkpoints are typically and imports in Buenaventura). In some order to avoid delays, these should not be operated by the military or police depart- cases, the congestion is caused by limited used as intermediate storage areas. ments and are aimed to control trade of 38 DOING BUSINESS IN COLOMBIA 2010 illegal drugs and contraband. However, in practice, there is little coordination between inspection authorities. In most 1. Djankov, Simeon, Caroline Freund and Cong Pham. Forthcoming. “Trading on cases, each operates its own post. The Time”. Review of Economics and Statistics. delays at each post are generally short, 2. Reis, Jose Guilherme, Guasch, Jose Luis, but can extend to several days in some and Barbero, Jose, Infraestructura Logís- situations, adding time and unpredict- tica y de Calidad para la Competitividad de Colombia, World Bank Group, 2006. ability to road transportation. In fact, in 3. For “Latin America and the Caribbean” many cases inspections by the antinar- (LAC). cotics police are repetitive as containers 4. “22 millones de dólares suman caletas are supposed to be inspected to the same halladas en las últimas 48 horas en Bue- end as part of the simultaneous inspec- naventura”, El Tiempo, Colombia, Sep- tember 11, 2009. tion procedures inside the port. The total 5. http://www.proyectorutadelsol.org/ number of checkpoints and informal in- 6. “Avanza Doble Calzada De Buenaventura”, spections should be reduced and stream- El Tiempo, Colombia, June 18, 2009. lined to the greatest extent possible. 7. Ibid. 8. Ibid. IMPROVE REGULATION OF TRUCK INDUSTRY A final component which contributes to the high inland transportation costs of cargo in Colombia has to do with truck drivers and operators. Simply put, the truck industry is a major source of inef- ficiency for trading across borders in Colombia. Better regulation of the truck industry could lead to significant reduc- tions in logistics costs.8 This could be done by improving entry regulations for the trucker so that only qualified op- erators are on the road. Encouraging more competition and better monitor- ing charges for inland cargo would also help (as several respondents indicated that cargo charges are significantly higher than those suggested by the Ministry of Transport). ENFORCING CONTRAC TS 39 Enforcing TABLE 7.1 Where is it easier to enforce a contract—and where not? contracts RANK 1 Easiest Manizales, Caldas RANK 11 Most difficult Pasto, Nariño 2 Valledupar, Cesar 13 Cúcuta, Norte de Santander 3 Santa Marta, Magdalena 14 Barranquilla, Atlántico 4 Armenia, Quindío 14 Medellín, Antioquia 4 Ibagué, Tolima 14 Neiva, Huila 6 Pereira, Risaralda 17 Tunja, Boyacá 7 Bucaramanga, Santander 18 Cali, Valle del Cauca 7 Popayán,Cauca 19 Riohacha, La Guajira 7 Sincelejo, Sucre 20 Cartagena, Bolívar 10 Villavicencio, Meta 21 Bogotá, Distrito Capital 11 Montería, Córdoba Note: Rankings are the average of the economy's rankings on the procedures, time and cost to resolve a commercial dispute through the courts. See Data notes for details. Source: Doing Business database. In Colombia there is a popular saying: “It the top ranking country globally on the differences among mid-sized cities. In is better to reach a bad settlement than ease of enforcing a contract indicator.2 Valledupar, where there are 6 municipal to engage in a good litigation.” That may Despite the common procedures across courts, it is possible to enforce a contract be the case when entrepreneurs have to Colombia, the time and cost vary greatly in 510 days. In Pasto, where there are also wait 2 to 4 years for a court decision. It from city to city. 6 courts, it would take up to 1,410 days. is also true that when defendants benefit Procedural steps are the same across Some regional differences in the struc- from court delays, breaches of contracts Colombia. Commercial procedures are ture of the legal profession or business may become more frequent and oppor- ruled by the Code of Civil Procedure and practices, such as frequency of out-of- tunities to settle become scarcer. Weak the Commercial Code. Despite the fact court settlements, may explain some of judicial systems undermine commercial that Colombia has 34 of the 100 possible the variations, as the internal structure of trust and reduce the scope of commercial procedures in the Doing Business stan- the courts is essentially the same. activity because entrepreneurs prefer to dardized list, the lowest number in Latin Not surprisingly, some practitioners enter commercial agreements primarily America and the Caribbean, the average say that enforcing contracts may be eas- with people they know. Thus, efficient time to enforce a contract in the 21 Co- ier in cities where there is a greater use of contract enforcement is essential for in- lombian cities is 1.4 times longer than in alternative dispute-resolution methods. vestment, trade and economic growth.1 Argentina, the top performing country In Armenia, where alternative resolution Two years ago, Doing Business in in this region. methods are popular, it takes only 293 Colombia 2008 benchmarked the ease of While in Armenia, Montería and days to enforce a contract, while in Bar- enforcing contracts through the courts Sincelejo enforcing a contract takes up ranquilla, where the majority of disputes in 13 Colombian cities. This year, Doing to 350 days, it takes almost 4 times as are resolved in courts, it takes 1,520 days. Business updated the measurement for long in Barranquilla, Pasto and Bogotá. Use of alternative resolution methods those 13 cities and added 8 more loca- Generally, differences in the time to en- could help reduce backlogs in courts, tions. Of the 21 cities measured, the force a contract among cities, show a since they could reduce the number of easiest cities to enforce a contract are relation between the size of the city (and Manizales and Valledupar and the most therefore the complexity of the busi- What is measured? difficult ones are Cartagena and Bogotá ness transactions, and structure of the Doing Business tracks the efficiency of the judicial system in resolving a commercial (table 7.1). business community) and the efficiency dispute, following the step-by-step evolu- On average, it takes 833 days to of the municipal courts. However, vari- tion of a commercial sale dispute before local enforce a contract—less than in Guate- ances in performance also occur among courts. It studies the time, cost and number of mala or Italy, but over 3 times as long as the largest cities. In Medellín, the second procedures from the moment the plaintiff files a lawsuit, through trial and then judgment, in Rwanda and twice as long as in Peru largest city in Colombia, enforcing a con- until the actual payment through a public sale and Mexico. The average cost is 34% of tract takes 768 days, whereas in Bogotá, of the defendant’s movable goods. See the the value of the claim—3.5 times more Cali or Barranquilla it can take 1,300 detailed description of the standard case in the Data notes section. expensive than Luxembourg, which was days or more. There are also notable 40 DOING BUSINESS IN COLOMBIA 2010 FIGURE 7.1 courts. An increase in the number of Wide variation in the time to enforce a contract constitutional protection actions (tu- Armenia telas) has contributed to these backlogs.5 Montería Filing Judgement Enforcement In 2007, in Bogotá, tutelas represented Sincelejo 1% of the claims handled by municipal Santa Marta courts. By the end of 2008, the number Pereira of tutelas had risen to 10% of the claims Ibagué Valledupar and in 2009, tutelas came to represent Manizales 23% of the claims filed before courts.6 Villavicencio Judges must give priority to these types Tunja of claims and resolve them within 10 Medellín days of filing. Lawyers in Pasto and Santa Cúcuta Bucaramanga Marta commented that a single court can Riohacha receive up to 15 constitutional claims on Popayán a given day, in addition to an average Neiva of 40 motions. It is, therefore, not sur- Cartagena prising that judgments on commercial Cali disputes are often put on hold. Bogotá Pasto Since the beginning of 2009, the Barranquilla Superior Council of the Judicature has 0 1 2 3 4 taken administrative measures to reduce Years backlogs in courts by creating positions Source: Doing Business database. for adjunct judges and providing more new filings. However, the main issue re- Once a defendant is served with clerks. These measures are temporary, lated to duration of cases is the efficiency process, the trial period begins. The trial but are expected to produce a favorable and performance of individual judges and sentencing account for 65% of the outcome in expediting proceedings in and judicial staff. total time to enforce a contract and are the short run.7 There are uniform legal rules re- the main causes of delays and differences The sentencing stage is followed by garding the modes of service and notifi- among cities (figure 7.1). In Sincelejo, enforcement and then public auction. cation that could help reducing the dura- courts will issue a judgment in 190 days. Time to enforce a judicial decision is, on tion of some procedures. For instance, Meanwhile, in Barranquilla courts take 6 average, 237 days, but in some cities— in 2003, the Code of Civil Procedure times longer. Within the general frame- notably, Armenia, Montería, Ibagué and was amended to make it possible for work established by the Superior Council Sincelejo—it takes only 120 days.8 Even plaintiffs to directly deliver summons of the Judicature, courts have certain de- though the enforcement stage is more to defendants instead of relying on the gree of organizational autonomy in each efficient in these cities, it is still twice as process server or court clerk (notifica- city and some courts are more efficient long as in France. dor). Despite the change in the Code, than others. Some are more centrally The Code of Civil Procedure allows notifications can still take up to 90 days located and have more modern techni- lawyers to file the petition for enforce- in some cities. “It is common that defen- cal equipment than others. Additionally, ment before the same judge that ruled dants delay notification by not appearing some judges exercise better control over on the merits of the case. This makes it before the court,” says one lawyer in court staff and use their resources more easier for the plaintiff to obtain a writ of Armenia. To expedite this stage, the 2003 efficiently.4 An in-depth look into the execution (mandamiento de pago) since Code reform introduced also notification evaluations of court staff may help ex- the case is not subject to another judicial by electronic means.3 To date, this re- plain the different outcomes (sometimes review.9 Nevertheless, during this stage, form has not been put into practice and within the same city) and may help also there are also delays. One bottleneck is plaintiffs continue to deliver summons find practical solutions—like training or the system of “delegation orders” (despa- by regular mail. In contrast, countries transfers—to make court performance chos comisorios), whereby lower courts like Costa Rica and Peru have moved more homogenous across the country. and police inspectors are mandated to forward on the use of email for serving Lawyers concur that backlogs are carry out cautionary measures (seizure process to defendants. one of the main reasons for delays in and attachment of assets) among other ENFORCING CONTRAC TS 41 FIGURE 7.2 Cartagena and Tunja where enforcing a Cost to enforce a contract across Colombia contract takes longer. Conversely, fees Manizales are lower in cities like Manizales where Pasto Attorney Court Enforcement enforcing a contract is faster.13 fees cost cost Popayán Two more sources of cost variations Valledupar among cities are the expert and bailiff Bucaramanga fees. Since 2002, the Superior Council Barranquilla Santa Marta of the Judicature has enacted rules for Ibagué expert and bailiff fees.14 Despite the fact Pereira that litigants base their estimates on Villavicencio the legal rules, the final fees vary be- Neiva tween 1.5% and 10.0% of the claim value Cali Armenia in practice. For instance, an expert in Cúcuta Riohacha or Montería may receive 3.5 Sincelejo times more than an expert in Popayán. Medellín Lawyers comment that the current rules Riohacha are confusing and make it difficult for Tunja judges to effectively allocate expert fees Cartagena Montería according to the degree of complexity of Bogotá the subject matter and the experience of 0 10 20 30 40 50 the expert. As a result, judges have ample Cost discretionary powers to set expert fees. Source: Doing Business database. (% of claim) In addition, parties often object either proceedings. The Colombian Superior be expensive. Costs among cities vary. to the qualifications of the expert or the Council of the Judicature started to as- For example, in Manizales (the top per- level of their fees, which may also add to sign adjunct judges to expedite these former overall), it costs 21% of the total delays of trial. delegation orders. value of the claim to bring a case before Doing Business in Colombia 2008 Since Doing Business in Colombia the courts—half as much as in Montería, stated that one of the main causes of 2008, the time it took to enforce a deci- Cartagena or Tunja. Variations of legal backlogs is the high percentage of inac- sion dropped by 2 months in Medellín, and expert fees related to the competitive tive cases due to inactivity by either where the Superior Council of the Judi- structure of the legal profession and the party. According to a justice from the cature created 2 municipal courts dedi- availability of experts may explain these Superior Council of the Judicature, “In- cated solely to carrying out delegation differences (figure 7.2). active cases account for up to 52% of the orders in February of 2009. Similar mea- Even though there are non-man- total inventory of cases currently filed in sures were adopted in Bogotá, where 12 datory parameters for lawyers fees set Colombian courts.” To address this prob- new municipal courts were created with forth by the Colombian Bar Association lem, Congress issued Law 1194 (Ley de the purpose of reducing the number of (Corporación Colegio Nacional de Aboga- Desistimiento Tácito) regarding “implied days to enforce a judgment. The results dos, CONALBOS) and by the percentage abandonment” in May, 2008. This law in Bogotá remain to be seen.10 of lawyers’ fees taxed by the court as sets forth mechanisms for the judges to Most measures adopted to reduce litigation costs (Agencias en Derecho), dismiss cases whenever there is no activ- backlogs in Colombia’s courts today are ultimately, these fees may be negotiated ity on behalf of the parties. temporary. The cases assigned to adjunct by the parties. The average for lawyers’ As a result of the application of judges will return to existing courts if fees is 25% of the total value of the claim. “implied abandonment,” judges in 150 they are still pending. Thus, capacity Since Doing Business in Colombia 2008, municipal courts in Colombia have dis- within the existing courts should be rein- legal fees have increased, in general. missed almost 32,283 cases. Further- forced for long term improvements. The time needed to enforce a contract more, in civil courts—municipal and cir- One of the core principles of Co- is a factor, especially if lawyers have cuit level15 —a total of 43,948 cases have lombia’s justice system is that citizens entered into “Quota Litis” or contingent- been dismissed as of June 2009—that is, should have access to it at no cost.11 Nev- fee agreement12 with their client. Law- 12.2% of the total inventory of inactive ertheless, in practice, going to court can yers’ fees are higher in cities like Cali, cases.16 Reducing the number of pending 42 DOING BUSINESS IN COLOMBIA 2010 cases was not the only positive result of of courts already exist in 48 economies IMPLEMENT MODERN SYSTEMS FOR CASE MANAGEMENT AND JUDICIAL the “implied abandonment” law: judges around the world. If Colombia effectively STATISTICS in Santa Marta have also incorporated implements its small claims courts, es- in their writs a reference to the terms tablishing proper claim thresholds and Having a system that allows users to do established in the law, urging plaintiffs commercial matters under their juris- a remote search for cases and track their to deliver summons to defendants. As a diction, it could reduce the burden on progress can reduce time requirements result, Santa Marta has reduced the filing higher instance courts. Colombia should and costs because parties can follow period by half—from 60 to 30 days. look to the results seen in cities like up on the status of their cases without In addition to the “implied aban- Seoul, where 70% of civil suits are de- having to go to court personally. Consoli- donment” law, Congress passed Law cided in small claims courts and take an dated statistics are also a valuable tool 1285 of 2009, introducing the concept average of 230 days. for the judiciary, since they facilitate the of quashing (perención) for enforcement task of measuring caseloads, assessing procedures (procesos ejecutivos)—effec- INTRODUCE SPECIALIZED COURTS OR the performance of judges and clerks and tively allowing judges to dismiss inactive REASSIGN WORKLOADS TO SPECIAL- guiding the allocation of resources.19 PURPOSE COURTS cases after a certain time period. Another bill (197 of 2008) now before Congress Countries around the world have bene- CONTINUE MODERNIZING aims to further reduce backlogs in courts fited from establishing specialized courts. PROCEDURAL RULES (Proyecto de Ley de Descongestión Judi- In Argentina, commercial disputes are Running an efficient judicial system does cial). On top of that, the government has resolved by commercial judges (Jueces not only mean passing new reforms; it started to gradually implement oral pro- Nacionales de Primera Instancia en lo also entails implementing the reforms cedures in all civil courts to make them Comercial). Several countries in Africa that have been enacted. Putting into more efficient. have also introduced commercial courts practice the system of notifications by Although Colombia is reforming or commercial sections within their exit- e-mail, making greater use of alterna- its judicial system to reduce backlogs ing courts, achieving a 19% reduction in tive dispute resolution mechanisms and and run more efficiently, there are many the time to enforce a contract. enhancing judges’ control over dilatory challenges ahead, especially in the cities In Colombia, civil courts have juris- practices are three examples. where enforcing a contract is currently diction over constitutional, commercial Colombia can also introduce re- most difficult. Sectional Councils of the and civil claims. For civil and commer- forms adopted by other countries. Alge- Judicature (Consejos Seccionales de la cial claims, the same courts handle judg- ria, for example, amended its procedural Judicatura) should periodically update ment and enforcement procedures—i.e., rules to reinforce procedural time limits. statistics of courts’ performances in their cases disputed on their merits and cases Norway is also enforcing its procedural territories. Based on this information, to enforce judicial or commercial titles. deadlines more strictly with judges re- they can present recommendations be- Colombian judicial authorities have quired to justify delays if cases are not fore the Supreme Council of the Judica- identified that the greatest number of resolved within 6 months. Finally, Por- ture on how to guide the allocation of claims filed before the courts belong to tugal reviewed its law on the execution resources.17 This is an important role for enforcement procedures (juicio ejecutivo of judgments, allowing more power to pinpointing further improvements. singular). According to their statistics, bailiffs thereby concentrating judges in 88.5% of the total numbers of claims sentencing. These are all positive steps to WHAT TO REFORM? handled by municipal courts are debt help enforce contracts efficiently. collections.18 In order to reduce the bur- RELY ON SMALL CLAIMS COURTS den on municipal courts, Colombia is STRENGTHEN MECHANISMS FOR THE In January of 2009, Law 1285 amended considering the creation of specialized EVALUATION OF JUDICIAL STAFF the Statute of Judicial Administration courts that exclusively carry out enforce- Most issues regarding courts’ perfor- (Ley Estatutaria de la Administración ment procedures. Nevertheless, since mance are related to the profile and de Justicia) and introduced, once more, these entail complementary activities skills of court officials. Close tracking of small claims courts as part of the judi- such as cautionary measures and public individual and group performances will cial structure. Small claims courts can auctions, enforcement courts will not be- help ascertain the real causes behind dif- help resolve simple disputes more effi- come an aid for the prompt and effective ferent results observed among cities. The ciently—and with fewer procedural and collection of debts, unless comprehensive need to establish and maintain national evidentiary requirements. These types reforms cover all of these aspects. standards while allowing for the par- ENFORCING CONTRAC TS 43 ticulars of regions and cities may lead to 10. Agreements PSAA 09-5530 of February 2009 and PSAA08-444 of January, 2009. considering changes in the organization Colombian Superior Council of the Judi- structure and job profiles in certain cit- 1. Djankov, Simeon, Rafael La Porta, cature. Available at http://www.ramajudi- Florencio Lopez-de-Silanes and Andrei ies, and in the allocation of resources. cial.gov.co/csj_portal/jsp/frames/index. Shleifer. “Courts”. Quarterly Journal of jsp?iitio=6&idseccion=16. Economics: 118 (2): 453-517. PROMOTE ONE-STOP SHOPS 11. Law 270 of 1996. Ley Estatutaria de la 2. World Bank. 2009. Doing Business 2010: Justicia. Art 6 (Col.). Available at http:// Colombia has already tested one-stop Reforming Through Difficult Times. Wash- www.secretariasenado.gov.co/senado/ ington DC: The World Bank Group. shops in particular locations within basedoc/ley/1996/ley_0270_1996.html. 3. Code of Civil Procedure [C.P.C] art 320 the metropolitan area of Bogotá (Su- (Col). 12. A contingent fee is the fee which will perCADES) in partnership with local be due and payable to the lawyer only 4. Corporación Excelencia en la Justicia. if there is a successful conclusion of the government agencies. The experience is 2009. Propuesta de Ajuste al Mod- legal work, usually winning or settling a promising in terms of facilitating service elo de Gestión de los Juzgados Civiles lawsuit in favor of the client. Municipales de Bogotá D.C. Bogotá of process, and exchanges of documents D.C.:Secretaría de Desarrollo Económico. 13. This may also suggests issues of mis- without physical displacement to indi- match between supply and demand in 5. The Constitution of 1991 enacted a con- the market for legal professional services. vidual court offices thereby reducing time stitutional action (tutela) for the protec- 14. Agreements 1518 of August 2002 and and cost of judicial procedures. The po- tion of fundamental rights. The majority 1852 of 2003. Colombian Superior of tutelas are related to social security tential for decentralization of these facili- Council of the Judicature. Avail- and benefits under the programs of the ties in other cities should be explored. able at http://www.ramajudicial. Presidential Agency for Social Action and gov.co/csj_portal/jsp/frames/index. International Cooperation known as Ac- jsp?idsitio=6&idseccion=167 STANDARDIZE MEDIATION SERVICES ción Social. 15. Jueces municipales y civiles de circuito. Mediation is a most promising alter- 6. Corporación Excelencia en la Justicia, 2009, supra note 4, and statistics pro- 16. Statistics provided by the Superior Coun- native dispute-resolution method that vided by the Superior Council of the cil of the Judicature. could help reducing backlogs through Judicature (October 2009). 17. Law 270 of 1996. Ley Estatutaria court-annexed or self-standing facilities. 7. Some examples are Agreements PSAA09- de la Justicia. Art 101 (Col.). Avail- 5674 of March, 2009, PSAA 09-5647 of able at http://www.secretariasenado. However, its potential has not been fully March 2009, PSAA09-5677 of March gov.co/senado/basedoc/ley/1996/ tapped in part because of the wide varia- 2009. Colombian Superior Council of the ley_0270_1996.html tion in the quality of services among more Judicature. Available at http://www.rama- 18. Corporación Excelencia en la Justicia than 300 officially-sanctioned providers. judicial.gov.co/csj_portal/jsp/frames/ 2009, supra note 4. index.jsp?idsitio=6&idseccion=16. 19. Improvements in communications and Closer supervision of their performance 8. Probably as a result of a more limited systems are components of the Justice and establishment of common standards market for assets given in collateral or Service Strengthening Program that for all (ISO-certifiable) can help improv- closer personal relationships among the Colombian Government will imple- ing the quality of the services provided members of the legal/business communi- ment with the support of the World ties. Bank Group. See, Document No 3359 Of and the use of this alternative. 9. Code of Civil Procedure [C.P.C] art 335 December 15 of 2008, approved By the (Col). National Council for Economic and So- cial Policy “CONPES” Available at ,http:// www.dnp.gov.co/PortalWeb/CONPES/ ConpesEcon%C3%B3micos/2008/ tabid/752/Default.aspx. Data notes ECONOMY CHARACTERISTICS GROSS NATIONAL INCOME (GNI) PER CAPITA Doing Business in Colombia 2010 reports 2008 income per capita and population as published in the World Bank’s World Development Indicators 2009. Income is calculated using the Atlas method (current US$). For cost indicators expressed as a percentage of income per capita, 2008 GNI in local currency units is used as the denominator. For cost indicators expressed as a percent- age of income per capita, 2008 GNI in local currency units is used as the denominator. Colombia’s GNI per capita in 2008 = US$ 4,657.67 EXCHANGE RATE The exchange rate used in this report is: 1 US$ = 2,202.07 COP (Colombian pesos) REGION AND INCOME GROUP Doing Business uses the World Bank regional and income group classifications available at http:// www.worldbank.org/data/countryclass. Throughout the report the term rich economies refers to the high income group, middle income economies refers to the upper middle income group and poor economies refers to the lower middle and low income groups The indicators presented and analyzed in advising on legal and regulatory requirements. tive of the regulation on other businesses, Doing Business in Colombia 2010 measure These experts have several rounds of interac- for example, sole proprietorships. Second, government regulation and the protection tion with the Doing Business team, through transactions described in a standardized case of property rights—and their effect on busi- conference calls, written correspondence and scenario refer to a specific set of issues and nesses, especially small and medium-size do- country visits. For Doing Business in Colombia may not represent the full set of issues a busi- mestic firms. First, the indicators document 2010 the team members visited Colombia ness encounters. Third, the measures of time the degree of regulation, such as the number twice to recruit respondents, verify data and involve an element of judgment by the expert of procedures to start a business, to construct meet with local government officials. The respondents. When sources indicate different a warehouse or to register commercial prop- team also invited local government officials estimates, the time indicators reported in erty. Second, they gauge regulatory outcomes, and judges to review the preliminary results Doing Business represent the median values such as the time and cost to enforce a contract and offered them a right of reply period. The of several responses given under the assump- and to trade across borders. Finally, they data from surveys are subjected to numerous tions of the standardized case. document the tax burden on business. For de- tests for robustness, which lead to revisions or Finally, the methodology assumes that tails on how the rankings on these indicators expansions of the information collected. a business has full information on what is are constructed, see Aggregate Ranking at the The Doing Business methodology offers required and does not waste time when com- end of this section. several advantages. It is transparent, using pleting procedures. In practice, completing In this project, Doing Business indicators factual information about what laws and regu- a procedure may take longer if the busi- benchmarked 21 Colombian cities—the com- lations say and allowing multiple interactions ness lacks information or is unable to follow plete list is available in the Contents page. The with local respondents to clarify potential up promptly. Alternatively, the business may data for all sets of indicators in Doing Business misinterpretations of questions. Having rep- choose to disregard some burdensome pro- in Colombia 2010 are for July 2009. The data resentative samples of respondents is not an cedures. For both reasons the time delays presented in this report for Bogotá and other issue, as the texts of the relevant laws and reg- reported in Doing Business in Colombia 2010 countries is based on the global report Doing ulations are collected and answers checked for could differ from the perceptions of entrepre- Business in 2010: Reforming through Difficult accuracy. The methodology is inexpensive and neurs reported in the World Bank Enterprise Times. easily replicable, so data can be collected in a Surveys or other perception surveys. large sample of economies. Because standard Most laws and regulations underlying METHODOLOGY assumptions are used in the data collection, the Doing Business data are available on the comparisons and benchmarks are valid across Doing Business website at http://www.do- The Doing Business in Colombia 2010 data are economies. Finally, the data not only highlight ingbusiness.org. All the sample surveys and collected in a standardized way. To start, the the extent of specific regulatory obstacles to the details underlying the indicators are also Doing Business team, with academic advisers, doing business but also identify their source published on the website. Questions on the designs a survey. The survey uses a simple and point to what might be reformed. methodology and challenges to data can be business case to ensure comparability across submitted through the site’s “Ask a Question” countries and over time—with assumptions function. about the legal form of the business, its size, its LIMITS TO WHAT IS MEASURED location and the nature of its operations. Then The Doing Business methodology applied to STARTING A BUSINESS the survey is customized to the particular Doing Business in Colombia 2010 has 4 limita- case of Colombia. Surveys are administered tions that should be considered when inter- Doing Business in Colombia 2010 records through more than 300 local experts, includ- preting the data. First, the data often focus on all procedures that are officially required for ing lawyers, business consultants, accountants, a specific business form—generally a limited an entrepreneur to start up and formally freight forwarders, government officials and liability company (or its legal equivalent) of operate an industrial or commercial business. other professionals routinely administering or a specified size—and may not be representa- These include obtaining all necessary licenses DATA NOTES 45 and permits and completing any required PROCEDURES required for each procedure is 1 day. Although notifications, verifications or inscriptions for A procedure is defined as any interaction of procedures may take place simultaneously, the company and employees with relevant the company founder with external parties they cannot start on the same day (that is, authorities. (for example, government agencies, lawyers, simultaneous procedures start on consecutive After a study of laws, regulations and auditors or notaries). Interactions between days). A procedure is considered completed publicly available information on business company founders or company officers and once the company has received the final docu- entry, a detailed list of procedures is de- employees are not counted as procedures. ment, such as the company registration cer- veloped, along with the time and cost of Procedures that must be completed in the tificate or tax number. If a procedure can be complying with each procedure under nor- same building but in different offices are accelerated for an additional cost, the fastest mal circumstances and the paid-in minimum counted as separate procedures. If founders procedure is chosen. It is assumed that the capital requirements. Subsequently, local in- have to visit the same office several times entrepreneur does not waste time and com- corporation lawyers and government officials for different sequential procedures, each is mits to completing each remaining procedure complete and verify the data. counted separately. The founders are assumed without delay. The time that the entrepreneur Information is also collected on the se- to complete all procedures themselves, with- spends on gathering information is ignored. It quence in which procedures are to be com- out middlemen, facilitators, accountants or is assumed that the entrepreneur is aware of pleted and whether procedures may be carried lawyers, unless the use of such a third party all entry regulations and their sequence from out simultaneously. It is assumed that any is mandated by law. If the services of profes- the beginning but has had no prior contact required information is readily available and sionals are required, procedures conducted by with any of the officials. that all agencies involved in the start-up pro- such professionals on behalf of the company cess function without corruption. If answers are counted separately. Each electronic pro- COST by local experts differ, inquiries continue until cedure is counted separately. If 2 procedures Cost is recorded as a percentage of the coun- the data are reconciled. can be completed through the same website try’s income per capita. It includes all official To make the data comparable across but require separate filings, they are counted fees and fees for legal or professional services countries, several assumptions about the busi- as 2 procedures. if such services are required by law. Fees for ness and the procedures are used. Both pre- and post- incorporation pro- purchasing and legalizing company books are cedures that are officially required for an included if these transactions are required by ASSUMPTIONS ABOUT THE BUSINESS entrepreneur to formally operate a business law. The company law, the commercial code The business: are recorded. and specific regulations and fee schedules are r *TBMJNJUFEMJBCJMJUZDPNQBOZ*GUIFSFJT Procedures required for official corre- used as sources for calculating costs. In the more than one type of limited liability spondence or transactions with public agen- absence of fee schedules, a government of- company in the country, the limited lia- cies are also included. For example, if a com- ficer’s estimate is taken as an official source. In bility form most popular among domestic pany seal or stamp is required on official the absence of a government officer’s estimate, firms is chosen. Information on the most documents, such as tax declarations, obtain- estimates of incorporation lawyers are used. popular form is obtained from incorpora- ing the seal or stamp is counted. Similarly, if If several incorporation lawyers provide dif- tion lawyers or the statistical office. a company must open a bank account before ferent estimates, the median reported value is r 0QFSBUFTJOUIFDPVOUSZTTFMFDUFEDJUJFT registering for sales tax or value added tax, applied. In all cases the cost excludes bribes. r *TEPNFTUJDBMMZPXOFEBOEIBT this transaction is included as a procedure. owners, none of whom is a legal entity. Shortcuts are counted only if they fulfill 4 PAID-IN MINIMUM CAPITAL r )BTTUBSUVQDBQJUBMPGUJNFTJODPNF criteria: they are legal, they are available to the The paid-in minimum capital requirement re- per capita at the end of 2008, paid in general public, they are used by the major- flects the amount that the entrepreneur needs cash. ity of companies, and avoiding them causes to deposit in a bank or with a notary before r 1FSGPSNTHFOFSBMJOEVTUSJBMPSDPNNFS- substantial delays. registration and up to 3 months following in- cial activities, such as the production or Only procedures required of all busi- corporation and is recorded as a percentage of sale of products or services to the public. The business does not perform foreign nesses are covered. Industry-specific proce- the country’s income per capita. The amount trade activities and does not handle prod- dures are excluded. For example, procedures is typically specified in the commercial code ucts subject to a special tax regime, for to comply with environmental regulations or the company law. Many countries have a example, liquor or tobacco. It is not using are included only when they apply to all minimum capital requirement but allow busi- heavily polluting production processes. businesses conducting general commercial nesses to pay only a part of it before registra- r -FBTFTUIFDPNNFSDJBMQMBOUBOEPēDFT or industrial activities. Procedures that the tion, with the rest to be paid after the first year and is not a proprietor of real estate. company undergoes to connect to electricity, of operation. r %PFTOPURVBMJGZGPSJOWFTUNFOUJODFO- water, gas and waste disposal services are not tives or any special benefits. included. The data details on starting a business can be r )BTBUMFBTUBOEVQUPFNQMPZFFT found for each economy at http://www.doing- 1 month after the commencement of TIME business.org. This methodology was developed operations, all of them nationals. Time is recorded in calendar days. The mea- in Djankov, La Porta, López-de-Silanes and r )BTBUVSOPWFSPGBUMFBTUUJNFT sure captures the median duration that incor- Shleifer. 2002. “The Regulation of Entry.” Quar- income per capita. poration lawyers indicate is necessary to com- terly Journal of Economics 117 (1): 1–37; and r )BTBDPNQBOZEFFEQBHFTMPOH plete a procedure with minimum follow-up is adopted here with minor changes. with government agencies and no extra pay- ments. It is assumed that the minimum time 46 DOING BUSINESS IN COLOMBIA 2010 DEALING WITH CONSTRUCTION ASSUMPTIONS ABOUT THE below also covers the water needed for PERMITS WAREHOUSE fire protection. The warehouse: r )BTBOBWFSBHFXBUFSVTFPGMJUFST Doing Business in Colombia 2010 records all r 8JMMCFVTFEGPSHFOFSBMTUPSBHFBDUJWJUJFT  (175 gallons) a day and an average waste- procedures required for a business in the such as storage of books or stationery. water flow of 568 liters (150 gallons) a construction industry to build a standardized The warehouse will not be used for any day. warehouse. These procedures include submit- goods requiring special conditions, such r )BTBQFBLXBUFSVTFPG MJUFST  ting all relevant project-specific documents as food, chemicals or pharmaceuticals. gallons) a day and a peak wastewater flow r )BTTUPSJFT CPUIBCPWFHSPVOE XJUI of 1,136 liters (300 gallons) a day. (for example, building plans and site maps) to the authorities; obtaining all necessary clear- a total surface of approximately 1,300.6 r 8JMMIBWFBDPOTUBOUMFWFMPGXBUFS square meters (14,000 square feet). Each demand and wastewater flow throughout ances, licenses, permits and certificates; com- floor is 3 meters (9 feet, 10 inches) high. the year. pleting all required notifications; and receiv- ing all necessary inspections. Doing Business r )BTSPBEBDDFTTBOEJTMPDBUFEJOUIFQFSJ The telephone connection: urban area of the economy’s selected city in Colombia 2010 also records procedures for r *TNFUFST GFFU JODIFT GSPNUIF (that is, on the fringes of the city but still obtaining connections for electricity, water, within its official limits). main telephone network. sewerage and a fixed land line. Procedures r *TBêYFEMBOEMJOF r *TOPUMPDBUFEJOBTQFDJBMFDPOPNJDPS necessary to register the property so that it industrial zone. The zoning requirements can be used as collateral or transferred to PROCEDURES for warehouses are met by building in an another entity are also counted. The survey area where similar warehouses can be A procedure is any interaction of the compa- divides the process of building a warehouse found. ny’s employees or managers with external par- into distinct procedures and calculates the r *TMPDBUFEPOBMBOEQMPUPGTRVBSF ties, including government agencies, notaries, time and cost of completing each procedure in NFUFST  TRVBSFGFFU UIBUJT the land registry, the cadastre, utility compa- practice under normal circumstances. owned by BuildCo and is accurately regis- nies, public and private inspectors and tech- Information is collected from experts in tered in the cadastre and land registry. nical experts apart from in-house architects construction licensing, including architects, r *TBOFXDPOTUSVDUJPO UIFSFXBTOP and engineers. Interactions between company construction lawyers, construction firms, previous construction on the land). employees, such as development of the ware- utility service providers and public officials r )BTDPNQMFUFBSDIJUFDUVSBMBOEUFDIOJDBM house plans and inspections conducted by who deal with building regulations, includ- plans prepared by a licensed architect. employees, are not counted as procedures. ing approvals and inspections. To make the r 8JMMJODMVEFBMMUFDIOJDBMFRVJQNFOU Procedures that the company undergoes to data comparable across economies, several as- required to make the warehouse fully connect to electricity, water, sewerage and sumptions about the business, the warehouse operational. telephone services are included. All proce- project and the utility connections are used. dures that are legally or in practice required ASSUMPTIONS ABOUT THE UTILITY CONNECTIONS for building a warehouse are counted, even if ASSUMPTIONS ABOUT THE they may be avoided in exceptional cases. CONSTRUCTION COMPANY The electricity connection: TIME r *TNFUFST GFFU JODIFT GSPNUIF The business (BuildCo): main electricity network. Time is recorded in calendar days. The mea- r *TBMJNJUFEMJBCJMJUZDPNQBOZ r *TBNFEJVNUFOTJPO QIBTF XJSF:  sure captures the median duration that local r 0QFSBUFTJOUIFDPVOUSZTTFMFDUFEDJUJFT 140-kVA connection. Three-phase service experts indicate is necessary to complete a r *TEPNFTUJDBMMZBOEQSJWBUFMZ is available in the construction area. procedure in practice. It is assumed that the owned. r 8JMMCFEFMJWFSFECZBOPWFSIFBETFSWJDF  minimum time required for each procedure r )BTPXOFST OPOFPGXIPNJTBMFHBM unless overhead service is not available in is 1 day. Although procedures may take place entity. the peri-urban area. simultaneously, they cannot start on the same r *TGVMMZMJDFOTFEBOEJOTVSFEUPDBSSZPVU r $POTJTUTPGBTJNQMFIPPLVQVOMFTTJOTUBM- day (that is, simultaneous procedures start construction projects, such as building lation of a private substation (transform- on consecutive days). If a procedure can be warehouses. er) or extension of network is required. accelerated legally for an additional cost, the r )BTCVJMEFSTBOEPUIFSFNQMPZFFT  r 3FRVJSFTUIFJOTUBMMBUJPOPGPOMZPOF fastest procedure is chosen. It is assumed all of them nationals with the technical electricity meter. that BuildCo does not waste time and com- expertise and professional experience BuildCo is assumed to have a licensed mits to completing each remaining procedure necessary to obtain construction permits electrician on its team to complete the internal without delay. The time that BuildCo spends and approvals. wiring for the warehouse. on gathering information is ignored. It is as- r )BTBUMFBTUFNQMPZFFXIPJTBMJDFOTFE sumed that BuildCo is aware of all building architect and registered with the local The water and sewerage connection: requirements and their sequence from the association of architects. r *TNFUFST GFFU JODIFT GSPNUIF beginning. r )BTQBJEBMMUBYFTBOEUBLFOPVUBMMOFDFT- existing water source and sewer tap. sary insurance applicable to its general COST r %PFTOPUSFRVJSFXBUFSGPSêSFQSPUFDUJPO business activity (for example, accidental reasons; a fire extinguishing system (dry Cost is recorded as a percentage of the econ- insurance for construction workers and system) will be used instead. If a wet fire omy’s income per capita. Only official costs third-person liability insurance). protection system is required by law, it is are recorded. All the fees associated with r 0XOTUIFMBOEPOXIJDIUIFXBSFIPVTFJT assumed that the water demand specified completing the procedures to legally build built. DATA NOTES 47 a warehouse are recorded, including those ASSUMPTIONS ABOUT THE PROPERTY TIME associated with obtaining land use approv- The property: Time is recorded in calendar days. The mea- als and preconstruction design clearances; r )BTBWBMVFPGUJNFTJODPNFQFS sure captures the median duration that prop- receiving inspections before, during and after capita. The sale price equals the value. erty lawyers, notaries or registry officials indi- construction; getting utility connections; and r *TGVMMZPXOFECZUIFTFMMFS cate is necessary to complete a procedure. It is registering the warehouse property. Nonre- r )BTOPNPSUHBHFTBUUBDIFEBOEIBTCFFO assumed that the minimum time required for curring taxes required for the completion of under the same ownership for the past 10 each procedure is 1 day. Although procedures the warehouse project also are recorded. The years. may take place simultaneously, they cannot building code, information from local experts r *TSFHJTUFSFEJOUIFMBOESFHJTUSZPSDBEBT- start on the same day. It is assumed that the and specific regulations and fee schedules are tre, or both, and is free of title disputes. buyer does not waste time and commits to used as sources for costs. If several local part- r *TMPDBUFEJOBQFSJVSCBODPNNFSDJBM completing each remaining procedure with- ners provide different estimates, the median zone, and no rezoning is required. out delay. If a procedure can be accelerated for reported value is used. r $POTJTUTPGMBOEBOEBCVJMEJOHѮFMBOE an additional cost, the fastest legal procedure area is 6,000 square feet (557.4 square available and used by the majority of property The data details on dealing with construction meters). A 2-story warehouse of 10,000 owners is chosen. If procedures can be under- permits can be found for each economy at square feet (929 square meters) is located taken simultaneously, it is assumed that they http://www.doingbusiness.org. by selecting the on the land. The warehouse is 10 years are. It is assumed that the parties involved are economy in the drop-down list. old, is in good condition and complies aware of all regulations and their sequence with all safety standards, building from the beginning. Time spent on gathering codes and other legal requirements. The property of land and building will be information is not considered. REGISTERING PROPERTY transferred in its entirety. COST r 8JMMOPUCFTVCKFDUUPSFOPWBUJPOTPSBE- Doing Business in Colombia 2010 records the ditional building following the purchase. Cost is recorded as a percentage of the prop- full sequence of procedures necessary for a r )BTOPUSFFT OBUVSBMXBUFSTPVSDFT  erty value, assumed to be equivalent to 50 business (buyer) to purchase a property from natural reserves or historical monuments times income per capita. Only official costs another business (seller) and to transfer the of any kind. required by law are recorded, including fees, property title to the buyer’s name so that the r 8JMMOPUCFVTFEGPSTQFDJBMQVSQPTFT BOE transfer taxes, stamp duties and any other buyer can use the property for expanding its no special permits, such as for residential payment to the property registry, notaries, business, use the property as collateral in tak- use, industrial plants, waste storage or public agencies or lawyers. Other taxes, such ing new loans or, if necessary, sell the property certain types of agricultural activities, are as capital gains tax or value added tax, are to another business. The process starts with required. excluded from the cost measure. Both costs obtaining the necessary documents, such as r )BTOPPDDVQBOUT MFHBMPSJMMFHBM BOE borne by the buyer and those borne by the a copy of the seller’s title if necessary, and no other party holds a legal interest in it. seller are included. If cost estimates differ conducting due diligence if required. The among sources, the median reported value transaction is considered complete when it is PROCEDURES is used. opposable to third parties and when the buyer A procedure is defined as any interaction can use the property, use it as collateral for a of the buyer or the seller, their agents (if an The data details on registering property can bank loan or resell it. agent is legally or in practice required) or be found for each economy at http://www. Every procedure required by law or nec- the property with external parties, includ- doingbusiness.org by selecting the economy in essary in practice is included, whether it is the ing government agencies, inspectors, notaries the drop-down list. responsibility of the seller or the buyer or must and lawyers. Interactions between company be completed by a third party on their behalf. officers and employees are not considered. PAYING TAXES -PDBMQSPQFSUZMBXZFST OPUBSJFTBOEQSPQFSUZ All procedures that are legally or in practice registries provide information on procedures required for registering property are recorded, Doing Business in Colombia 2010 records the as well as the time and cost to complete each. even if they may be avoided in exceptional taxes and mandatory contributions that a To make the data comparable across cases. It is assumed that the buyer follows the medium-size company must pay in a given economies, several assumptions about the fastest legal option available and used by the year, as well as measures of the administrative parties to the transaction, the property and majority of property owners. Although the burden of paying taxes and contributions. the procedures are used. buyer may use lawyers or other professionals Taxes and contributions measured include where necessary in the registration process, it the profit or corporate income tax, social ASSUMPTIONS ABOUT THE PARTIES is assumed that it does not employ an outside contributions and labor taxes paid by the The parties (buyer and seller): facilitator in the registration process unless employer, property taxes, property transfer r "SFMJNJUFEMJBCJMJUZDPNQBOJFT legally or in practice required to do so. taxes, dividend tax, capital gains tax, financial r "SFMPDBUFEJOUIFQFSJVSCBOBSFBPGUIF transactions tax, waste collection taxes and country’s selected cities. vehicle and road taxes. r "SFEPNFTUJDBMMZBOEQSJWBUFMZ Doing Business in Colombia 2010 mea- owned. sures all taxes and contributions that are gov- r )BWFFNQMPZFFTFBDI BMMPGXIPNBSF ernment mandated (at any level—national, nationals. department or city), apply to the standardized r 1FSGPSNHFOFSBMDPNNFSDJBMBDUJWJUJFT business and have an impact in its income 48 DOING BUSINESS IN COLOMBIA 2010 statements. In doing so, Doing Business goes ment, computers and 1 truck and leases 1 tax agencies. Although they do not affect the beyond the traditional definition of a tax: truck. income statements of the company, they add as defined for the purposes of government r %PFTOPURVBMJGZGPSJOWFTUNFOUJODFO- to the administrative burden of complying national accounts, taxes include only compul- tives or any benefits apart from those with the tax system and so are included in the sory, unrequited payments to general govern- related to the age or size of the company. tax payments measure. ment. Doing Business departs from this defini- r )BTFNQMPZFFT‡NBOBHFST BT- The number of payments takes into ac- tion because it measures imposed charges sistants and 48 workers. All are nationals, count electronic filing. Where full electronic that affect business accounts, not government and 1 manager is also an owner. filing and payment is allowed and it is used accounts. The main differences relate to labor r )BTBUVSOPWFSPG UJNFTJODPNFQFS by the majority of medium-size businesses, contributions and value added tax. The Doing capita. the tax is counted as paid once a year even if Business measure includes government-man- r .BLFTBMPTTJOUIFêSTUZFBSPGPQFSBUJPO payments are more frequent. dated contributions paid by the employer to r )BTBHSPTTNBSHJO QSFUBY PG UIBU Where 2 or more taxes or contributions a requited private pension fund or workers’ JT TBMFTBSFPGUIFDPTUPGHPPET are filed for and paid jointly using the same insurance fund. The indicator includes, for ex- sold). form, each of these joint payments is counted ample, Australia’s compulsory superannuation r %JTUSJCVUFTPGJUTOFUQSPêUTBT once. For example, if mandatory health insur- guarantee and workers’ compensation insur- dividends to the owners at the end of the ance contributions and mandatory pension second year. ance. It excludes value added taxes from the contributions are filed for and paid together, total tax rate because they do not affect the ac- r 4FMMTPOFPGJUTQMPUTPGMBOEBUBQSPêU only one of these contributions would be in- during the second year. counting profits of the business—that is, they cluded in the number of payments. are not reflected in the income statement. r )BTBOOVBMGVFMDPTUTGPSJUTUSVDLTFRVBM to twice income per capita. TIME Doing Business has prepared a case sce- nario to measure the taxes and contributions r *TTVCKFDUUPBTFSJFTPGEFUBJMFEBTTVNQ- Time is recorded in hours per year. The in- tions on expenses and transactions to paid by a standardized business and the com- dicator measures the time taken to prepare, further standardize the case. All financial plexity of an economy’s tax compliance sys- statement variables are proportional to file and pay 3 major types of taxes and con- tem. This case scenario uses a set of financial 2006 income per capita. For example, the tributions: the corporate income tax, value statements and assumptions about transac- PXOFSXIPJTBMTPBNBOBHFSTQFOET added or sales tax and labor taxes, includ- tions made over the year. Tax experts in each of income per capita on traveling for the ing payroll taxes and social contributions. economy compute the taxes and contribu- DPNQBOZ PGUIJTPXOFSTFYQFOTFT Preparation time includes the time to collect tions due in their jurisdiction based on the BSFQVSFMZQSJWBUF BSFGPSFOUFSUBJO- all information necessary to compute the tax standardized case facts. Information is also JOHDVTUPNFSTBOEGPSCVTJOFTT payable. If separate accounting books must compiled on the frequency of filing, tax audits travel). be kept for tax purposes—or separate cal- and other costs of compliance. The project was ASSUMPTIONS ABOUT THE TAXES culations made—the time associated with developed and implemented in cooperation AND CONTRIBUTIONS these processes is included. This extra time is with PricewaterhouseCoopers. r "MMUIFUBYFTBOEDPOUSJCVUJPOTQBJEJO included only if the regular accounting work To make the data comparable across the second year of operation (fiscal 2008) is not enough to fulfill the tax accounting economies, several assumptions about the are recorded. A tax or contribution is requirements. Filing time includes the time to business and the taxes and contributions are considered distinct if it has a different complete all necessary tax return forms and used. name or is collected by a different agency. make all necessary calculations. Payment time Taxes and contributions with the same considers the hours needed to make the pay- ASSUMPTIONS ABOUT THE BUSINESS name and agency, but charged at different ment online or at the tax authorities. Where The business: rates depending on the business, are taxes and contributions are paid in person, the counted as the same tax or contribution. r *TBMJNJUFEMJBCJMJUZ UBYBCMFDPNQBOZ time includes delays while waiting. r ѮFOVNCFSPGUJNFTUIFDPNQBOZQBZT r 4UBSUFEPQFSBUJPOTPO+BOVBSZ  taxes and contributions in a year is the TOTAL TAX RATE At that time the company purchased all number of different taxes or contributions the assets shown in its balance sheet and multiplied by the frequency of payment The total tax rate measures the amount of hired all its workers. (or withholding) for each one. The fre- taxes and mandatory contributions borne by r 0QFSBUFTJOUIFDPVOUSZTTFMFDUFEDJUJFT quency of payment includes advance pay- the business in the second year of operation, r *TEPNFTUJDBMMZPXOFEBOEIBT ments (or withholding) as well as regular expressed as a share of commercial profit. owners, all of whom are natural persons. payments (or withholding). Doing Business in Colombia 2010 and Doing r )BTBTUBSUVQDBQJUBMPGUJNFT Business 2010 report the total tax rate for income per capita at the end of 2006. TAX PAYMENTS fiscal 2008. The total amount of taxes borne r 1FSGPSNTHFOFSBMJOEVTUSJBMPSDPNNFS- The tax payments indicator reflects the total is the sum of all the different taxes and con- cial activities. Specifically, it produces number of taxes and contributions paid, the tributions payable after accounting for allow- ceramic flowerpots and sells them at method of payment, the frequency of pay- able deductions and exemptions. The taxes retail. It does not participate in foreign ment and the number of agencies involved withheld (such as personal income tax) or trade (no import or export) and does not for this standardized case during the second collected by the company and remitted to the handle products subject to a special tax year of operation. It includes consumption tax authorities (such as value added tax, sales regime, for example, liquor or tobacco. taxes paid by the company, such as sales tax or tax or goods and service tax) but not borne by r "UUIFCFHJOOJOHPG PXOTQMPUTPG value added tax. These taxes are traditionally the company are excluded. The taxes included land, 1 building, machinery, office equip- collected from the consumer on behalf of the can be divided into 5 categories: profit or cor- DATA NOTES 49 porate income tax, social contributions and TRADING ACROSS BORDERS DOCUMENTS labor taxes paid by the employer (in respect All documents required per shipment to of which all mandatory contributions are in- Doing Business in Colombia 2010 compiles export and import the goods are recorded. cluded, even if paid to a private entity such procedural requirements for exporting and It is assumed that the contract has already as a requited pension fund), property taxes, importing a standardized cargo of goods by been agreed upon and signed by both parties. turnover taxes and other small taxes (such as ocean transport from or to Bogotá through Documents required for clearance by govern- department fees and vehicle and fuel taxes). each of the four major Colombian ports. Every ment ministries, customs authorities, port The total tax rate is designed to provide official procedure for exporting and importing and container terminal authorities, health a comprehensive measure of the cost of all the goods is recorded—from the contrac- and technical control agencies and banks are the taxes a business bears. It differs from the tual agreement between the 2 parties to the taken into account. Since payment is by letter statutory tax rate, which merely provides the delivery of goods—along with the time and of credit, all documents required by banks for factor to be applied to the tax base. In comput- cost necessary for completion. All documents the issuance or securing of a letter of credit ing the total tax rate, the actual tax payable is needed by the trader for clearance of the are also taken into account. Documents that divided by commercial profit. goods across the border are also recorded. For are renewed at least annually and that do not Commercial profit is essentially net exporting goods, procedures range from pack- require renewal per shipment (for example, profit before all taxes borne. It differs from ing the goods at the factory to their departure an annual tax clearance certificate) are not the conventional profit before tax, reported in from the port of exit. For importing goods, included. financial statements. In computing profit be- procedures range from the vessel’s arrival fore tax, many of the taxes borne by a firm are at the port of entry to the cargo’s delivery at TIME deductible. In computing commercial profit, the factory warehouse. The time and cost for The time for exporting and importing is re- these taxes are not deductible. Commercial ocean transport are not included. Payment is corded in calendar days. The time calculation profit therefore presents a clear picture of the made by letter of credit, and the time, cost and for a procedure starts from the moment it is actual profit of a business before any of the documents required for the issuance of a letter initiated and runs until it is completed. If a taxes it bears in the course of the fiscal year. of credit are taken into account. procedure can be accelerated for an additional Commercial profit is computed as sales -PDBMGSFJHIUGPSXBSEFST TIJQQJOHMJOFT  cost and is available to all trading companies, minus cost of goods sold, minus gross sala- customs brokers, port officials and banks pro- the fastest legal procedure is chosen. Fast- ries, minus administrative expenses, minus vide information on required documents and track procedures applying to firms located in other expenses, minus provisions, plus capital cost as well as the time to complete each pro- an export processing zone are not taken into gains (from the property sale) minus interest cedure. To make the data comparable across account because they are not available to all expense, plus interest income and minus com- economies, several assumptions about the trading companies. Ocean transport time is mercial depreciation. To compute the com- business and the traded goods are used. not included. It is assumed that neither the ex- mercial depreciation, a straight-line depre- porter nor the importer wastes time and that ciation method is applied, with the following ASSUMPTIONS ABOUT THE BUSINESS each commits to completing each remain- SBUFT  GPS UIF MBOE   GPS UIF CVJMEJOH  The business: ing procedure without delay. Procedures that GPSUIFNBDIJOFSZ GPSUIFDPNQVU- r )BTFNQMPZFFT can be completed in parallel are measured FST   GPS UIF PēDF FRVJQNFOU   GPS r *TMPDBUFEJO#PHPUÃ as simultaneous. The waiting time between UIFUSVDLBOEGPSCVTJOFTTEFWFMPQNFOU r *TBQSJWBUF MJNJUFEMJBCJMJUZDPNQBOZ*U procedures—for example, during unloading expenses. Commercial profit amounts to 59.4 does not operate in an export processing of the cargo—is included in the measure. times income per capita. zone or an industrial estate with special This methodology is consistent with the export or import privileges. COST Total Tax Contribution framework developed r *TEPNFTUJDBMMZPXOFEXJUIOPGPSFJHO Cost measures the fees levied on a 20-foot con- by PricewaterhouseCoopers. This framework ownership. tainer in U.S. dollars. All the fees associated measures taxes that are borne by companies and r &YQPSUTNPSFUIBOPGJUTTBMFT with completing the procedures to export or affect their income statements, as does Doing import the goods are included. These include Business. But while PricewaterhouseCoopers ASSUMPTIONS ABOUT THE TRADED costs for documents, administrative fees for bases its calculation on data from the largest GOODS customs clearance and technical control, ter- companies in the economy, Doing Business fo- r ѮFUSBEFEQSPEVDUUSBWFMTJOBESZDBSHP  minal handling charges and inland transport. cuses on a standardized medium-size company. 20-foot, full container load. It weighs 10 The cost measure does not include customs tons and is valued at US$20,000. tariffs and duties or costs related to ocean The data details on paying taxes can be found r ѮFQSPEVDU transport. Only official costs are recorded. for each economy at http://www.doingbusi- r *TOPUIB[BSEPVTOPSEPFTJUJODMVEF ness.org. This methodology was developed military items. The data details on trading across borders in Djankov, Simeon, Tim Ganser, Caralee r %PFTOPUSFRVJSFSFGSJHFSBUJPOPSBOZ can be found for each economy at http://www. McLiesh, Rita Ramalho and Andrei Shleifer. other special environment. doingbusiness.org. This methodology was de- 2008. The Effect of Corporate Taxes on Invest- r %PFTOPUSFRVJSFBOZTQFDJBMQIZUPTBOJ- veloped in Djankov, Simeon, Caroline Freund ment and Entrepreneurship. NBER Working tary or environmental safety standards and Cong Pham. Forthcoming. "Trading on other than accepted international stan- Paper 13756. Cambridge, MA: National Bu- Time." Review of Economics and Statistics; and dards. reau of Economic Research. is adopted here with minor changes. 50 DOING BUSINESS IN COLOMBIA 2010 ENFORCING CONTRACTS PROCEDURES business.org. This methodology was developed The list of procedural steps compiled for each in Djankov, La Porta, López-de-Silanes and Indicators on enforcing contracts measure the economy traces the chronology of a commer- Shleifer. 2003. “Courts.” Quarterly Journal of efficiency of the judicial system in resolving cial dispute before the relevant court. A pro- Economics 118 (2): 453-517; and is adopted a commercial dispute. The data are built by cedure is defined as any interaction between here with minor changes. following the step-by-step evolution of a com- the parties, or between them and the judge mercial sale dispute before local courts. The or court officer. This includes steps to file the data are collected through study of the codes case, steps for trial and judgment and steps AGGREGATE RANKING of civil procedure and other court regulations necessary to enforce the judgment. as well as surveys completed by local litigation The survey allows respondents to record The aggregate ranking index ranks cities from lawyers as well as by judges. procedures that exist in civil law but not com- 1 to 21. The index is calculated as the rank- mon law jurisdictions, and vice versa. For ing on the simple average of city percentile ASSUMPTIONS ABOUT THE CASE example, in civil law countries the judge can rankings on each of the 5 topics covered in r ѮFWBMVFPGUIFDMBJNFRVBMTPGUIF appoint an independent expert, while in com- Doing Business in Colombia 2010 for which country’s income per capita. mon law countries each party submits a list data is available for 21 locations. The data for r ѮFEJTQVUFDPODFSOTBMBXGVMUSBOTBDUJPO of expert witnesses to the court. To indicate the indicator trading across borders are not between 2 businesses (Seller and Buyer), the overall efficiency of court procedures, 1 included in the ranking. The ranking on each located in the economy’s selected cities. procedure is now subtracted for economies topic is the simple average of the percentile 4FMMFSTFMMTHPPETXPSUIPGUIF economy’s income per capita to Buyer. that have specialized commercial courts and 1 rankings on its component indicators. After Seller delivers the goods to Buyer, procedure for economies that allow electronic The aggregate ranking index is limited Buyer refuses to pay for the goods on the filing of court cases. Some procedural steps in scope. It does not account for an country's grounds that the delivered goods were that take place simultaneously with or are proximity to large markets, the quality of its not of adequate quality. included in other procedural steps are not infrastructure services (other than services r 4FMMFS UIFQMBJOUJĒ TVFT#VZFS UIF counted in the total number of procedures. related to trading across borders or construc- defendant) to recover the amount under tion permits), the security of property from UIFTBMFTBHSFFNFOU UIBUJT PG TIME theft and looting, macroeconomic conditions the country’s income per capita). Buyer Time is recorded in calendar days, counted or the strength of underlying institutions. opposes Seller’s claim, saying that the from the moment Seller files the lawsuit in There remains a large unfinished agenda for quality of the goods is not adequate. The court until payment. This includes both the research into what regulation constitutes claim is disputed on the merits. days when actions take place and the waiting binding constraints, what package of reforms r "DPVSUJOUIFDPVOUSZTTFMFDUFEDJUJFT periods between. The average duration of dif- is most effective and how these issues are with jurisdiction over commercial cases ferent stages of dispute resolution is recorded: shaped by the context of a country. The Doing XPSUIPGJODPNFQFSDBQJUBEFDJEFT the dispute. the completion of filing and service of process Business indicators provide a new empirical and of pretrial attachment (time to file the data set that may improve understanding of r 4FMMFSBUUBDIFT#VZFSTHPPETQSJPSUP obtaining a judgment because Seller fears case), the issuance of judgment (time for the these issues. that Buyer may become insolvent during trial and obtaining the judgment) and the the lawsuit. moment of payment (time for enforcement r &YQFSUPQJOJPOTBSFHJWFOPOUIFRVBMJUZ of judgment). of the delivered goods. If it is standard COST practice in the economy for parties to call witnesses or expert witnesses to give an Cost is recorded as a percentage of the claim, opinion on the quality of the goods, the BTTVNFEUPCFFRVJWBMFOUUPPGJODPNF parties each call one witness or expert per capita. No bribes are recorded. Three types witness. If it is standard practice for the of costs are recorded: court costs, enforcement judge to appoint an independent expert costs and average attorney fees. to give an expert opinion on the quality of Court costs include all costs Seller must the goods, the judge does so. In this case the judge does not allow opposing expert advance to the court or to the expert regard- testimony. less of the final cost to Seller (plaintiff). Expert r ѮFKVEHNFOUJTJOGBWPSPG4FMMFS fees, if required by law or necessary in prac- the judge decides that the goods are of tice, are included in court costs. Enforcement adequate quality and that Buyer must costs are all costs Seller must advance to QBZUIFBHSFFEQSJDF PGJODPNFQFS enforce the judgment through a public sale of capita). Buyer’s movable assets, regardless of the final r #VZFSEPFTOPUBQQFBMUIFKVEHNFOUѮF cost to Seller (plaintiff). Average attorney fees judgment becomes final. are the fees Seller (plaintiff) must advance r 4FMMFSUBLFTBMMSFRVJSFETUFQTGPSQSPNQU to a local attorney to represent Seller in the enforcement of the judgment. The standardized case. money is successfully collected through a public sale of Buyer’s movable assets (for The data details on enforcing contracts can be example, office equipment). found for each economy at http://www.doing- Doing Business Indicators 52 DOING BUSINESS IN COLOMBIA 2010 Starting a business Dealing with construction permits Paid-in Ease of Ease of Ease of min. dealing with doing starting a Cost capital construction Cost business business Procedures Time (% of GNI (% of GNI permits Procedures Time (% of GNI (rank) (rank) (number) (days) per capita) per capita) (rank) (number) (days) per capita) Armenia 7 1 8 12 14.0 0 13 14 123 122.0 Quindío Barranquilla 17 11 9 17 15.7 0 8 13 91 186.9 Atlántico Bogotá 12 6 9 20 15.1 0 7 11 74 402.8 Distrito Capital Bucaramanga 18 15 9 38 16.4 0 19 18 160 126.8 Santander Cali 20 12 11 13 15.3 0 20 19 146 175.1 Valle del Cauca Cartagena 21 20 11 27 20.2 0 16 14 107 293.7 Bolívar Cúcuta 15 9 9 13 15.6 0 18 16 96 208.1 Norte de Santander Ibagué 2 8 10 17 15.0 0 16 14 217 144.8 Tolima Manizales 1 3 9 10 15.1 0 10 13 98 209.6 Caldas Medellín 16 10 9 12 16.4 0 15 13 181 231.3 Antioquia Montería 14 19 14 19 15.8 0 5 13 75 116.2 Córdoba Neiva 11 6 8 8 30.0 0 10 14 127 112.8 Huila Pasto 9 4 9 17 13.1 0 10 13 140 147.2 Nariño Pereira 3 2 8 11 15.1 0 14 14 121 171.6 Risaralda Popayán 8 18 12 28 15.6 0 1 11 38 85.5 Cauca Riohacha 13 17 12 38 15.4 0 6 14 48 106.1 Guajira Santa Marta 6 5 9 10 15.5 0 3 13 43 125.5 Magdalena Sincelejo 4 13 12 20 15.2 0 8 14 85 141.5 Sucre Tunja 10 21 15 43 15.4 0 3 13 86 104.9 Boyacá Valledupar 5 14 13 24 15.0 0 2 13 89 79.7 Cesar Villavicencio 19 15 10 17 18.4 0 21 16 151 269.0 Meta INDICATOR TABLES 53 Registering property Paying taxes Enforcing contracts Ease of Cost Ease of Total tax Ease of registering (% of paying rate enforcing Cost property Procedures Time property taxes Payments Time (% of contracts Procedures Time (% of (rank) (number) (days) value) (rank) (number) (hours) profit) (rank) (number) (days) claim) Armenia 9 10 18 2.6 10 15 208 78.4 4 34 293 35.9 Quindío Barranquilla 20 13 19 4.0 15 20 208 73.1 14 34 1,520 28.8 Atlántico Bogotá 6 7 20 2.0 19 20 208 78.7 21 34 1,346 52.6 Distrito Capital Bucaramanga 17 13 20 2.4 8 17 208 72.0 7 34 930 28.6 Santander Cali 13 11 24 2.1 20 26 208 72.7 18 34 1,320 35.7 Valle del Cauca Cartagena 21 12 33 2.7 21 26 208 73.6 20 34 1,300 44.8 Bolívar Cúcuta 19 13 24 2.1 3 17 208 68.4 13 34 906 36.3 Norte de Santander Ibagué 1 8 16 1.9 2 17 208 66.6 4 34 510 30.6 Tolima Manizales 2 10 12 2.0 12 26 208 68.9 1 34 575 21.4 Caldas Medellín 11 10 23 2.3 16 18 208 73.9 14 34 768 40.1 Antioquia Montería 18 12 27 2.0 14 26 208 69.9 11 34 330 45.8 Córdoba Neiva 12 11 17 3.4 8 20 208 70.0 14 34 1,155 32.2 Huila Pasto 13 11 38 2.0 5 16 208 70.3 11 34 1,410 25.9 Nariño Pereira 5 11 19 1.9 4 20 208 66.6 6 34 482 31.1 Risaralda Popayán 15 11 28 2.0 7 16 208 70.3 7 34 1,120 26.0 Cauca Riohacha 8 9 26 2.0 17 26 208 71.3 19 34 955 40.2 Guajira Santa Marta 10 11 17 2.7 17 20 208 77.3 3 34 440 29.0 Magdalena Sincelejo 3 11 14 2.0 1 15 208 66.0 7 34 355 37.2 Sucre Tunja 7 11 21 1.9 5 20 208 67.5 17 34 690 41.9 Boyacá Valledupar 4 11 15 2.0 12 20 208 72.6 2 34 510 27.1 Cesar Villavicencio 16 11 29 2.5 11 26 208 68.9 10 34 587 32.1 Meta 54 DOING BUSINESS IN COLOMBIA 2010 Indicator details Paying taxes Trading across borders Enforcing contracts INDICATOR DE TAILS 55 Paying taxes National taxes Local taxes (% of profit) (% of profit) Payments Time (number (hours per Profit Labor tax and Other Industry and Property Fuel Total Tax per year) year) tax contributions taxes commerce tax tax tax Rate Armenia 15 208 24.3 33.9 0.2 17.7 1.9 0.6 78.4 Quindío Barranquilla 20 208 24.3 33.9 0.2 12.4 1.7 0.6 73.1 Atlántico Bogotá 20 208 24.3 33.9 0.2 20.2 0.0 0.2 78.7 Distrito Capital Bucaramanga 17 208 24.3 33.9 0.2 10.6 2.5 0.6 72.0 Santander Cali 26 208 24.3 33.9 0.2 11.7 2.1 0.6 72.7 Valle del Cauca Cartagena 26 208 24.3 33.9 0.2 12.4 2.3 0.6 73.6 Bolívar Cúcuta 17 208 24.3 33.9 0.2 7.1 2.4 0.6 68.4 Norte de Santander Ibagué 17 208 24.3 33.9 0.2 6.2 1.5 0.6 66.6 Tolima Manizales 26 208 24.3 33.9 0.2 8.0 2.0 0.6 68.9 Caldas Medellín 18 208 24.3 33.9 0.2 12.4 2.6 0.6 73.9 Antioquia Montería 26 208 24.3 33.9 0.2 8.8 2.2 0.6 69.9 Córdoba Neiva 20 208 24.3 33.9 0.2 8.8 2.2 0.6 70.0 Huila Pasto 16 208 24.3 33.9 0.2 10.6 0.8 0.6 70.3 Nariño Pereira 20 208 24.3 33.9 0.2 6.0 1.7 0.6 66.6 Risaralda Popayán 16 208 24.3 33.9 0.2 10.6 1.3 0.2 70.3 Cauca Riohacha 26 208 24.3 33.9 0.2 10.6 1.8 0.6 71.3 Guajira Santa Marta 20 208 24.3 33.9 0.2 17.7 0.8 0.6 77.3 Magdalena Sincelejo 15 208 24.3 33.9 0.2 5.3 1.8 0.6 66.0 Sucre Tunja 20 208 24.3 33.9 0.2 7.1 1.4 0.7 67.5 Boyacá Valledupar 20 208 24.3 33.9 0.2 11.5 2.2 0.6 72.6 Cesar Villavicencio 26 208 24.3 33.9 0.2 8.8 1.1 0.6 68.9 Meta 56 DOING BUSINESS IN COLOMBIA 2010 Trading across borders Barranquilla Buenaventura Cartagena Santa Marta Time Cost Time Cost Time Cost Time Cost (days) (USD) (days) (USD) (days) (USD) (days) (USD) Nature of export 14 1,600 18 1,890 14 1,770 13 1,717 procedures Documents preparation 6 225 6 225 5 350 5 350 Customs clearance and 2 260 2 310 2 250 2 270 technical control Ports and terminal 3 115 3 105 3 170 3 97 handling Inland transportation and handling 3 1,000 7 1,250 4 1,000 3 1,000 Nature of import 15 1,700 19 1,990 14 1,750 11 1,562 procedures Documents preparation 7 325 7 325 7 330 5 325 Customs clearance and 2 260 4 310 2 250 2 240 technical control Ports and terminal 2 115 2 105 2 170 2 97 handling Inland transportation 3 1,000 5 1,250 3 1,000 2 900 and handling Export documents Commercial invoice Certificate of origin Bill of lading Customs export declaration Inspection report Packing list Import documents Commercial invoice Certificate of origin Bill of lading Customs import declaration Inspection report Cargo release order Terminal handling receipts INDICATOR DE TAILS 57 Enforcing contracts Time Cost (days) (% of claim) Procedures Filing and Trial and Enforcement Total Attorney Court Enforcement Total (number) service judgment of judgment time cost cost Cost cost Armenia 34 23 150 120 293 30.0 2.1 3.8 35.9 Quindío Barranquilla 34 80 1,080 360 1,520 20.0 3.8 4.9 28.8 Atlántico Bogotá 34 68 913 365 1,346 23.2 12.6 16.8 52.6 Distrito Capital Bucaramanga 34 80 600 250 930 22.0 2.8 3.8 28.6 Santander Cali 34 70 1,000 250 1,320 30.0 1.8 3.9 35.7 Valle del Cauca Cartagena 34 90 850 360 1,300 30.0 4.9 9.9 44.8 Bolívar Cúcuta 34 46 680 180 906 30.0 1.9 4.4 36.3 Norte de Santander Ibagué 34 30 360 120 510 25.0 2.1 3.5 30.6 Tolima Manizales 34 45 350 180 575 15.0 2.6 3.8 21.4 Caldas Medellín 34 78 450 240 768 30.0 3.8 6.3 40.1 Antioquia Montería 34 30 180 120 330 35.0 5.1 5.6 45.8 Córdoba Neiva 34 90 700 365 1,155 25.0 2.3 4.9 32.2 Huila Pasto 34 45 1,000 365 1,410 20.0 2.7 3.2 25.9 Nariño Pereira 34 42 300 140 482 25.0 2.1 4.0 31.1 Risaralda Popayán 34 30 730 360 1,120 20.0 1.6 4.4 26.0 Cauca Riohacha 34 45 545 365 955 25.0 5.0 10.2 40.2 Guajira Santa Marta 34 30 210 200 440 20.0 4.1 4.8 29.0 Magdalena Sincelejo 34 45 190 120 355 30.0 2.2 5.0 37.2 Sucre Tunja 34 30 420 240 690 35.0 2.6 4.3 41.9 Boyacá Valledupar 34 50 360 100 510 20.0 3.1 4.0 27.1 Cesar Villavicencio 34 42 365 180 587 25.0 2.8 4.3 32.1 Meta List of LIST OF PROCEDURES Starting a business procedures Armenia, Quindío Starting a business Procedure 1. Register the company in the Mercantile Registry, obtain the certificate of existence and legal representation, Dealing with register the company’s books and register with the National Tax Authority (DIAN) at the Business Services Center (CAE) of the construction permits Chamber of Commerce Time: 1 day Registering property Cost: COP$1,439,637 [COP$307,719: departmental registration tax (0.3% of the company’s initial capital); COP$307,719: pro-hospital stamp duty (0.3% of the company’s initial capital); COP$665,000: commercial license (133.92% of the legal minimum monthly wage in effect); COP$83,000: commercial establishment fee; COP$3,500: registration form; COP$26,000: registration at the Chamber of Commerce and registration of the public document on company’s incorporation; COP$3,500: certificate of existence and legal representation; COP$17,400: purchase cost of the company’s books (3 books, COP$5,800 each, COP$58 per page, 100 pages per book); COP$25,800: registration fee for the books (COP$8,600 each book)]. Comments: Municipal Decree 100 of December 18, 2007, authorized the operation of the CAE in Armenia, regulated the procedures related to legalization of compa- nies, and eliminated the requirement of obtaining land use and sanitary certificates. The CAE makes it possible to perform the following procedures simultaneously at a single location: 1. Register the company and the commercial establishment (if applicable) at the Mercantile Registry 2. Obtain a copy of the certificate of existence and legal representation 3. Register the company’s books 4. Register the company in the Unified Tax Registry (RUT) of DIAN and obtain the Tax Identification Number (NIT) The company’s books are submitted to the Chamber of Commerce for the pages to be subscribed and numbered. A form requesting the books is filled out and the amount is paid directly at the cashier booth. If the company carries out the company’s establishment procedure using the website www.crearempresa.com.co, it may at the same time request registration of the books, without having to wait for the company to be registered first. Registration for payment of city sales tax (Industria y Comercio) is also done directly at the CAE. The forms may be obtained at the CAE or may be downloaded from the website www.crearempresa.com.co. The rates to register a company or commercial establishment, certificates and ap- plication forms are set at the national level (Decree 393 of 2002); the rates indicated above are for the year 2009. The registration tax and pro-hospital stamp duty are established by the Department of Quindío. Procedure 2. Open a bank account Time: 1 day Cost: No cost Comments: The company needs to open an account at a commercial bank in order to operate. Opening a savings account only takes a few minutes, but opening a checking account may take up to three days, because the bank is required to verify the applicant’s information before approving the account. Each financial entity may have its own additional requirements for opening an account, such as a minimum deposit amount. In general, a checking account can be opened with a minimum deposit of COP$100,000, and a savings account can be opened with the equivalent of one legal monthly minimum wage, which is currently COP$496,900. Procedure 3. Register the company with a family compensation fund (caja de compensación familiar), the National Training Service (SENA) and the Colombian Family Welfare Institute (ICBF) Time: 10 days Cost: No cost Comments: Once it is registered, the company must pay these payroll-based contributions within the first eight days of each month. The contribution is then distributed internally between SENA and ICBF. The registration procedure at a family compensation fund only takes a few minutes, but the request is subject to evaluation for approval or rejection. LIST OF PROCE %63&4t STARTING A BUSINESS 59 The documents that must be submitted include: registration form, certificate of STARTING A BUSINESS existence and legal representation issued by the Chamber of Commerce, photocopy Barranquilla, Atlántico of the legal representative’s identification card and the payroll list, with copies of the employees’ identification cards and documentation related to their children. Procedure 1. Purchase the company books Decree 3667 of November 8, 2004, establishes that all employers must submit a Time: 1 day single integrated statement reporting all payroll contributions to the social security system and parafiscal fees. Payment of the parafiscal fees to the family compensa- Cost: COP$57,000 (6 books, COP$9,500 per book, COP$95 per page, 100 pages per tion fund, SENA, ICBF, ESAP, industrial and technical schools and the social security book). contributions must be made at the locations indicated by the respective entities Comments: The company books can be acquired in a commercial establishment or within one calendar month of the respective payroll time period. in the Chamber of Commerce. Limited liability companies shall use the following six books: Procedure 4*. Affiliate the company to an Occupational Risk 1. Inventory and balance sheet book: An inventory and a general balance must be Management Company (ARP) made when initiating activities and at least once per year to get to know in a clear Time: 1 day and concise manner the state of company’s assets and liabilities Cost: No cost 2. Ledger book: In this book the operations of the accounts are entered using the Comments: The Occupational Risk Management Company (ARP) insures against double entry system; this allows the company to summarize on a monthly basis risks due to work accidents and disability due to occupational illnesses. The company all its operations for each account must affiliate its employees to a public or private ARP of its choice. The application 3. Cash Book - daily: In this book the accounting operations are entered in chrono- procedure only takes a few minutes and consists in submitting a form. However, cov- logical order, either individually or by summaries not to exceed one month erage only begins the next day. Monthly payments are made through an integrated 4. Minutes Book: It could be of two types: Minutes book of shareholders’ meeting form for social security contributions (PILA). minutes and minutes’ book of the Board of Directors. The first must be kept by all companies, the second only by those companies that have a board of directors. Procedure 5*. Affiliate employees to the public pensions system The minutes of the meetings must be recorded in chronological order, and must Time: 1 day be signed by the persons designated as secretary and president of the meetings Cost: No cost 5. Shareholders’ book: In this book the shares must be recorded with the title, Comments: The company must affiliate its employees to a pension fund, which may number, and date of inscription, as well as the changes in ownership be either the government’s Social Security Institute (ISS) or a private pension fund. 6. Subsidiary book: It is kept to record in detail, in chronological order the main ac- Employees may select the fund of their choice. The application process to the ISS counts, keeping a total of the debits, credits, and balances that continue on at the takes one day and is formalized once the appropriate form is submitted. An agent end of each term to the daily book and the ledger book; this book does not need from the public pension fund may visit the company and perform the registration to be registered in the Chamber of Commerce procedure. Once the company has been registered, its owner, or legal representative must present and request the registry of the commerce books through a letter addressed Procedure 6*. Affiliate employees to a private pension fund to the Chamber of Commerce, and fill in the respective application form; the duly Time: 1 day numbered book or pages must be presented. The first page in each book or set of pages should be labeled in pencil in the upper side with the name of the company Cost: No cost and function given to each book; the pages must be consecutively numbered and Comments: When employees select a private fund, a representative of the fund have no accounting entries. will generally visit the company to assist in filling out the forms and expediting the registration process. Procedure 2. Register the company in the Mercantile Registry, obtain the certificate of existence and legal representation, Procedure 7*. Affiliate employees to a mandatory healthcare plan register the company’s books and register with the National Tax Time: 1 day Authority (DIAN) at the Business Services Center (CAE) of the Cost: No cost Chamber of Commerce Comments: The company is required to affiliate its employees to a Mandatory Time: 5 days Health Plan (POS) through a Healthcare Promotion Entity (EPS). Each employee has Cost: COP$1,550,610 [COP$718,010: departmental registry tax (0.7% of the initial the right to select the EPS of his or her choice, and companies are required to register capital of the company); COP$665,000: commercial license (133.92% of the legal the employee at the selected EPS. The employee registration process varies depend- minimum monthly wage in effect); COP$83,000: tariff for the business establishment; ing on the EPS and the employee’s background. COP$3,500: cost of the registry’s application form; COP$26,000: inscription in the The EPS representative visits the company’s facilities, obtains the information Chamber of Commerce and registry of the document of incorporation; COP$3,500: required for affiliation and submits the request to the EPS. Requirements: copy of the certificate of existence and legal representation; COP$51,600: cost of registering the each employee’s identification card, filled out form and copy of the labor contract. If company’s books (COP$8,600 each book)]. the employee has a family, copies of the civil registration certificates of the children Comments: The CAE makes it possible to perform the following procedures simulta- and identification card of the spouse or companion must be included. neously at a single location: In August of 2008, a new EPS named Nueva EPS S.A. was created as a result of the 1. Register the company and the commercial establishment (if applicable) at the exceptional transfer of the affiliates of the public-sector EPS ISS, in the framework Mercantile Registry of Decree 055 of 2007. Nueva EPS was established as a healthcare promotion entity under the contributive regime by means of Resolution 371 of April 3, 2008 of the 2. Obtain a copy of the certificate of existence and legal representation National Health Superintendence. 3. Register the company’s books 4. Register the company in the Unified Tax Registry (RUT) of the DIAN and obtain the Procedure 8*. Affiliate employees to a severance fund Tax Identification Number (NIT) Time: 1 day The company’s books are submitted to the Chamber of Commerce for the pages Cost: No cost to be subscribed and numbered. A form requesting the books is filled out and Comments: Each employee is free to select the severance fund of his or her choice. the amount is paid directly at the cashier booth. If the company carries out the The company submits the documents for affiliation and must deposit every year –on company’s establishment procedure using the website www.crearempresa.com.co, February 14th– payment of each employee’s severance entitlement. it may at the same time request registration of the books, without having to wait for the company to be registered first. The forms may be obtained at the CAE or may be downloaded from the website * This procedure is simultaneous with a previous procedure. www.crearempresa.com.co. The rates to register a company and commercial establishment, certificates and ap- plication forms are national (Decree 393 of 2002) and correspond to 2009. In order to facilitate the process of obtaining the NIT, the Chamber of Commerce of Barranquilla, requires applicants to follow these steps: 60 DOING BUSINESS IN COLOMBIA 2010 1. The respective form is filled out in the webpage of the DIAN and the system deliv- Procedure 7*. Affiliate employees to a private pension fund ers to the user a code, named pre-RUT (prior form identification number) which Time: 1 day should be taken to the Chamber of Commerce for the company to obtain then the RUT (Unified Tax Registry) Cost: No cost 2. The entrepreneur can also go personally to DIAN’s office and obtain the pre-RUT, Comments: When employees select a private fund, a representative of the fund which must be attached to the other documents that are to be delivered to the will generally visit the company to assist in filling out the forms and expediting the Chamber of Commerce. Once the company is legally incorporated, the Chamber registration process. of Commerce, by virtue of an agreement with DIAN, will deliver the RUT certificate On September 8th of 2009, the Chamber of Commerce and the District’s Municipal Procedure 8*. Affiliate employees to a mandatory healthcare plan Government signed an Agreement (0047), which seeks to continue with the Proce- Time: 1 day dure Simplification Program for the business sector initiated with Agreement 004 Cost: No cost of 2001. The agreement includes information on uses of the land for the Chamber Comments: The company is required to affiliate its employees to a Mandatory of Commerce to implement a tool for official consultation of the different land uses, Health Plan (POS) through a Healthcare Promotion Entity (EPS). Each employee has while the Municipal Government is in charge of validating the information gener- the right to select the EPS of his or her choice, and companies are required to register ated from the automated consultation. Registration for payment of city sales tax the employee at the selected EPS. The affiliation process for employees varies (industria y comercio) is also done directly at the CAE. depending on the EPS and employees’ records. The EPS representative visits the company installations, obtains the information Procedure 3. Open a bank account required for the affiliation and files the affiliation before the EPS. Requirements: copy Time: 1 day of the identity card of each employee, fill out the form, copy of work contract; when Cost: No cost the employee has family, copy of the civil registration of the children and identity Comments: The company needs to open an account at a commercial bank in order card of the spouse or life partner. to operate. Open a savings account takes only a few minutes, but if it is a checking In August of 2008, a new EPS named Nueva EPS S.A. was created as a result of the account the bank may take up to three days to grant approval because it has the exceptional transfer of the affiliates of the public-sector EPS ISS, in the framework legal obligation of verifying the applicant’s information. of Decree 055 of 2007. Nueva EPS was established as a healthcare promotion entity Each financial entity may impose some additional requirements, for example mini- under the contributive regime by means of Resolution 371 of April 3, 2008 of the mum amounts for opening the accounts. The checking account generally must be National Health Superintendence. opened with a minimum amount of COP$100,000 and in the case of savings account the amount corresponds to a legal minimum monthly wage in effect (smlmv) which Procedure 9*. Affiliate employees to a severance fund currently comes to COP$496,900. Time: 1 day Cost: No cost Procedure 4. Register the company with a family compensation Comments: Each employee is free to join the severance fund of his or her choice. fund (caja de compensación familiar), the National Training The entrepreneur presents the documents for this affiliation and must deposit yearly Service (SENA) and the Colombian Family Welfare Institute (ICBF) – on February 14 – the severance pay of each employee. Time: 10 days Cost: No cost *This procedure is simultaneous with a previous procedure. Comments: Once it is registered, the company must pay these payroll-based contributions within the first eight days of each month. The contribution is then STARTING A BUSINESS distributed internally between SENA and ICBF. The registration procedure at a family compensation fund only takes a few minutes, but the request is subject to evaluation Bogotá, D. C. for approval or rejection. The documents required are: affiliation form, certificate of existence and legal Procedure 1. Purchase the company books representation issued by the Chamber of Commerce, photocopy of identity card of Time: 1 day the legal representative and payroll and list of persons that the company will have Cost: COP$24,000 (3 books, COP$8,000 each book) with the corresponding photocopies of the identity cards and of the documents of Comments: The company’s books can be purchased at a commercial establishment the employee’s children. or in the Chamber of Commerce. Decree 3667 of November 8, 2004, establishes that all employers must submit a Limited liability companies shall use the following three books: single integrated statement reporting all payroll contributions to the social security 1. Inventory and balance sheet book: An inventory and a general balance must be system and parafiscal fees. Payment of the parafiscal fees to the family compensa- made when initiating activities and at least once per year to get to know in a clear tion fund, SENA, ICBF, ESAP, industrial and technical schools and the social security and concise manner the state of company’s assets and liabilities contributions must be made at the locations indicated by the respective entities within one calendar month of the respective payroll time period. 2. Ledger book: In this book the operations of the accounts are entered using the double entry system; this allows the company to summarize on a monthly basis Procedure 5*. Affiliate the company to an Occupational Risk all the operations for each account Management Company (ARP) 3. Cash Book - daily: In this book the accounting operations are entered in chrono- logical order, either individually or by summaries not to exceed one month Time: 1 day Once the company has been registered, its owner, or legal representative must pres- Cost: No cost ent and request the registry of the books through a letter addressed to the Chamber Comments: The Occupational Risk Management Company (ARP) insures against of Commerce, and fill in the respective application form; the duly numbered book risks due to work accidents and disability due to occupational illnesses. The company or pages must be presented. The first page in each book or set of pages should be must affiliate its employees to a private or public ARP of its choice. labeled in pencil in the upper side with the name of the company and function given The registration procedure before the ARP takes a few minutes and consists of the to each book; the pages must be consecutively numbered and have no accounting presentation of the form but the coverage begins the following day. entries. Monthly payments are made through the Comprehensive Form of Liquidation and Contributions of Social Security (PILA). Procedure 2. Register the company in the Mercantile Registry, obtain the certificate of existence and legal representation, Procedure 6*. Affiliate employees to the public pensions system register the company’s books and register with the National Tax Time: 1 day Authority (DIAN) at the Business Services Center (CAE) of the Cost: No cost Chamber of Commerce Comments: The company must affiliate its employees to a pension fund, which may Time: 2 days be either the government’s Social Security Institute (ISS) or a private pension fund. Employees may select the fund of their choice. The affiliation to the pension fund takes a day to be legalized, once the corresponding form is submitted. A public pen- sion fund agent goes to the company and carries out the affiliation procedure. LIST OF PROCE %63&4t STARTING A BUSINESS 61 Cost: COP$1,521,510 [COP$718,010: departmental registry tax (0.7% of the initial Procedure 6*. Affiliate employees to the public pensions system capital of the company); COP$665,000: commercial license (133.92% of the legal minimum monthly wage (smlmv) in effect); COP$83,000: rate for the business Time: 14 days establishment; COP$3,500: cost of the registry application form; COP$26,000: inscrip- Cost: No cost tion at the Chamber of Commerce and registry of the document of incorporation; Comments: The company must affiliate its employees to a pension fund, which may COP$26,000: cost of registering the company’s books (COP$8,666 each book)]. be either the government’s Social Security Institute (ISS) or a private pension fund. Comments: The Business Services Center (CAE) began to operate in May of 2003. Employees may select the fund of their choice. The application process to the ISS The CAE allows to complete in a sole step and at the same location the following takes one day and is completed once the appropriate form is submitted. However, procedures: the ISS may take, on average, 14 days to confirm the affiliation. A public pension 1. Register the company and the commercial establishment (if applicable) at the fund agent goes to the company and carries out the affiliation procedure. Mercantile Registry 2. Obtain a copy of the certificate of existence and legal representation Procedure 7*. Affiliate employees to a private pension fund 3. Register the company’s books Time: 1 day 4. Register the company in the Unified Tax Registry (RUT) of the DIAN and obtain the Cost: No cost Tax Identification Number (NIT) Comments: When employees select a private fund, a representative of the fund The company’s books are submitted to the Chamber of Commerce for the pages will generally visit the company to assist in filling out the forms and expediting the to be subscribed and numbered. A form requesting the books is filled out and registration process. the amount is paid directly at the cashier booth. If the company carries out the company’s establishment procedure using the website www.crearempresa.com.co, Procedure 8*. Affiliate employees to a mandatory healthcare plan it may at the same time request registration of the books, without having to wait for Time: 6 days the company to be registered first. Cost: No cost The registration for the payment of industry and commerce tax is also carried out im- Comments: The company is required to affiliate its employees to a Mandatory mediately in the CAE. Forms may be obtained directly at the CAE or be downloaded Health Plan (POS) through a Healthcare Promotion Entity (EPS). Each employee has from the webpage www.crearempresa.com.co. the right to select the EPS of his or her choice, and companies are required to register The rates to register a company and commercial establishment, certificates, and ap- the employee at the selected EPS. The affiliation process for employees varies plication forms are national (Decree 393 of 2002) and correspond to 2009. depending on the EPS and employees’ records. The EPS representative visits the company installations, obtains the information Procedure 3. Open a bank account required for the affiliation and files the affiliation before the EPS. Requirements: copy Time: 1 day of the identity card of each employee, fill out the form, copy of work contract; when Cost: No cost the employee has family, copy of the civil registration of the children and identity card of the spouse or life partner. Comments: The company needs to open an account at a commercial bank in order to operate. Opening a savings account only takes a few minutes, but opening a In August of 2008, a new EPS named Nueva EPS S.A. was created as a result of the checking account may take up to three days, because the bank is required to verify exceptional transfer of the affiliates of the public-sector EPS ISS, in the framework the applicant’s data before approving the account. Each financial entity may impose of Decree 055 of 2007. Nueva EPS was established as a healthcare promotion entity some additional requirements, for example minimum amounts for opening the ac- under the contributive regime by means of Resolution 371 of April 3, 2008 of the counts. The checking account generally must be opened with a minimum amount of National Health Superintendence. COP$100,000 and in the case of savings account the amount corresponds to a legal minimum monthly wage in effect (smlmv) which currently comes to COP$496,900. Procedure 9*. Affiliate employees to a severance fund Time: 1 day Procedure 4. Register the company with a family compensation Cost: No cost fund (caja de compensación familiar), the National Training Comments: Each employee freely chooses the severance fund of his or her choice. Service (SENA) and the Colombian Family Welfare Institute (ICBF) The entrepreneur presents the documents for this affiliation and must deposit yearly Time: 10 days – on February 14 – the severance pay of each employee. Cost: No cost Comments: Once it is registered, the company must pay these payroll-based * This procedure is simultaneous with a previous procedure. contributions within the first eight days of each month. The contribution is then distributed internally between SENA and ICBF. The registration procedure at a family STARTING A BUSINESS compensation fund only takes a few minutes, but the request is subject to evaluation for approval or rejection. Bucaramanga, Santander The documents required are: affiliation form, certificate of existence and legal Procedure 1. Purchase the company books representation issued by the Chamber of Commerce, photocopy of identity card of the legal representative and payroll and list of persons that the company will have Time: 1 day with the corresponding photocopies of the identity cards and of the documents of Cost: COP$27,600 [6 books (COP$4,600 per book, COP$46 per page, 100 pages per the employee’s children. book)]. Decree 3667 of November 8, 2004, establishes that all employers must submit a Comments: The company’s books can be purchased at a commercial establishment single integrated statement reporting all payroll contributions to the social security or in the Chamber of Commerce. Limited liability companies shall use the following system and parafiscal fees. Payment of the parafiscal fees to the family compensa- six books: tion fund, SENA, ICBF, ESAP, industrial and technical schools and the social security 1. Inventory and balance sheet book: An inventory and a general balance must be contributions must be made at the locations indicated by the respective entities made when initiating activities and at least once per year to get to know in a clear within one calendar month of the respective payroll time period. and concise manner the state of company’s assets and liabilities 2. Ledger book: In this book the operations of the accounts are entered using the Procedure 5*. Affiliate the company to an Occupational Risk double entry system; this allows the company to summarize on a monthly basis, Management Company (ARP) all operations for each account Time: 1 day 3. Cash Book - daily: In this book the accounting operations are entered in chrono- Cost: No cost logical order, either individually or by summaries not to exceed one month Comments: The Occupational Risk Management Company (ARP) insures against 4. Minutes Book: It could be of two types: Minutes book of shareholders’ meeting risks due to work accidents and disability due to occupational illnesses. The company and minutes’ book of the Board of Directors. The first must be kept by all com- must affiliate its employees to a private or public ARP of its choice. The registration panies, the second only by those companies that have a board of directors. The procedure before the ARP takes a few minutes and consists of the presentation of minutes of the meetings must be recorded in chronological order, and signed by the form but the coverage begins as of the next day. Monthly payments are made persons designated as secretary and president of the meetings through the Comprehensive Form of Liquidation and Contributions of Social Security 5. Book of shareholders: in this are recorded the shares, noting the title, number and (PILA). date of registration, and likewise for change of ownership 62 DOING BUSINESS IN COLOMBIA 2010 6. Subsidiary Ledger: used to record chronologically details of the main accounts, The documents that must be submitted include: registration form, certificate of totaling debits, credits and balances that pass at the end of each period to the existence and legal representation issued by the Chamber of Commerce, photocopy daily and the main ledger, this book need not be registered with the Chamber of of the legal representative’s identification card and the payroll list, with copies of the Commerce employees’ identification cards and documentation related to their children. Once the company has been registered, its owner, or legal representative must pres- Decree 3667 of November 8, 2004, establishes that all employers must submit a ent and request the registry of the books through a letter addressed to the Chamber single integrated statement reporting all payroll contributions to the social security of Commerce, and fill in the respective application form; the duly numbered book system and parafiscal fees. Payment of the parafiscal fees to the family compensa- or pages must be presented. The first page in each book or set of pages should be tion fund, SENA, ICBF, ESAP, industrial and technical schools and the social security labeled in pencil in the upper side with the name of the company and function given contributions must be made at the locations indicated by the respective entities to each book; the pages must be consecutively numbered and have no accounting within one calendar month of the respective payroll time period. entries. Procedure 5*. Affiliate the company to an Occupational Risk Procedure 2. Register the company in the Mercantile Registry, Management Company (ARP) obtain the certificate of existence and legal representation, Time: 1 day register the company’s books and register with the National Tax Cost: No cost Authority (DIAN) at the Business Services Center (CAE) of the Comments: The Occupational Risk Management Company (ARP) insures against risks Chamber of Commerce due to work accidents and disability due to occupational illnesses. The company must Time: 4 days affiliate its employees to a public or private ARP of its choice. The registration proce- Cost: COP$1,653,743 [COP$820,583: departmental registration tax (0.8% of the com- dure before the ARP takes a few minutes and consists of the presentation of the form pany’s initial capital); COP$665,000: commercial license (133.92% of the legal mini- but the coverage begins the following day. Monthly payments are made through the mum monthly wage); COP$83,000: rate for the business establishment; COP$4,060: Comprehensive Form of Liquidation and Contributions of Social Security (PILA). cost of the registry’s application form; COP$26,000: registration at the Chamber of Commerce and registration of the document of incorporation; COP$3,500: certificate Procedure 6*. Affiliate employees to the public pensions system of existence and legal representation; COP$51,600: cost of registering the company’s Time: 30 days books (COP$8,600 each book)] Cost: No cost Comments: The CAE makes it possible to complete the following procedures simul- Comments: The company must affiliate its employees to a pension fund, which may taneously at a single location: be either the government’s Social Security Institute (ISS) or a private pension fund. 1. Register the company and the commercial establishment (if applicable) at the Employees may select the fund of their choice. The application process to the ISS Mercantile Registry takes one day and is completed once the appropriate form is submitted. However, 2. Obtain a copy of the certificate of existence and legal representation the ISS may take, on average, 30 days to confirm the affiliation. An agent from the 3. Register the company’s books public pension fund may visit the company and perform the registration procedure. 4. Register the company in the Unified Tax Registry (RUT) of the DIAN and obtain the Tax Identification Number (NIT) Procedure 7*. Affiliate employees to a private pension fund The company’s books are submitted to the Chamber of Commerce for the pages Time: 1 day to be subscribed and numbered. A form requesting the books is filled out and the Cost: No cost amount is paid directly at the cashier booth. If the company performs the company Comments: When employees select a private fund, a representative of the fund establishment procedure using the website www.crearempresa.com.co, it may at the will generally visit the company to assist in filling out the forms and expediting the same time request registration of the books, without having to wait for the company registration process. to be registered first. Forms may be obtained directly at the CAE or may be downloaded from the web- Procedure 8*. Affiliate employees to a mandatory healthcare plan page www.crearempresa.com.co. The registration for the payment of industry and Time: 1 day commerce tax is also carried out immediately in the CAE. Cost: No cost The rates to register a company and commercial establishment, certificates, and ap- Comments: The company is required to affiliate its employees to a Mandatory plication forms are national (Decree 393 of 2002) and correspond to 2009. Healthcare Plan (POS) through a Healthcare Promotion Entity (EPS). Each employee The NIT is assigned by the DIAN. However the procedure is carried out in the CAE, has the right to select the EPS of his or her choice, and companies are required to where its agents provide assistance to fill out the forms for RUT’s inscription and then register the employee at the selected EPS. The employee registration process varies they send the information to DIAN. The entrepreneur receives his or her Mercantile depending on the EPS and the employee’s record. Registration certificate with the assigned NIT in an average time of 4 days; the RUT The EPS representative visits the company’s facilities, obtains the information certificate will also be provided. required for affiliation and submits the request to the EPS. Requirements: copy of the identity card of each employee, fill out the form, copy of work contract; when the Procedure 3. Open a bank account employee has family, copy of the civil registration of the children and identity card of Time: 1 day the spouse or life partner. Cost: No cost In August of 2008, a new EPS named Nueva EPS S.A. was created as a result of the Comments: The company needs to open an account at a commercial bank in order exceptional transfer of the affiliates of the public-sector EPS ISS, in the framework to operate. Opening a savings account only takes a few minutes, but opening a of Decree 055 of 2007. Nueva EPS was established as a healthcare promotion entity checking account may take up to three days, because the bank is required to verify under the contributive regime by means of Resolution 371 of April 3, 2008 of the the applicant’s data before approving the account. Each financial entity may have its National Health Superintendence. own additional requirements for opening an account, such as a minimum deposit amount. In general, a checking account can be opened with a minimum deposit of Procedure 9*. Affiliate employees to a severance fund COP$100,000, and a savings account can be opened with the equivalent of one legal Time: 1 day monthly minimum wage, which is currently COP$496,900. Cost: No cost Procedure 4. Register the company with a family compensation Comments: Each employee is free to select the severance fund of his or her choice. The company submits the documents for affiliation and must deposit every year –on fund (caja de compensación familiar), the National Training February 14th– payment of each employee’s severance entitlement. Service (SENA) and the Colombian Family Welfare Institute (ICBF) Time: 10 days *This procedure is simultaneous with a previous procedure. Cost: No cost Comments: Once it is registered, the company must pay these payroll-based contributions within the first eight days of each month. The contribution is then distributed internally between SENA and ICBF. The registration procedure at a family compensation fund only takes a few minutes, but the request is subject to evaluation for approval or rejection. LIST OF PROCE %63&4t STARTING A BUSINESS 63 STARTING A BUSINESS 3. Register the company’s books Cali, Valle del Cauca 4. Register the company in the Unified Tax Registry (RUT) of the DIAN and obtain the Tax Identification Number (NIT) Procedure 1. Visit a Business Service Center (CAE) and obtain The company’s books are submitted to the Chamber of Commerce for the pages application forms to be subscribed and numbered. A form requesting the books is filled out and the Time: 1 day amount is paid directly at the cashier booth. If the company performs the company Cost: COP$3,500 [COP$3,500 is cost of the application form for both the company establishment procedure using the website www.crearempresa.com.co, it may at the and the business establishment; the registration form for the company for the pay- same time request registration of the books, without having to wait for the company ment of industry and commerce tax have no cost]. to be registered first. Registration for payment of Industry and Commerce tax is also done directly at the CAE. Comments: It is necessary to visit the CAE to obtain the application forms for both the company and the business establishment. The forms may be obtained at the CAE or may be downloaded from the website www.crearempresa.com.co. The form comes in two parts: The first part contains the entrepreneur’s information, and the second part contains the information of the business establishment; if the The rates to register a company and commercial establishment, certificates, and ap- new company has more than one commercial establishment another form must be plication forms are national (Decree 393 of 2002) and correspond to 2009. acquired. Additionally, another form is given (at no cost) to provide detailed informa- tion to industry and commerce and to the Office of Municipal Planning, according Procedure 4. Open a bank account to the guidelines of the agreement signed between the Municipal Government of Time: 1 day Santiago de Cali and the Municipality of Yumbo to simplify the procedures for start- Cost: No cost ing a business. Comments: The company needs to open an account at a commercial bank in order It is important for the entrepreneur to define the name of the Company and the fiscal to operate. Opening a savings account only takes a few minutes, but opening a obligations that he must comply with before moving on in the advisory process; then checking account may take up to three days, because the bank is required to verify he or she must go to the correspondent booths to purchase the necessary forms. the applicant’s data before approving the account. Each financial entity may have its own additional requirements for opening an account, such as a minimum deposit Procedure 2. Purchase the company books amount. In general, a checking account can be opened with a minimum deposit of Time: 1 day COP$100,000, and a savings account can be opened with the equivalent of one legal Cost: COP$15,000 [5 books (COP$3,000 per book) COP$30 (per page, 100 pages per monthly minimum wage, which is currently COP$496,900. book)]. Comments: The company’s books can be purchased at a commercial establishment Procedure 5*. Pay departmental duty stamps in support of or from the Chamber of Commerce. hospitals Limited liability companies shall use the following five books: Time: 1 day 1. Inventory and balance sheet book: An inventory and a general balance must be Cost: COP$7,500 made when initiating activities and at least once per year to get to know in a clear Comments: The payment is made at the Office of the Municipal Treasury. and concise manner the state of company’s assets and liabilities 2. Ledger book: In this book the operations of the accounts are entered using the Procedure 6. Register the company with a family compensation double entry system; this allows the company to summarize on a monthly basis fund (caja de compensación familiar), the National Training all its operations for each account Service (SENA) and the Colombian Family Welfare Institute (ICBF) 3. Cash Book - daily: In this book the accounting operations are entered in chrono- Time: 1 day logical order, either individually or by summaries not to exceed one month Cost: No cost 4. Minutes Book: It could be of two types: Minutes book of shareholders’ meeting Comments: Once it is registered, the company must pay these payroll-based and minutes’ book of the Board of Directors. The first must be kept by all com- contributions within the first eight days of each month. The contribution is then panies, the second only by those companies that have a board of directors. The distributed internally between SENA and ICBF. The registration procedure at a family minutes of the meetings must be recorded in chronological order, and signed by compensation fund only takes a few minutes, but the request is subject to evaluation the secretary and the president for approval or rejection. 5. Shareholders book: In this book the shares must be recorded with the title, num- The documents that must be submitted include: registration form, certificate of ber, and date of inscription, as well as the changes in ownership existence and legal representation issued by the Chamber of Commerce, photocopy Once the company has been registered, its owner, or legal representative must of the legal representative’s identification card and the payroll list, with copies of the present and request the registry of the commerce books through a letter addressed employees’ identification cards and documentation related to their children. to the Chamber of Commerce, and fill in the respective application form; the duly Decree 3667 of November 8, 2004, establishes that self-liquidation and payment of numbered book or pages must be presented. The first page in each book or set of the contribution to the Comprehensive Social Security System and parafiscal contri- pages should be labeled in pencil in the upper side with the name of the company butions must be carried out through a sole comprehensive form, and all employers and function given to each book; the pages must be consecutively numbered and must effect the payment of parafiscal contributions to the family compensation have no accounting entries. funds, the SENA, the ICBF, and ESAP, industrial schools and technical institutes, and the contributions to the Comprehensive Social Security in the locations determined Procedure 3. Register the company in the Mercantile Registry, by the administrating entities, within a calendar month following the worked period. obtain the certificate of existence and legal representation, register the company’s books and register with the National Tax Procedure 7*. Affiliate employees to the public pensions system Authority (DIAN) at the Business Services Center (CAE) of the Time: 1 day Chamber of Commerce Cost: No cost Time: 3 days Comments: The company must affiliate its employees to a pension fund, which may Cost: COP$1,541,510 [COP$718,010: departmental registration tax (0.7% of the be either the government’s Social Security Institute (ISS) or a private pension fund. company’s initial capital); COP$665,000: commercial license (133.92% of the legal Employees may select the fund of their choice. The application process to the ISS minimum monthly wage); COP$83,000: commercial establishment fee; COP$3,000: takes one day and is completed once the appropriate form is submitted. It is done cost of the registry’s application form; COP$26,000: registration at the Chamber of only in the main branch of the ISS located in the Versalles neighborhood on Carrera Commerce and registration of the document of incorporation; COP$3,500: certificate 4 West 12-89, Cali. of existence and legal representation; COP$43,000: cost of registering the company’s books (COP$8,600 each book)]. Procedure 8*. Affiliate employees to a private pension fund Comments: The CAE makes it possible to complete the following procedures simul- Time: 1 day taneously at a single location: Cost: No cost 1. Register the company and the commercial establishment (if applicable) at the Comments: When employees select a private fund, a representative of the fund Mercantile Registry will generally visit the company to assist in filling out the forms and expediting the 2. Obtain a copy of the certificate of existence and legal representation registration process. 64 DOING BUSINESS IN COLOMBIA 2010 Procedure 9*. Affiliate employees to a mandatory healthcare plan Procedure 2. Pay departmental stamp duty pro-cultura Time: 1 day Time: 1 day Cost: No cost Cost: COP$512,864 (0.5% of initial capital). Comments: The company is required to affiliate its employees to a Mandatory Comments: The entrepreneur must pay the Departmental Government of Bolívar, Healthcare Plan (POS) through a Healthcare Promotion Entity (EPS). Each employee the equivalent amount of the pro cultura duty stamp provided the document of has the right to select the EPS of his or her choice, and companies are required to incorporation of the company is a public deed (Ordinance 11 of 2006). register the employee at the selected EPS. The employee registration process varies depending on the EPS and the employee’s records. Procedure 3. Register the company in the Mercantile Registry, The EPS representative visits the company’s facilities, obtains the information obtain the certificate of existence and legal representation, required for affiliation and submits the request to the EPS. Requirements: copy of the register the company’s books and register with the National Tax identity card of each employee, fill out the form, copy of work contract; when the Authority (DIAN) at the Business Services Center (CAE) of the employee has family, copy of the civil registration of the offspring and identity card Chamber of Commerce of the spouse or life partner. Time: 5 days In August of 2008, a new EPS named Nueva EPS S.A. was created as a result of the exceptional transfer of the affiliates of the public-sector EPS ISS, in the framework Cost: COP$1,533,410 [COP$718,010: departmental registration tax (0.7% of the of Decree 055 of 2007. Nueva EPS was established as a healthcare promotion entity company’s initial capital); COP$665,000: commercial license (133.92% of the legal under the contributive regime by means of Resolution 371 of April 3, 2008 of the minimum monthly wage); COP$83,000: commercial establishment fee; COP$3,500: National Health Superintendence. registration form; COP$26,000: registration at the Chamber of Commerce and registration of the document of incorporation; COP$3,500: certificate of existence and legal representation; COP$34,400: Cost of registering the company’s books Procedure 10*. Affiliate the company to an Occupational Risk (COP$8,600 each book)]. Management Company (ARP) Comments: The CAE makes it possible to complete the following procedures simul- Time: 1 day taneously at a single location: Cost: No cost 1. Register the company and the commercial establishment (if applicable) at the Comments: The Occupational Risk Management Company (ARP) insures against Mercantile Registry risks due to work accidents and disability due to occupational illnesses. The company 2. Obtain a copy of the certificate of existence and legal representation must affiliate its employees to a public or private ARP of its choice. The registration procedure before the ARP takes a few minutes and consists of the presentation of 3. Register the company’s books the form but the coverage begins as of the next day. Monthly payments are also 4. Register the company in the Unified Tax Registry (RUT) of the DIAN and obtain the made by means of the integrated form for social security contributions (PILA). Tax Identification Number (NIT) The company’s books are submitted to the Chamber of Commerce for the pages Procedure 11*. Affiliate employees to a severance fund to be subscribed and numbered. A form requesting the books is filled out and the Time: 1 day amount is paid directly at the cashier booth. If the company performs the company establishment procedure using the website www.crearempresa.com.co, it may at the Cost: No cost same time request registration of the books, without having to wait for the company Comments: Each employee is free to select the severance fund of his or her choice. to be registered first. Company Registration for Industry and Commerce is also done The company submits the documents for affiliation and must deposit every year –on directly at the CAE February 14th– payment of each employee’s severance entitlement. The forms may be obtained at the CAE or may be downloaded from the website www.crearempresa.com.co. *This procedure is simultaneous with a previous procedure. The rates to register a company and commercial establishment, certificates, and forms are national (Decree 393 of 2002) and correspond to 2009 STARTING A BUSINESS Cartagena, Bolívar Procedure 4. Open a bank account Time: 1 day Procedure 1. Purchase the company books Cost: No cost Time: 2 days Comments: The company needs to open an account at a commercial bank in order Cost: COP$14,000 [4 books (COP$3,500 per book, COP$35 per page, 100 pages per to operate. Opening a savings account only takes a few minutes, but opening a book)] checking account may take up to three days, because the bank is required to verify the applicant’s data before approving the account. Each financial entity may have its Comments: The company’s books can be purchased at a commercial establishment own additional requirements for opening an account, such as a minimum deposit or from the Chamber of Commerce. amount. In general, a checking account can be opened with a minimum deposit of Limited liability companies shall use the following four books: COP$100,000, and a savings account can be opened with the equivalent of one legal 1. Inventory and balance sheet book: An inventory and a general balance must be monthly minimum wage, which is currently COP$496,900. made when initiating activities and at least once per year to get to know in a clear and concise manner the state of company’s assets and liabilities Procedure 5. Obtain a land use certificate 2. Ledger book: In this book the operations of the accounts are entered using the Time: 8 days double entry system; this allows the company to summarize on a monthly basis Cost: COP$15,800 all its operations for each account Comments: Obtaining a land use certificate from the municipal authorities is 3. Cash Book - daily: In this book the accounting operations are entered in chrono- required for operating a business. The interested party may complete the procedure logical order, either individually or by summaries not to exceed one month before the District’s Planning Secretariat, a dependency of the Municipal Govern- 4. Minutes Book: It could be of two types: Minutes book of shareholder’s meeting ment, or he or she may also do the consultation through any of the following and minutes’ book of the Board of Directors. The first must be kept by all com- WebPages: www.sintramites.com.co/consultas.htm, or www.crearempresa.com.co panies, the second only by those companies that have a board of directors. The This procedure is completed before the Municipal Government (Registration and minutes of the meetings must be recorded in chronological order, and signed by Correspondence Office) and this office is in charge of sending the application to the the secretary and the president District’s Planning Secretariat, which finally issues the certificate. The reduction in the Once the company has been registered, its owner, or legal representative must number of days with respect to the average in Doing Business in Colombia, 2008, is present and request the registry of the commerce books through a letter addressed due to the implementation of the recommendations by the Technical Committee for to the Chamber of Commerce, and fill in the respective application form; the duly Improvement in Procedures: there is now an official dedicated solely to the consulta- numbered book or pages must be presented. The first page in each book or set of tion of compatibilities of land usage with the POT, and the certificates are signed by pages should be labeled in pencil in the upper side with the name of the company a different agent from the Planning Secretariat. and function given to each book; the pages must be consecutively numbered and have no accounting entries. LIST OF PROCE %63&4t STARTING A BUSINESS 65 Procedure 6. Register the company with a family compensation Procedure 11*. Affiliate employees to a severance fund fund (caja de compensación familiar), the National Training Time: 1 day Service (SENA) and the Colombian Family Welfare Institute (ICBF) Cost: No cost Time: 10 days Comments: Each employee is free to select the severance fund of his or her choice. Cost: No cost The company submits the documents for affiliation and must deposit every year –on Comments: Once it is registered, the company must pay these payroll-based February 14th– payment of each employee’s severance entitlement. contributions within the first eight days of each month. The contribution is then distributed internally between SENA and ICBF. The registration procedure at a family *This procedure is simultaneous with a previous procedure. compensation fund only takes a few minutes, but the request is subject to evaluation for approval or rejection. The quality of the service has improved much in the last 2 STARTING A BUSINESS years. The documents that must be submitted include: registration form, certificate of Cúcuta, Norte de Santander existence and legal representation issued by the Chamber of Commerce, photocopy of the legal representative’s identification card and the payroll list, with copies of the Procedure 1. Register the company in the Mercantile Registry, employees’ identification cards and documentation related to their children. obtain the certificate of existence and legal representation, Decree 3667 of November 8, 2004, establishes that self-liquidation and payment of register the company’s books and register with the National Tax the contribution to the Comprehensive Social Security System and extra-fiscal contri- Authority (DIAN) at the Business Services Center (CAE) of the butions must be carried out through a sole comprehensive form, and all employers Chamber of Commerce must effect the payment of extra-fiscal contributions to the family compensation Time: 2 days funds, the SENA, the ICBF, and ESAP, industrial schools and technical institutes, and the contributions to the Comprehensive Social Security in the locations determined Cost: COP$831,500 [COP$665,000: commercial license (133.92% of the legal mini- by the administrating entities, within a calendar month following the worked period. mum monthly wage); COP$83,000: commercial establishment fee; COP$3,500: regis- tration form; COP$26,000: registration at the Chamber of Commerce and registration of the document of incorporation; COP$3,500: certificate of existence and legal Procedure 7*. Affiliate the company to an Occupational Risk representation; COP$2,100: departmental duty stamp pro- hospital; COP$14,000: Management Company (ARP) cost of the company’s books (4 books, COP$3,500 each, COP$35 per page, 100 pages Time: 1 day per book); COP$34,400: registration fee for the books (COP$8,600 each book)]. Cost: No cost Comments: The CAE makes it possible to complete the following procedures simul- Comments: The Occupational Risk Management Company (ARP) insures against taneously at a single location: risks due to work accidents and disability due to occupational illnesses. The company 1. Register the company and the commercial establishment (if applicable) at the must affiliate its employees to a public or private ARP of its choice. The registration Mercantile Registry procedure before the ARP takes a few minutes and consists of the presentation of 2. Obtain a copy of the certificate of existence and legal representation the form but the coverage begins as of the next day. Monthly payments are made through the Comprehensive Form of Liquidation and Contributions of Social Security 3. Register the company’s books (PILA). 4. Register the company in the Unified Tax Registry (RUT) of the DIAN and obtain the Tax Identification Number (NIT) Procedure 8*. Affiliate employees to the public pensions system The entrepreneur can obtain the application forms directly at the CAE or download Time: 1 day them from the webpage www.crearempresa.com.co. He or she can also register the company in the Registry for Industry and Commerce Cost: No cost The rates to register a company and commercial establishment, certificates, and ap- Comments: The company must affiliate its employees to a pension fund, which may plication forms are national (Decree 393 of 2002) and correspond to 2009. be either the government’s Social Security Institute (ISS) or a private pension fund. Employees may select the fund of their choice. The application process to the ISS The company’s books are submitted to the Chamber of Commerce for the pages takes one day and is completed once the appropriate form is submitted. An agent to be subscribed and numbered. A form requesting the books is filled out and the from the public pension fund may visit the company and perform the registration amount is paid directly at the cashier booth. If the company performs the company procedure. establishment procedure using the website www.crearempresa.com.co, it may at the same time request registration of the books, without having to wait for the company Procedure 9*. Affiliate employees to a private pension fund to be registered first. Time: 1 day For the issuance of the certificate of existence and legal representation a duty stamp “Pro- Empresa Social del Estado Hospital Universitario Erasmo Meoz (pro- ESE HUEM)” Cost: No cost must be paid, in support of the hospital Erasmo Meoz. Comments: When employees select a private fund, a representative of the fund will generally visit the company to assist in filling out the forms and expediting the Procedure 2*. Pay departmental registry tax registration process. Time: 1 day Procedure 10*. Affiliate employees to a mandatory healthcare Cost: COP$769,297 (0.75% of the initial capital). plan Comments: The registry tax must currently be paid at the Departmental Office of the Treasury, because the Municipal Government cancelled the contract it had with Time: 1 day the Chamber of Commerce, which was in charge of receiving this payment when the Cost: No cost company was registered. Comments: The company is required to affiliate its employees to a Mandatory Healthcare Plan (POS) through a Healthcare Promotion Entity (EPS). Each employee Procedure 3. Open a bank account has the right to select the EPS of his or her choice, and companies are required to Time: 1 day register the employee at the selected EPS. The employee registration process varies depending on the EPS and the employee’s records. Cost: No cost The EPS representative visits the company’s facilities, obtains the information Comments: The company needs to open an account at a commercial bank in order required for affiliation and submits the request to the EPS. Requirements: copy of the to operate. Opening a savings account only takes a few minutes, but opening a identity card of each employee, fill out the form, copy of work contract; when the checking account may take up to three days, because the bank is required to verify employee has family, copy of the civil registration of the offspring and identity card the applicant’s data before approving the account. Each financial entity may have its of the spouse or life partner. own additional requirements for opening an account, such as a minimum deposit amount. In general, a checking account can be opened with a minimum deposit of In August of 2008, a new EPS named Nueva EPS S.A. was created as a result of the COP$100,000, and a savings account can be opened with the equivalent of one legal exceptional transfer of the affiliates of the public-sector EPS ISS, in the framework monthly minimum wage, which is currently COP$496,900. of Decree 055 of 2007. Nueva EPS was established as a healthcare promotion entity under the contributive regime by means of Resolution 371 of April 3, 2008 of the National Health Superintendence. 66 DOING BUSINESS IN COLOMBIA 2010 Procedure 4. Register the company with a family compensation Procedure 9*. Affiliate employees to a severance fund fund (caja de compensación familiar), the National Training Time: 1 day service (SENA) and the Colombian Family Welfare Institute (ICBF) Cost: No cost Time: 10 days Comments: Each employee is free to select the severance fund of his or her choice. Cost: No cost The company submits the documents for affiliation and must deposit every year –on Comments: Once it is registered, the company must pay these payroll-based February 14th– payment of each employee’s severance entitlement. contributions within the first eight days of each month. The contribution is then distributed internally between SENA and ICBF. The registration procedure at a family *This procedure is simultaneous with a previous procedure. compensation fund only takes a few minutes, but the request is subject to evaluation for approval or rejection. STARTING A BUSINESS The documents that must be submitted include: registration form, certificate of existence and legal representation issued by the Chamber of Commerce, photocopy Ibagué, Tolima of the legal representative’s identification card and the payroll list, with copies of the employees’ identification cards and documentation related to their children. Procedure 1. Purchase the company books Decree 3667 of November 8, 2004, establishes that self-liquidation and payment of Time: 1 day the contribution to the Comprehensive Social Security System and extra-fiscal contri- Cost: COP$13,572 [3 books (COP$4,524 per book, 100 pages per book)] butions must be carried out through a sole comprehensive form, and all employers Comments: The company books can be purchased at a commercial establishment must effect the payment of extra-fiscal contributions to the family compensation or from the Chamber of Commerce. funds, the SENA, the ICBF, and ESAP, industrial schools and technical institutes, and the contributions to the Comprehensive Social Security in the locations determined Limited liability companies shall use the following three books: by the administrating entities, within a calendar month following the worked period. 1. Inventory and balance sheet book: An inventory and a general balance must be made when initiating activities and at least once per year to get to know in a clear Procedure 5*. Affiliate the company to an Occupational Risk and concise manner the state of company’s assets and liabilities Management Company (ARP) 2. Ledger book: In this book the operations of the accounts are entered using the Time: 1 day double entry system; this allows the company to summarize on a monthly basis, all its operations for each account Cost: No cost 3. Cash Book - daily: In this book the accounting operations are entered in chrono- Comments: The Occupational Risk Management Company (ARP) insures against logical order, either individually or by summaries not to exceed one month risks due to work accidents and disability due to occupational illnesses. The company must affiliate its employees to a public or private ARP of its choice. The registration Once the company has been registered, its owner, or legal representative must procedure before the ARP takes a few minutes and consists of the presentation of present and request the registry of the commerce books through a letter addressed the form but the coverage begins as of the next day. Monthly payments are also to the Chamber of Commerce, and fill in the respective application form; the duly made by means of the integrated form for social security contributions (PILA). numbered book or pages must be presented. The first page in each book or set of pages should be labeled in pencil in the upper side with the name of the company and function given to each book; the pages must be consecutively numbered and Procedure 6*. Affiliate employees to the public pensions system have no accounting entries. Time: 5 days Cost: No cost Procedure 2. Register the company in the Mercantile Registry, Comments: The company must affiliate its employees to a pension fund, which may obtain the certificate of existence and legal representation, be either the government’s Social Security Institute (ISS) or a private pension fund. register the company’s books and register with the National Tax Employees may select the fund of their choice. The application process to the ISS Authority (DIAN) at the Business Services Center (CAE) of the takes one day and is completed once the appropriate form is submitted. However, Chamber of Commerce the ISS may take, on average, 5 days to confirm the affiliation. An agent from the public pension fund may visit the company and perform the registration procedure. Time: 3 days An agent from the public pension fund may visit the company and perform the Cost: COP$1,521,310 [COP$718,010: departmental registration tax (0.7% of the registration procedure. company’s initial capital); COP$665,000: commercial license (133.92% of the legal minimum monthly wage); COP$83,000: rate for the business establishment; Procedure 7*. Affiliate employees to a private pension fund COP$26,000: registration at the Chamber of Commerce and registration of the docu- ment of incorporation; COP$3,500: certificate of existence and legal representation; Time: 1 day COP$25,800: cost to register the company’s books (COP$8,600 each book)] Cost: No cost Comments: The CAE makes it possible to complete the following procedures simul- Comments: When employees select a private fund, a representative of the fund taneously at a single location: will generally visit the company to assist in filling out the forms and expediting the 1. Register the company and the commercial establishment (if applicable) at the registration process. Mercantile Registry Procedure 8*. Affiliate employees to a mandatory healthcare plan 2. Obtain a copy of the certificate of existence and legal representation Time: 1 day 3. Register the company’s books Cost: No cost 4. Register the company in the Unified Tax Registry (RUT) of the DIAN and obtain the Tax Identification Number (NIT) Comments: The company is required to affiliate its employees to a Mandatory Healthcare Plan (POS) through a Healthcare Promotion Entity (EPS). Each employee The company’s books are submitted to the Chamber of Commerce for the pages has the right to select the EPS of his or her choice, and companies are required to to be subscribed and numbered. A form requesting the books is filled out and the register the employee at the selected EPS. The employee registration process varies amount is paid directly at the cashier booth. If the company completes the company depending on the EPS and the employee’s records. establishment procedure using the website www.crearempresa.com.co, it may at the same time request registration of the books, without having to wait for the company The EPS representative visits the company’s facilities, obtains the information to be registered first. required for affiliation and submits the request to the EPS. Requirements: copy of the identity card of each employee, fill out the form, copy of work contract; when the At the CAE the entrepreneur has the option of drafting the a private incorporation employee has family, copy of the civil registration of the offspring and identity card document through the Internet page www.crearempresa.com.co. Likewise if the he of the spouse or life partner. opts to draft the document personally, he gets assistance so he can further send the documents to the notaries that have agreements with the Chamber of Commerce In August of 2008, a new EPS named Nueva EPS S.A. was created as a result of the of Ibagué. If the procedure is completed through Internet the registration forms are exceptional transfer of the affiliates of the public-sector EPS ISS, in the framework free. of Decree 055 of 2007. Nueva EPS was established as a healthcare promotion entity under the contributive regime by means of Resolution 371 of April 3, 2008 of the National Health Superintendence. LIST OF PROCE %63&4t STARTING A BUSINESS 67 Procedure 3. Open a bank account Procedure 9*. Affiliate employees to a mandatory healthcare plan Time: 1 day Time: 3 days Cost: No cost Cost: No cost Comments: The company needs to open an account at a commercial bank in order Comments: The company is required to affiliate its employees to a Mandatory to operate. Opening a savings account only takes a few minutes, but opening a Healthcare Plan (POS) through a Healthcare Promotion Entity (EPS). Each employee checking account may take up to three days, because the bank is required to verify has the right to select the EPS of his or her choice, and companies are required to the applicant’s data before approving the account. Each financial entity may have its register the employee at the selected EPS. The employee registration process varies own additional requirements for opening an account, such as a minimum deposit depending on the EPS and the employee’s records. amount. In general, a checking account can be opened with a minimum deposit of The EPS representative visits the company’s facilities, obtains the information COP$100,000, and a savings account can be opened with the equivalent of one legal required for affiliation and submits the request to the EPS. Requirements: copy of the monthly minimum wage, which is currently COP$496,900. identity card of each employee, fill out the form, copy of work contract; when the employee has family, copy of the civil registration of the children and identity card of Procedure 4*. Register the company for the payment of Industry the spouse or life partner. and Commerce tax In August of 2008, a new EPS named Nueva EPS S.A. was created as a result of the Time: 1 day exceptional transfer of the affiliates of the public-sector EPS ISS, in the framework Cost: No cost of Decree 055 of 2007. Nueva EPS was established as a healthcare promotion entity under the contributive regime by means of Resolution 371 of April 3, 2008 of the Comments: This procedure constitutes the local fiscal registration. To register, the National Health Superintendence. entrepreneur must obtain an application form at the Municipal Government, fill it out and submit it along with a certificate of existence and legal representation, copy of the RUT and copy of the identification card of the legal representative. Procedure 10*. Affiliate employees to a severance fund Time: 3 days Procedure 5. Register the company with a family compensation Cost: No cost fund (caja de compensación familiar), the National Training Comments: Each employee is free to select the severance fund of his or her choice. Service (SENA) and the Colombian Family Welfare Institute (ICBF) The company submits the documents for affiliation and must deposit every year –on Time: 3 days February 14th– payment of each employee’s severance entitlement. Cost: No cost Comments: Once it is registered, the company must pay these payroll-based *This procedure is simultaneous with a previous procedure. contributions within the first eight days of each month. The contribution is then distributed internally between SENA and ICBF. The registration procedure at a family STARTING A BUSINESS compensation fund only takes a few minutes, but the request is subject to evaluation for approval or rejection. Manizales, Caldas The documents that must be submitted include: registration form, certificate of Procedure 1. Purchase the company books existence and legal representation issued by the Chamber of Commerce, photocopy of the legal representative’s identification card and the payroll list, with copies of the Time: 1 day employees’ identification cards and documentation related to their children. Cost: COP$14,000 [4 books (COP$3,500 per book, COP$35 per page, 100 pages per Decree 3667 of November 8, 2004, establishes that self-liquidation and payment of book)] the contribution to the Comprehensive Social Security System and parafiscal contri- Comments: The company’s books can be purchased at a commercial establishment butions must be carried out through a sole comprehensive form, and all employers or from the Chamber of Commerce. must effect the payment of parafiscal contributions to the family compensation Limited liability companies shall use the following four books: funds, the SENA, the ICBF, and ESAP, industrial schools and technical institutes, and 1. Inventory and balance sheet book: An inventory and a general balance must be the contributions to the Comprehensive Social Security in the locations determined made when initiating activities and at least once per year to get to know in a clear by the administrating entities, within a calendar month following the worked period. and concise manner the state of company’s assets and liabilities 2. Ledger book: In this book the operations of the accounts are entered using the Procedure 6*. Affiliate the company to an Occupational Risk double entry system; this allows the company to summarize on a monthly basis Management Company (ARP) all its operations for each account Time: 3 days 3. Cash Book - daily: In this book the accounting operations are entered in chrono- Cost: No cost logical order, either individually or by summaries not to exceed one month Comments: The Occupational Risk Management Company (ARP) insures against 4. Minutes Book: It could be of two types: Minutes book of shareholder’s meeting risks due to work accidents and disability due to occupational illnesses. The company and minutes’ book of the Board of Directors. The first must be kept by all com- must affiliate its employees to a public or private ARP of its choice. The registration panies, the second only by those companies that have a board of directors. The procedure before the ARP takes a few minutes and consists of the presentation of minutes of the meetings must be recorded in chronological order, and signed by the form but the coverage begins as of the next day. An agent from the public pen- persons designated as secretary and president sion fund may visit the company and perform the registration procedure. Monthly Once the company has been registered, its owner, or legal representative must payments are made through the Comprehensive Form of Liquidation and Contribu- present and request the registry of the commerce books through a letter addressed tions of Social Security (PILA). to the Chamber of Commerce, and fill in the respective application form; the duly numbered book or pages must be presented. The first page in each book or set of Procedure 7*. Affiliate employees to the public pensions system pages should be labeled in pencil in the upper side with the name of the company Time: 9 days and function given to each book; the pages must be consecutively numbered and Cost: No cost have no accounting entries. Comments: The company must affiliate its employees to a pension fund, which may be either the government’s Social Security Institute (ISS) or a private pension fund. Procedure 2. Register the company in the Mercantile Registry, Employees may select the fund of their choice. The application process to the ISS obtain the certificate of existence and legal representation, takes one day and is completed once the appropriate form is submitted. However, register the company’s books and register with the national tax the ISS may take, on average, 9 days to confirm the affiliation. An agent from the authority (DIAN) at the Business Services Center (CAE) of the public pension fund may visit the company and complete the registration procedure. Chamber of Commerce Time: 2 days Procedure 8*. Affiliate employees to a private pension fund Cost: COP$1,533,410 [COP$718,010: departmental registration tax (0.7% of the Time: 3 days company’s initial capital); COP$665,000: commercial license (133.92% of the legal Cost: No cost minimum monthly wage); COP$83,000: commercial establishment fee; COP$3,500: Comments: When employees select a private fund, a representative of the fund registration form; COP$26,000: registration at the Chamber of Commerce and regis- will generally visit the company to assist in filling out the forms and expediting the tration of the public document on company’s incorporation; COP$3,500: certificate registration process. 68 DOING BUSINESS IN COLOMBIA 2010 of existence and legal representation; COP$34,400: cost of registry of the company The EPS representative visits the company’s facilities, obtains the information books (COP$8,600 each book)]. required for affiliation and submits the request to the EPS. Requirements: copy of the Comments: The new CAE located at the Chamber of Commerce of Manizales in identity card of each employee, fill out the form, copy of work contract; when the September, 2007, makes it possible to complete the following procedures simultane- employee has family, copy of the civil registration of the offspring and identity card ously at a single location: of the spouse or life partner. 1. Register the company and the commercial establishment (if applicable) at the In August of 2008, a new EPS named Nueva EPS S.A. was created as a result of the Mercantile Registry exceptional transfer of the affiliates of the public-sector EPS ISS, in the framework of Decree 055 of 2007. Nueva EPS was established as a healthcare promotion entity 2. Obtain a copy of the certificate of existence and legal representation under the contributive regime by means of Resolution 371 of April 3, 2008 of the 3. Register the company’s books National Health Superintendence.. 4. Register the company in the Unified Tax Registry (RUT) of the DIAN and obtain the Tax Identification Number (NIT) Procedure 6*. Affiliate employees to the public pensions system The company’s books are submitted to the Chamber of Commerce for the pages Time: 1 day to be subscribed and numbered. A form requesting the books is filled out and the Cost: No cost amount is paid directly at the cashier booth. The entrepreneur is provided with continuous pages, numbered, marked, and ready to use, or the businessman brings Comments: The company must affiliate its employees to a pension fund, which may with him the numbered pages, marked, and only pays COP$8,600 for registering be either the government’s Social Security Institute (ISS) or a private pension fund. each book. If the company completes the company establishment procedure using Employees may select the fund of their choice. The application process to the ISS the website www.crearempresa.com.co, it may at the same time request registration takes one day and is completed once the appropriate form is submitted. An agent of the books, without having to wait for the company to be registered first. from the public pension fund may visit the company and complete the registration procedure. The entrepreneur may carry out the pre-inscription of the RUT in the website www. crearempresa.com.co, or personally in the Chamber of Commerce CAE terminals, Procedure 7*. Affiliate employees to a private pension fund with the assistance of the officials. The Chamber of Commerce carries out the proce- dure of NIT assignation, and registration for the payment of Industry and Commerce Time: 1 day tax is also immediate in the CAE. Cost: No cost The rates to register a company and commercial establishment, certificates, and ap- Comments: When employees select a private fund, a representative of the fund plication forms are national (Decree 393 of 2002) and correspond to 2009. will generally visit the company to assist in filling out the forms and expediting the registration process. Procedure 3. Open a bank account Time: 1 day Procedure 8*. Affiliate the company to an Occupational Risk Cost: No cost Management Company (ARP) Comments: The company needs to open an account at a commercial bank in order Time: 1 day to operate. Opening a savings account only takes a few minutes, but opening a Cost: No cost checking account may take up to three days, because the bank is required to verify Comments: The Occupational Risk Management Company (ARP) insures against the applicant’s data before approving the account. Each financial entity may have its risks due to work accidents and disability due to occupational illnesses. The company own additional requirements for opening an account, such as a minimum deposit must affiliate its employees to a public or private ARP of its choice. The registration amount. In general, a checking account can be opened with a minimum deposit of procedure before the ARP takes a few minutes and consists of the presentation of COP$100,000, and a savings account can be opened with the equivalent of one legal the form but the coverage begins as of the next day. Monthly payments are made monthly minimum wage, which is currently COP$496,900. through the Comprehensive Form of Liquidation and Contributions of Social Security (PILA). Procedure 4. Register the company with a family compensation fund (caja de compensación familiar), the National Training Procedure 9*. Affiliate employees to a severance fund Service (SENA) and the Colombian Family Welfare Institute (ICBF) Time: 1 day Time: 3 days Cost: No cost Cost: No cost Comments: Each employee is free to select the severance fund of his or her choice. Comments: Once it is registered, the company must pay these payroll-based The company submits the documents for affiliation and must deposit every year –on contributions within the first eight days of each month. The contribution is then February 14th– payment of each employee’s severance entitlement. distributed internally between SENA and ICBF. The registration procedure at a family compensation fund only takes a few minutes, but the request is subject to evaluation *This procedure is simultaneous with a previous procedure. for approval or rejection. The documents that must be submitted include: registration form, certificate of STARTING A BUSINESS existence and legal representation issued by the Chamber of Commerce, photocopy of the legal representative’s identification card and the payroll list, with copies of the Medellín, Antioquia employees’ identification cards and documentation related to their children. Decree 3667 of November 8, 2004, establishes that self-liquidation and payment of Procedure 1. Purchase the company books the contribution to the Comprehensive Social Security System and parafiscal contri- Time: 1 day butions must be carried out through a sole comprehensive form, and all employers Cost: COP$24,000 [4 books (COP$6,000 per book, COP$60 per page, 100 pages per must effect the payment of parafiscal contributions to the family compensation book)] funds, the SENA, the ICBF, and ESAP, industrial schools and technical institutes, and Comments: The company’s books can be purchased at a commercial establishment the contributions to the Comprehensive Social Security in the locations determined or from the Chamber of Commerce. by the administrating entities, within a calendar month following the worked period. Limited liability companies shall use the following four books: Procedure 5*. Affiliate employees to a mandatory healthcare plan 1. Inventory and balance sheet book: An inventory and a general balance must be Time: 1 day made when initiating activities and at least once per year to get to know in a clear and concise manner the state of company’s assets and liabilities Cost: No cost 2. Ledger book: In this book the operations of the accounts are entered using the Comments: The company is required to affiliate its employees to a Mandatory double entry system; this allows the company to summarize on a monthly basis Healthcare Plan (POS) through a Healthcare Promotion Entity (EPS). Each employee all its operations for each account has the right to select the EPS of his or her choice, and companies are required to register the employee at the selected EPS. The employee registration process varies 3. Cash Book - daily: In this book the accounting operations are entered in chrono- depending on the EPS and the employee’s records. logical order, either individually or by summaries not to exceed one month LIST OF PROCE %63&4t STARTING A BUSINESS 69 4. Minutes Book: It could be of two types: Minutes book of shareholder’s meetings Procedure 4. Register the company with a family compensation and minutes’ book of the Board of Directors. The first must be kept by all com- fund (caja de compensación familiar), the National Training panies, the second only by those companies that have a board of directors. The Service (SENA) and the Colombian Family Welfare institute (ICBF) minutes of the meetings must be recorded in chronological order, and signed by the persons designated as secretary president Time: 6 days Once the company has been registered, its owner, or legal representative must Cost: No cost present and request the registry of the commerce books through a letter addressed Comments: Once it is registered, the company must pay these payroll-based to the Chamber of Commerce, and fill in the respective application form; the duly contributions within the first eight days of each month. The contribution is then numbered book or pages must be presented. The first page in each book or set of distributed internally between SENA and ICBF. The registration procedure at a family pages should be labeled in pencil in the upper side with the name of the company compensation fund only takes a few minutes, but the request is subject to evaluation and function given to each book; the pages must be consecutively numbered and for approval or rejection. have no accounting entries. The documents that must be submitted include: registration form, certificate of existence and legal representation issued by the Chamber of Commerce, photocopy Procedure 2. Register the company in the Mercantile Registry, of the legal representative’s identification card and the payroll list, with copies of the obtain the certificate of existence and legal representation, employees’ identification cards and documentation related to their children. register the company’s books and register with the National Tax Decree 3667 of November 8, 2004, establishes that self-liquidation and payment of Authority (DIAN) at the Business Services Center (CAE) of the the contribution to the Comprehensive Social Security System and parafiscal contri- Chamber of Commerce butions must be carried out through a sole comprehensive form, and all employers must effect the payment of parafiscal contributions to the family compensation Time: 4 days funds, the SENA, the ICBF, and ESAP, industrial schools and technical institutes, and Cost: COP$1,657,963 [COP$718,010: departmental registration tax (0.7% of the the contributions to the Comprehensive Social Security in the locations determined company’s initial capital); COP$51,286: departmental pro-development stamp duty by the administrating entities, within a calendar month following the worked period. (0.05% of initial capital); COP$66,267: departmental tax for appointment of legal representative; COP$665,000: commercial license (133.92% of the legal minimum Procedure 5*. Affiliate the company to an Occupational Risk monthly wage); COP$83,000: commercial establishment fee; COP$3,500: registration Management Company (ARP) form; COP$26,000: registration at the Chamber of Commerce and registration of the document of incorporation; COP$3,500: certificate of existence and legal representa- Time: 1 day tion; COP$7,000: assigned company’s registry number; COP$34,400: cost of register- Cost: No cost ing the company’s books (COP$8,600 each book)]. Comments: The Occupational Risk Management Company (ARP) insures against Comments: The CAE located at the Chamber of Commerce of Medellín makes it pos- risks due to work accidents and disability due to occupational illnesses. The company sible to complete the following procedures simultaneously at a single location: must affiliate its employees to a public or private ARP of its choice. The registration 1. Register the company and the commercial establishment (if applicable) at the procedure before the ARP takes a few minutes and consists of the presentation of Mercantile Registry the form but the coverage begins as of the next day. Monthly payments are made through the Comprehensive Form of Liquidation and Contributions of Social Security 2. Obtain a copy of the certificate of existence and legal representation (PILA). 3. Register the company’s books 4. Register the company in the Unified Tax Registry (RUT) of the DIAN and obtain the Procedure 6*. Affiliate employees to the public pensions system Tax Identification Number (NIT) Time: 1 day 5. Registration of Industry and Commerce Cost: No cost 6. Notification of the opening of a business to the correspondent office at the Comments: The company must affiliate its employees to a pension fund, which may Department of Municipal Planning be either the government’s Social Security Institute (ISS) or a private pension fund. 7. Payment of departmental income of Antioquia Employees may select the fund of their choice. The application process to the ISS The company’s books are submitted to the Chamber of Commerce for the pages takes one day and is completed once the appropriate form is submitted. An agent to be subscribed and numbered. A form requesting the books is filled out and the from the public pension fund may visit the company and complete the registration amount is paid directly at the cashier booth. If the company completes the company procedure. establishment procedure using the website www.crearempresa.com.co, it may at the same time request registration of the books, without having to wait for the company Procedure 7*. Affiliate employees to a private pension fund to be registered first. The registration for the payment of industry and commerce tax Time: 1 day is also done immediately at the CAE. Cost: No cost When the company is incorporated by means of a private document, the Chamber Comments: When employees select a private fund, a representative of the fund of Commerce verifies the signatures contained in the document to prevent potential will generally visit the company to assist in filling out the forms and expediting the frauds. registration process. The rates to register a company and commercial establishment, certificates, and ap- plication forms are national (Decree 393 of 2002) and correspond to 2009. Procedure 8*. Affiliate employees to a mandatory healthcare plan The duration of this procedure was reduced because there is more efficiency on the Time: 2 days part of the CAE’s personnel. Cost: No cost Procedure 3. Open a bank account Comments: The company is required to affiliate its employees to a Mandatory Healthcare Plan (POS) through a Healthcare Promotion Entity (EPS). Each employee Time: 1 day has the right to select the EPS of his or her choice, and companies are required to Cost: No cost register the employee at the selected EPS. The employee registration process varies Comments: The company needs to open an account at a commercial bank in order depending on the EPS and the employee’s records. to operate. Opening a savings account only takes a few minutes, but opening a The EPS representative visits the company’s facilities, obtains the information checking account may take up to three days, because the bank is required to verify required for affiliation and submits the request to the EPS. Requirements: copy of the the applicant’s data before approving the account. Each financial entity may have its identity card of each employee, fill out the form, copy of work contract; when the own additional requirements for opening an account, such as a minimum deposit employee has family, copy of the civil registration of the children and identity card of amount. In general, a checking account can be opened with a minimum deposit of the spouse or life partner. COP$100,000, and a savings account can be opened with the equivalent of one legal In August of 2008, a new EPS named Nueva EPS S.A. was created as a result of the monthly minimum wage, which is currently COP$496,900. exceptional transfer of the affiliates of the public-sector EPS ISS, in the framework of Decree 055 of 2007. Nueva EPS was established as a healthcare promotion entity under the contributive regime by means of Resolution 371 of April 3, 2008 of the National Health Superintendence. 70 DOING BUSINESS IN COLOMBIA 2010 Procedure 9*. Affiliate employees to a severance fund Procedure 4. Open a bank account Time: 1 day Time: 1 day Cost: No cost Cost: No cost Comments: Each employee is free to select the severance fund of his or her choice. Comments: The company needs to open an account at a commercial bank in order The company submits the documents for affiliation and must deposit every year –on to operate. Opening a savings account only takes a few minutes, but opening a February 14th– payment of each employee’s severance entitlement. checking account may take up to three days, because the bank is required to verify the applicant’s data before approving the account. Each financial entity may have its own additional requirements for opening an account, such as a minimum deposit *This procedure is simultaneous with a previous procedure. amount. In general, a checking account can be opened with a minimum deposit of COP$100,000, and a savings account can be opened with the equivalent of one legal STARTING A BUSINESS monthly minimum wage, which is currently COP$496,900. Montería, Córdoba Procedure 5*. Obtain a certificate from the fire department Procedure 1. Purchase the company books Time: 1 day Time: 1 day Cost: COP$15,000 Cost: COP$10,500 [3 books (COP$3,500 per book, COP$35 per page, 100 pages per Comments: If the company complies with their safety standards, it can obtain the book)] certificate in one day. Comments: The company’s books can be purchased at a commercial establishment or from the Chamber of Commerce. Procedure 6*. Obtain a land use certificate Limited liability companies shall use the following three books: Time: 2 days 1. Inventory and balance sheet book: An inventory and a general balance must be Cost: COP$70,000 made when initiating activities and at least once per year to get to know in a clear Comments: Obtaining a land use certificate from the municipal authorities is and concise manner the state of company’s assets and liabilities required for operating a business. The entrepreneur requests the land use certificate 2. Ledger book: In this book the operations of the accounts are entered using the from the Planning Secretariat, which sends inspectors to visit the company; then the double entry system; this allows the company to summarize on a monthly basis urban curator issues the certificate. A certificate of existence and legal representa- all its operations for each account tion is required. 3. Cash Book - daily: In this book the accounting operations are entered in chrono- logical order, either individually or by summaries not to exceed one month Procedure 7*. Obtain the sanitation certificate Once the company has been registered, its owner, or legal representative must Time: 2 days present and request the registry of the commerce books through a letter addressed Cost: No cost to the Chamber of Commerce, and fill in the respective application form; the duly Comments: Commercial establishments must comply with specific sanitation re- numbered book or pages must be presented. The first page in each book or set of quirements. To obtain this certificate, the entrepreneur has to present the certificate pages should be labeled in pencil in the upper side with the name of the company of existence and legal representation to the Municipal Health department. and function given to each book; the pages must be consecutively numbered and have no accounting entries Procedure 8*. Register the company for the payment of Industry and Commerce tax Procedure 2. Obtain a Provisional Unified Tax Registry (pre-RUT) Time: 1 day from DIAN Cost: No cost Time: 1 day Comments: This procedure constitutes the local fiscal registration. To register, the Cost: No cost entrepreneur must obtain an application form at the Municipal Government, submit Comments: Before registering the company at the Chamber of Commerce, the the filled out form, and attach a certificate of existence and legal representation, company’s legal representative must go personally to the DIAN’s office to request copy of the RUT and copy of the identification card of the legal representative. a pre-RUT, for which the articles of incorporation of the company are required. The pre-RUT is approved and assigned immediately. If the legal representative cannot go Procedure 9. Register the company with a family compensation personally, he may present this request through a proxy. fund (caja de compensación familiar), the National Training Service (SENA) and the Colombian Family Welfare Institute (ICBF) Procedure 3. Register the company before the Mercantile Registry, obtain the certificate of existence and legal Time: 4 days representation, register the company’s books, and obtain the Cost: No cost Unified tax Registry (RUT) from the Chamber of Commerce Comments: Once it is registered, the company must pay these payroll-based Time: 5 days contributions within the first eight days of each month. The contribution is then distributed internally between SENA and ICBF. The registration procedure at a family Cost: COP$1,524,810 [COP$718,010: departmental registration tax (0.7% of the compensation fund only takes a few minutes, but the request is subject to evaluation company’s initial capital); COP$665,000: commercial license (133.92% of the legal for approval or rejection. minimum monthly wage); COP$83,000: commercial establishment fee; COP$3,500: registration form; COP$26,000: inscription in the Chamber of Commerce and The documents that must be submitted include: registration form, certificate of registration of the document of incorporation; COP$3,500: certificate of existence existence and legal representation issued by the Chamber of Commerce, photocopy and legal representation; COP$25,800: cost of registering the company’s books of the legal representative’s identification card and the payroll list, with copies of the (COP$8,600 each book)]. employees’ identification cards and documentation related to their children. Comments: There are no Business Service Centers (CAEs) in Monteria. Decree 3667 of November 8, 2004, establishes that self-liquidation and payment of the contribution to the Comprehensive Social Security System and parafiscal contri- The procedural steps required from the Chamber of Commerce are: butions must be carried out through a sole comprehensive form, and all employers - Present the format, the letter, and the company’s books before any of the booths must effect the payment of parafiscal contributions to the family compensation - Pay the rights to register the books. A payment received is given with which the funds, the SENA, the ICBF, and ESAP, industrial schools and technical institutes, and company can claim the books the contributions to the Comprehensive Social Security in the locations determined Once the company has been registered, its owner or legal representative, must by the administrating entities, within a calendar month following the worked period. present and request the registry of the commerce books through a letter addressed to the Chamber of Commerce, and fill out the application form; the books or pages duly numbered must also be presented. The first page in each book or set of pages should be labeled in pencil in the upper side with the name of the company and purpose given to each book; the pages must be consecutively numbered and have no accounting entries. The application form for registering the company is filled out by advisors from the Chamber of Commerce, who also provide the NIT. LIST OF PROCE %63&4t STARTING A BUSINESS 71 Procedure 10*. Affiliate the company to an Occupational Risk (0.25% of initial capital); COP$256,432: departmental pro-USCO stamp duty (0.25% of initial capital); COP$512,864: departmental pro-electric energy stamp duty (0.5% Management Company (ARP) of initial capital); COP$512,864: departmental pro-culture stamp duty (0.5% of initial Time: 1 day capital); COP$665,000: commercial license (133.92% of the legal minimum monthly Cost: No cost wage); COP$83,000: commercial establishment fee; COP$3,500: registration form; Comments: The Occupational Risk Management Company (ARP) insures against COP$26,000: registration at the Chamber of Commerce and registration of the public risks due to work accidents and disability due to occupational illnesses. The company document of incorporation; COP$3,500: certificate of existence and legal representa- must affiliate its employees to a public or private ARP of its choice. The registration tion; COP$10,500: purchase cost of the company’s books (3 books, COP$3,500 each, procedure before the ARP takes a few minutes and consists of the presentation of COP$35 per page, 100 pages per book); COP$25,800: registration fee for the books the form but the coverage begins as of the next day. Monthly payments are made (COP$8,600 each book)]. through the Comprehensive Form of Liquidation and Contributions of Social Security Comments: The CAE makes it possible to complete the following procedures simul- (PILA). taneously at a single location: 1. Register the company and the commercial establishment (if applicable) at the Procedure 11*. Affiliate employees to the public pensions system Mercantile Registry Time: 5 days 2. Obtain a copy of the certificate of existence and legal representation Cost: No cost 3. Register the company’s books Comments: The company must affiliate its employees to a pension fund, which may 4. Register the company in the Unified Tax Registry Registration (RUT) of the DIAN be either the government’s Social Security Institute (ISS) or a private pension fund. and obtain the Tax Identification Number (NIT) Employees may select the fund of their choice. The application process to the ISS The rates to register a company and commercial establishment, certificates, and ap- takes one day and is completed once the appropriate form is submitted. However, plication forms are national (Decree 393 of 2002) and correspond to 2009. the ISS may take, on average, 5 days to confirm the affiliation. An agent from the At the CAE, the entrepreneur is helped by an advisor on how to fill out the necessary public pension fund may visit the company and complete the registration procedure. documents to incorporate the company. Fees for registration, national registration tax, and departmental stamp duties are paid at the same booth. Attorneys of the Procedure 12*. Affiliate employees to a private pension fund Chamber of Commerce revise the documents, assign the NIT then provide the certifi- Time: 1 day cate of existence and legal representation. This procedure takes one day if it there is Cost: No cost not a large number of applicants. The Chamber of Commerce sends the information Comments: When employees select a private fund, a representative of the fund of the incorporation and company registration to Municipal, Planning, the Depart- will generally visit the company to assist in filling out the forms and expediting the mental Treasury, Fire Department, Municipal Justice Directorate, Zoonosis, Invima, registration process. There are six private funds operating in the city. and Sayco – Acinpro, for such entities to carry out the corresponding verification visit. The company’s books are submitted to the Chamber of Commerce for the pages Procedure 13*. Affiliate employees to a mandatory healthcare to be subscribed and numbered. A form requesting the books is filled out and the plan amount is paid directly at the cashier booth. If the company completes the company establishment procedure using the website www.crearempresa.com.co, it may at the Time: 2 days same time request registration of the books, without having to wait for the company Cost: No cost to be registered first. Comments: The company is required to affiliate its employees to a Mandatory The Chamber of Commerce began to program a mobile booth that visits zones Healthcare Plan (POS) through a Healthcare Promotion Entity (EPS). Each employee where informal companies are located. A CAE’s report is submitted every six months has the right to select the EPS of his or her choice, and companies are required to to the Municipal Council. They are opening sub-regional CAEs in four cities in Huila. register the employee at the selected EPS. The employee registration process varies depending on the EPS and the employee’s records. Procedure 2. Open a bank account The EPS representative visits the company’s facilities, obtains the information Time: 1 day required for affiliation and submits the request to the EPS. Requirements: copy of the identity card of each employee, fill out the form, copy of work contract; when the Cost: No cost employee has family, copy of the civil registration of the offspring and identity card Comments: The company needs to open an account at a commercial bank in order of the spouse or life partner. to operate. Opening a savings account only takes a few minutes, but opening a In August of 2008, a new EPS named Nueva EPS S.A. was created as a result of the checking account may take up to three days, because the bank is required to verify exceptional transfer of the affiliates of the public-sector EPS ISS, in the framework the applicant’s data before approving the account. Each financial entity may have its of Decree 055 of 2007. Nueva EPS was established as a healthcare promotion entity own additional requirements for opening an account, such as a minimum deposit under the contributive regime by means of Resolution 371 of April 3, 2008 of the amount. In general, a checking account can be opened with a minimum deposit of National Health Superintendence. COP$100,000, and a savings account can be opened with the equivalent of one legal monthly minimum wage, which is currently COP$496,900. Procedure 14*. Affiliate employees to a severance fund Procedure 3. Register the company before a Professional Risk Time: 1 day Management Company (ARP) Cost: No cost Time: 1 day Comments: Each employee is free to select the severance fund of his or her choice. Cost: No cost The company submits the documents for affiliation and must deposit every year –on February 14th– payment of each employee’s severance entitlement. Comments: The Occupational Risk Management Company (ARP) insures against risks due to work accidents and disability due to occupational illnesses. The company must affiliate its employees to a public or private ARP of its choice. The registration *This procedure is simultaneous with a previous procedure. procedure before the ARP takes a few minutes and consists of the presentation of the form but the coverage begins as of the next day. Monthly payments are made STARTING A BUSINESS through the Comprehensive Form of Liquidation and Contributions of Social Security (PILA). Neiva, Huila Procedure 4*. Register the company with a family compensation Procedure 1. Register the company in the Mercantile Registry, fund (caja de compensación familiar), the National Training obtain the certificate of existence and legal representation, Service (SENA) and the Colombian Family Welfare Institute (ICBF) register the company’s books and register with the National Tax Authority (DIAN) at the Business Services Center (CAE) of the Time: 3 days Chamber of Commerce Cost: No cost Time: 1 day Comments: Once it is registered, the company must pay these payroll-based contributions within the first eight days of each month. The contribution is then Cost: COP$3,073,904 [COP$718,010: departmental registry tax (el 0.7% of the initial distributed internally between SENA and ICBF. The registration procedure at a family capital of the company); COP$256,432: departmental pro-development stamp duty compensation fund only takes a few minutes, but the request is subject to evalua- 72 DOING BUSINESS IN COLOMBIA 2010 tion for approval or rejection. Currently there is stronger efficiency and therefore the STARTING A BUSINESS time was reduced in comparison with the time measured in Doing Business Colombia, Pasto, Nariño 2008 report. The documents that must be submitted include: registration form, certificate of Procedure 1. Purchase the company books existence and legal representation issued by the Chamber of Commerce, photocopy Time: 1 day of the legal representative’s identification card and the payroll list, with copies of the employees’ identification cards and documentation related to their children. Cost: COP$21,000 [3 books (COP$7,000 per book, COP$70 per page, 100 pages each book)] Decree 3667 of November 8, 2004, establishes that self-liquidation and payment of the contribution to the Comprehensive Social Security System and parafiscal contri- Comments: The company's books can be purchased from a retail store or from the butions must be carried out through a sole comprehensive form, and all employers Chamber of Commerce. must effect the payment of parafiscal contributions to the family compensation Limited liability company shall use the following three books: funds, the SENA, the ICBF, and ESAP, industrial schools and technical institutes, and 1. Inventory and balance sheet book: An inventory and general balance must be the contributions to the Comprehensive Social Security in the locations determined made when initiating activities and at least once a year to get to know in a clear by the administrating entities, within a calendar month following the worked period. and concise manner the state of the company's assets and liabilities. 2. Main Ledger: All transactions are entered in this book using the double entry sys- Procedure 5*. Affiliate employees to the public pensions system tem, which allows a company to summarize on a monthly basis all its transactions Time: 1 day 3. Cash book - daily: Accounting transactions in chronological order are entered in Cost: No cost this book, individually or summarized, for a maximum of one month Comments: The company must affiliate its employees to a pension fund, which may Once the company or is registered, its owner or legal representative should submit be either the government’s Social Security Institute (ISS) or a private pension fund. and request the registration of the books by means of a letter addressed to the Employees may select the fund of their choice. The application process to the ISS Chamber of Commerce. The first page of each book or sheet should be submit- takes one day and is completed once the appropriate form is submitted. An agent ted labeled (marked) in pencil at the top with the name of the company and the from the public pension fund may visit the company and complete the registration intended use to be given to each book; they must also be numbered consecutively procedure. and contain no accounting records. Procedure 6*. Affiliate employees to a private pension fund Procedure 2. Register the company before the Mercantile Time: 1 day Registry; obtain a copy of the certificate of existence and legal Cost: No cost representation; get the Unified Tax Registry (RUT); register Comments: When employees select a private fund, a representative of the fund the company’s books with the Chamber of Commerce; register will generally visit the company to assist in filling out the forms and expediting the with the National Tax Authority (DIAN) and obtain the Tax registration process. Identification Number (NIT) Time: 5 days Procedure 7*. Affiliate employees to a mandatory healthcare plan Cost: COP$1,319,664 [COP$512,864: departmental registration tax (0.5% of the Time: 1 day company’s initial capital); COP$665,000: commercial license (133.92% of the legal Cost: No cost minimum monthly wage); COP$83,000: commercial establishment fee; COP$3,500: Comments: The company is required to affiliate its employees to a Mandatory registration form; COP$26,000: registration at the Chamber of Commerce and Healthcare Plan (POS) through a Healthcare Promotion Entity (EPS). Each employee registration of the public document on company constitution; COP$3,500: certificate has the right to select the EPS of his or her choice, and companies are required to of existence and legal representation; COP$25,800: cost to register the company’s register the employee at the selected EPS. The employee registration process varies books (COP$8,600 per book)]. depending on the EPS and the employee’s records. Comments: The CAE makes it possible to complete the following procedures simul- The EPS representative visits the company’s facilities, obtains the information taneously at a single location: required for affiliation and submits the request to the EPS. Requirements: copy of the 1. Register the company and the commercial establishment (if applicable) at the identity card of each employee, fill out the form, copy of work contract; when the Mercantile Registry employee has family, copy of the civil registration of the offspring and identity card 2. Obtain a copy of the certificate of existence and legal representation of the spouse or life partner. 3. Register the company’s books In August of 2008, a new EPS named Nueva EPS S.A. was created as a result of the 4. Register the company in Unified Tax Registry (RUT) and obtain the Tax Identifica- exceptional transfer of the affiliates of the public-sector EPS ISS, in the framework tion Number (NIT) of Decree 055 of 2007. Nueva EPS was established as a healthcare promotion entity under the contributive regime by means of Resolution 371 of April 3, 2008 of the The company’s books are submitted to the Chamber of Commerce for the pages National Health Superintendence. to be subscribed and numbered. A form requesting the books is filled out and the amount is paid directly at the cashier booth. If the company completes the company establishment procedure using the website www.crearempresa.com.co, it may at the Procedure 8*. Affiliate employees to a severance fund same time request registration of the books, without having to wait for the company Time: 1 day to be registered first. Cost: No cost The rates to register a company and commercial establishment, certificates and Comments: Each employee is free to select the severance fund of his or her choice. application forms are national (Decree 393 of 2002) and are applicable for the year The company submits the documents for affiliation and must deposit every year –on 2009. Registration for the payment of tax on industry and trade also takes place February 14th– payment of each employee’s severance entitlement. immediately at the CAE. At the CAE the user gets assistance on how to fill out the documentation for the *This procedure is simultaneous with a previous procedure. incorporation of the company. Payments for the registration and the national tax registration are made in the same booth. Attorneys from the Chamber of Commerce revise the documents and then if they are complete, the company gets its NIT and certificate of existence and legal representation. Procedure 3. Open a bank account Time: 1 day Cost: No cost Comments: The company needs to open an account at a commercial bank in order to operate. Opening a savings account only takes a few minutes, but opening a checking account may take up to three days, because the bank is required to verify the applicant’s data before approving the account. Each financial entity may have its own additional requirements for opening an account, such as a minimum deposit LIST OF PROCE %63&4t STARTING A BUSINESS 73 amount. In general, a checking account can be opened with a minimum deposit of In August of 2008, a new EPS named Nueva EPS S.A. was created as a result of the COP$100,000, and a savings account can be opened with the equivalent of one legal exceptional transfer of the affiliates of the public-sector EPS ISS, in the framework monthly minimum wage, which is currently COP$496,900. of Decree 055 of 2007. Nueva EPS was established as a healthcare promotion entity under the contributive regime by means of Resolution 371 of April 3, 2008 of the Procedure 4. Register the company with a family compensation National Health Superintendence. fund (caja de compensación familiar), the National Training Procedure 9*. Affiliate employees to a severance fund Service (SENA) and the Colombian Family Welfare Institute (ICBF) Time: 1 day Time: 10 days Cost: No cost Cost: No cost Comments: Each employee is free to select the severance fund of his or her choice. Comments: Once it is registered, the company must pay these payroll-based The company submits the documents for affiliation and must deposit every year –on contributions within the first eight days of each month. The contribution is then February 14th– payment of each employee’s severance entitlement. distributed internally between SENA and ICBF. The registration procedure at a family compensation fund only takes a few minutes, but the request is subject to evaluation for approval or rejection. *This procedure is simultaneous with a previous procedure. The documents that must be submitted include: Registration form, certificate of existence and legal representation issued by the Chamber of Commerce, photocopy STARTING A BUSINESS of the legal representative’s identification card and the payroll list, with copies of the Pereira, Risaralda employees’ identification cards and documentation related to their children. Decree 3667 of 8 November 2004, states that the self-assessment and payment of Procedure 1. Register the company in the Mercantile Registry, contributions to the Integrated Social Security System (“Sistema de Seguridad Social obtain the certificate of existence and legal representation, Integral“) and parafiscal contributions shall be completed by a single or integrated register the company’s books and register with the National Tax form and all employers shall make parafiscal contributions to the family compensa- tion funds, the SENA, the ICBF, the ESAP, industrial schools, technical institutes, and Authority (DIAN) at the Business Services Center (CAE) of the contributions to integrated social security in the places determined by the adminis- Chamber of Commerce trative bodies within the calendar month following each work period. Time: 3 days Cost: COP$1,551,810 [COP$718,010: departmental registration tax (0.7% of the Procedure 5*. Affiliate the company to an Occupational Risk company’s initial capital); COP$665,000: commercial license (133.92% of the legal Management Company (ARP) minimum monthly wage); COP$83,000: commercial establishment fee; COP$3,500: Time: 1 day registration form; COP$26,000: registration at the Chamber of Commerce and registration of the document of incorporation; COP$3,500: certificate of existence Cost: No cost and legal representation; COP$27,000: purchase cost of the company’s books (3 Comments: The Occupational Risk Management Company (ARP) insures against books, COP$9,000 each, COP$90 per page, 100 pages per book); COP$25,800: cost for risks due to work accidents and disability due to occupational illnesses. The company registering the company’s books (COP$8,600 per book)]. must affiliate its employees to a public or private ARP of its choice. The procedure Comments: Since the inauguration of Pereira’s CAE in September of 2007, proce- for registration with the ARP takes a few minutes and involves the submission of the dures for starting a business at the Chamber of Commerce have been simplified form, but coverage begins from the following day. Monthly payments are also made and streamlined. Personal assistance is provided with forms to obtain the pre-RUT, by means of the integrated form for social security contributions (PILA). to register in the Mercantile Registry, to register before Industry and Commerce, to verify use of land, and to file reports on tax duties to DIAN and to the Municipal Procedure 6*. Affiliate employees to the public pensions system Treasury. The CAE also offers a delivery service for the certificate of existence and Time: 2 days legal representation, the RUT, the industry and commerce forms and the books, for a Cost: No cost total value of COP $ 2,400. Comments: The company must affiliate its employees to a pension fund, which may The company’s books are submitted to the Chamber of Commerce for the pages be either the government’s Social Security Institute (ISS) or a private pension fund. to be subscribed and numbered. A form requesting the books is filled out and the Employees may select the fund of their choice. The application process to the ISS amount is paid directly at the cashier booth. If the company completes the company takes one day and is completed once the appropriate form is submitted. However, establishment procedure using the website www.crearempresa.com.co, it may at the the ISS may take, on average, 2 days to confirm the affiliation. An agent from the same time request registration of the books, without having to wait for the company public pension fund may visit the company and complete the registration procedure. to be registered first. The national tax registration was enacted by means of Act 223 of 1995 and Decree Procedure 7*. Affiliate employees to a private pension fund 650 of 1996. In Pereira there was a negative change in the registration tax, which Time: 1 day rose from 0.3% to 0.7% of the company's initial capital. Cost: No cost Procedure 2. Open a bank account Comments: When employees select a private fund, a representative of the fund will generally visit the company to assist in filling out the forms and expediting the Time: 1 day registration process. Cost: No cost Comments: The company needs to open an account at a commercial bank in order Procedure 8*. Affiliate employees to a mandatory healthcare plan to operate. Opening a savings account only takes a few minutes, but opening a Time: 2 days checking account may take up to three days, because the bank is required to verify Cost: No cost the applicant’s data before approving the account. Each financial entity may have its own additional requirements for opening an account, such as a minimum deposit Comments: The company is required to affiliate its employees to a Mandatory amount. In general, a checking account can be opened with a minimum deposit of Health Plan (POS) through a Healthcare Promotion Entity (EPS). Each employee has COP$100,000, and a savings account can be opened with the equivalent of one legal the right to select the EPS of his or her choice, and companies are required to register monthly minimum wage, which is currently COP$496,900. the employee at the selected EPS. The employee registration process varies depend- ing on the EPS and the employee’s records. Procedure 3. Register the company with a family compensation The EPS representative visits the company’s facilities, obtains the information fund (caja de compensación familiar), the National Training required for affiliation and submits the request to the EPS. Requirements: copy the Service (SENA) and the Colombian Family Welfare Institute (ICBF) identity card of each employee, complete the form, attach a copy of the employ- ment contract; when the employee has family, a copy of the civil registration of the Time: 4 days children and of the identity card of the spouse or permanent companion must be Cost: No cost attached. Comments: Once it is registered, the company must pay these payroll-based contributions within the first eight days of each month. The contribution is then distributed internally between SENA and ICBF. The registration procedure at a family compensation fund only takes a few minutes, but the request is subject to evaluation for approval or rejection. 74 DOING BUSINESS IN COLOMBIA 2010 STARTING A BUSINESS The documents that must be submitted include: registration form, certificate of existence and legal representation issued by the Chamber of Commerce, photocopy Popayán, Cauca of the legal representative’s identification card and the payroll list, with copies of the employees’ identification cards and documentation related to their children. Procedure 1. Purchase the company books Decree 3667 of 8 November 2004, states that the self-assessment and payment of Time: 1 day contributions to the Integrated Social Security System (“Sistema de Seguridad Social Cost: COP$24,000 [6 books (COP$4,000 per book, COP$40 per page, 100 pages each Integral“) and parafiscal contributions shall be completeed by a single or integrated book)] form and all employers shall make parafiscal contributions to the family compensa- tion funds, the SENA, the ICBF, the ESAP, industrial schools, technical institutes, and Comments: The company's books can be purchased from a retail store or from the contributions to integrated social security in the places determined by the adminis- Chamber of Commerce. trative bodies within the calendar month following each work period. Limited liability company shall use the following six books: 1. Inventory and Balance Book: An inventory and general balance sheet must be Procedure 4*. Affiliate the company to an Occupational Risk made at the start of activities and at least once a year to have a clear and com- Management Company (ARP) plete picture of the assets Time: 1 day 2. Main Ledger: All transactions are entered in this book using the double entry Cost: No cost system, which allows for the monthly summary of all the account transactions Comments: The Occupational Risk Management Company (ARP) insures against 3. Cash book - daily: Accounting transactions in chronological order are entered in risks due to work accidents and disability due to occupational illnesses. The company this book, individually or summarized, for a maximum of one month must affiliate its employees to a public or private ARP of its choice. The procedure 4. Minutes Book: It could be of two types: Minutes book of shareholders’ meetings for registration with the ARP takes a few minutes and involves the submission of the and minutes’ book of the Board of Directors. The first must be kept by all com- form, but coverage begins from the following day. Monthly payments are also made panies, the second only by those companies that have a board of directors. The by means of the integrated form for social security contributions (PILA). minutes of the meetings must be recorded in chronological order, and signed by persons designated as secretary and president of the meetings Procedure 5*. Affiliate employees to the public pensions system 5. Book of shareholders: in this are recorded the shares, noting the title, number and Time: 1 day date of registration, and likewise for change of ownership Cost: No cost 6. Subsidiary Ledger: used to record chronologically details of the main accounts, totaling debits, credits and balances that pass at the end of each period to the Comments: The company must affiliate its employees to a pension fund, which may daily and the main ledger, this book need not be registered with the Chamber of be either the government’s Social Security Institute (ISS) or a private pension fund. Commerce Employees may select the fund of their choice. The application process to the ISS takes one day and is completed once the appropriate form is submitted. An agent Once the company has been registered, its owner or legal representative, must from the public pension fund may visit the company and complete the registration present and request the registry of the commerce books through a letter addressed procedure. to the Chamber of Commerce, and fill out the application form; the books or pages duly numbered must also be presented. The first page in each book or set of pages Procedure 6*. Affiliate employees to a private pension fund should be labeled in pencil in the upper side with the name of the company and purpose given to each book; the pages must be consecutively numbered and have Time: 4 days no accounting entries. Cost: No cost Comments Procedure 2. Register the company in the Commercial Registry, When employees select a private fund, a representative of the fund will generally obtain the certificate of existence and legal representation, visit the company to assist in filling out the forms and expediting the registration register the company’s books and register with the national tax process. authority (DIAN) at the Business Services Center (CAE) of the Chamber of Commerce Procedure 7*. Affiliate employees to a mandatory healthcare plan Time: 5 days Time: 2 days Cost: COP$1,550,610 [COP$718,010: departmental registration tax (0.7% of the Cost: No cost company’s initial capital); COP$665,000: commercial license (133.92% of the legal Comments: The company is required to affiliate its employees to a Mandatory minimum monthly wage); COP$83,000: commercial establishment fee; COP$3,500: Health Plan (POS) through a Healthcare Promotion Entity (EPS). Each employee has registration form; COP$26,000: registration at the Chamber of Commerce and the right to select the EPS of his or her choice, and companies are required to register registration of document of incorporation; COP$3,500: certificate of existence and the employee at the selected EPS. The employee registration process varies depend- legal representation; COP$51,600: cost to register the company’s books (COP$8,600 ing on the EPS and the employee’s records. per book)]. The EPS representative visits the company’s facilities, obtains the information Comments: CAE, which was inaugurated in Popayán on March 5th 2008, allows the required for affiliation and submits the request to the EPS. Requirements: copy the following procedures to be completed in one step and at the same place: identity card of each employee, complete the form, attach a copy of the employ- 1. Register the company and the commercial establishment (if applicable) at the ment contract; when the employee has family, a copy of the civil registration of the Mercantile Registry children and of the identity card of the spouse or permanent companion must be 2. Obtain a copy of the certificate of existence and legal representation attached. 3. Register the company’s books In August of 2008, a new EPS named Nueva EPS S.A. was created as a result of the exceptional transfer of the affiliates of the public-sector EPS ISS, in the framework 4. Register the company in the Unified Tax Registry (RUT) and obtain the Tax Identifi- of Decree 055 of 2007. Nueva EPS was established as a healthcare promotion entity cation Number (NIT) under the contributive regime by means of Resolution 371 of April 3, 2008 of the To register the company is necessary to fill out the Unified Business Registration form National Health Superintendence. (Registro Único Empresarial or RUE). The certificate of land use can also be obtained at the CAE. Procedure 8*. Affiliate employees to a severance fund The company’s books are submitted to the Chamber of Commerce for the pages Time: 1 day to be subscribed and numbered. A form requesting the books is filled out and the amount is paid directly at the cashier booth. If the company completes the company Cost: No cost establishment procedure using the website www.crearempresa.com.co, it may at the Comments: Each employee is free to select the severance fund of his or her choice. same time request registration of the books, without having to wait for the company The company submits the documents for affiliation and must deposit every year –on to be registered first. February 14th– payment of each employee’s severance entitlement. The rates to register a company and commercial establishment, certificates and ap- plication forms are national (Decree 393 of 2002) and correspond to the year 2009. *This procedure is simultaneous with a previous procedure. LIST OF PROCE %63&4t STARTING A BUSINESS 75 Procedure 3. Open a bank account Procedure 9*. Affiliate employees to the public pensions system Time: 1 day Time: 3 days Cost: No cost Cost: No cost Comments: The company needs to open an account at a commercial bank in order Comments: The company must affiliate its employees to a pension fund, which may to operate. Opening a savings account only takes a few minutes, but opening a be either the government’s Social Security Institute (ISS) or a private pension fund. checking account may take up to three days, because the bank is required to verify Employees may select the fund of their choice. The application process to the ISS the applicant’s data before approving the account. Each financial entity may have its takes one day and is completed once the appropriate form is submitted. However, own additional requirements for opening an account, such as a minimum deposit the ISS may take, on average, 3 days to confirm the affiliation. An agent from the amount. In general, a checking account can be opened with a minimum deposit of public pension fund may visit the company and complete the registration procedure. COP$100,000, and a savings account can be opened with the equivalent of one legal monthly minimum wage, which is currently COP$496,900. Procedure 10*. Affiliate employees to a private pension fund Time: 1 day Procedure 4*. Obtain certificate from the Fire Department Cost: No cost Time: 15 days Comments: When employees select a private fund, a representative of the fund Cost: COP$22,000 (5% of industry and commerce tax; COP$22,000 is the minimum will generally visit the company to assist in filling out the forms and expediting the fee). registration process. Comments: The interested party provides information on the company to the Popayán’s Fire Department and pays them a fee for the visits or inspection. Procedure 11*. Affiliate employees to a mandatory healthcare plan Procedure 5*. Receive inspection by the Fire Department Time: 1 day Time: 1 day Cost: No cost Cost: No cost Comments: The company is required to affiliate its employees to a Mandatory Comments: The Fire Department’s officials conduct an inspection and provide Health Plan (POS) through a Healthcare Promotion Entity (EPS). Each employee has recommendations to comply with safety standards. the right to select the EPS of his or her choice, and companies are required to register the employee at the selected EPS. The employee registration process varies depend- Procedure 6*. Register the company for payments of Industry ing on the EPS and the employee’s records. and Commercial Tax The EPS representative visits the company’s facilities, obtains the information required Time: 1 day for affiliation and submits the request to the EPS. Requirements: copy the identity Cost: No cost card of each employee, complete the form, attach a copy of the employment contract; when the employee has family, a copy of the civil registration of the children and of Comments: To complete the registry, the entrepreneur must fill out a form provided the identity card of the spouse or permanent companion must be attached. by the Municipal Government, along with a certificate of existence and legal repre- sentation, a copy of the RUT and the identity card of legal representative. In August of 2008, a new EPS named Nueva EPS S.A. was created as a result of the exceptional transfer of the affiliates of the public-sector EPS ISS, in the framework Procedure 7. Register the company with a family compensation of Decree 055 of 2007. Nueva EPS was established as a healthcare promotion entity under the contributive regime by means of Resolution 371 of April 3, 2008 of the fund (caja de compensación familiar), the National Training National Health Superintendence. Service (SENA) and the Colombian Family Welfare Institute (ICBF) Time: 5 days Procedure 12*. Affiliate employees to a severance fund Cost: No cost Time: 1 day Comments: Once it is registered, the company must pay these payroll-based Cost: No cost contributions within the first eight days of each month. The contribution is then Comments: Each employee is free to select the severance fund of his or her choice. distributed internally between SENA and ICBF. The registration procedure at a family The company submits the documents for affiliation and must deposit every year –on compensation fund only takes a few minutes, but the request is subject to evaluation February 14th– payment of each employee’s severance entitlement. for approval or rejection. The documents that must be submitted include: registration form, certificate of existence and legal representation issued by the Chamber of Commerce, photocopy *This procedure is simultaneous with a previous procedure. of the legal representative’s identification card and the payroll list, with copies of the employees’ identification cards and documentation related to their children. STARTING A BUSINESS Decree 3667 of 8 November 2004, states that the self-assessment and payment of Riohacha, La Guajira contributions to the Integrated Social Security System (“Sistema de Seguridad Social Integral“) and parafiscal contributions shall be completeed by a single or integrated Procedure 1. Purchase the company books form and all employers shall make parafiscal contributions to the family compensa- Time: 1 day tion funds, the SENA, the ICBF, the ESAP, industrial schools, technical institutes, and contributions to integrated social security in the places determined by the adminis- Cost: COP$36,000 [3 books (COP$12,000 per book, 100 pages each book)] trative bodies within the calendar month following each work period. Comments: The company's books can be purchased from a retail store or from the Chamber of Commerce. Procedure 8*. Affiliate the company to an Occupational Risk Limited liability company shall use the following three books: Management Company (ARP) 1. Inventory and Balance Book: An inventory and general balance sheet must be Time: 5 days made at the start of activities and at least once a year to have a clear and com- Cost: No cost plete picture of the assets Comments: The Occupational Risk Management Company (ARP) insures against 2. Main Ledger: All transactions are entered in this book using the double entry risks due to work accidents and disability due to occupational illnesses. The company system which allows for the monthly summary of all the account transactions must affiliate its employees to a public or private ARP of its choice. The procedure for 3. Cash book - daily: Accounting transactions in chronological order are entered in registration with the ARP is the submission of the form and coverage commences this book, individually or summarized, for a maximum of one month the following day. Monthly payments are made by means of the integrated form for Once the company or firm is registered, its owner or legal representative should social security contributions (PILA). submit and request the registration of the trade books in a letter to the Chamber of Commerce and fill out the application form concerned, submitting either the books or the appropriately numbered pages. The first page of each book or sheet should be submitted labeled (marked) in pencil at the top with the name of the company and the intended use to be given to each book; they must also be numbered consecu- tively and contain no accounting records. 76 DOING BUSINESS IN COLOMBIA 2010 Procedure 2. Obtain the provisional Unified Tax Registration (pre- compensation fund only takes a few minutes, but the request is subject to evaluation RUT) with DIAN for approval or rejection. Riohacha is small and with fewer users compared to other cities such as Bogota, which facilitates the process. Time: 1 day The documents that must be submitted include: registration form, certificate of Cost: No cost existence and legal representation issued by the Chamber of Commerce, photocopy Comments: Before registering the company before the Chamber of Commerce, the of the legal representative’s identification card and the payroll list, with copies of the company's legal representative must personally request from the DIAN the pre-RUT, employees’ identification cards and documentation related to their children. presenting a certificate of existence and legal representation. The pre-RUT is as- Decree 3667 of 8 November 2004, states that the self-assessment and payment of signed immediately. If the legal representative cannot attend personally, the request contributions to the Integrated Social Security System (“Sistema de Seguridad Social may be presented by a proxy. Integral“) and parafiscal contributions shall be completed by a single or integrated form and all employers shall make parafiscal contributions to the family compensa- Procedure 3. Register the company with the Mercantile tion funds, the SENA, the ICBF, the ESAP, industrial schools, technical institutes, and Registry, obtain a copy of the certificate of existence and legal contributions to integrated social security in the places determined by the adminis- representation, register the company’s books and register the trative bodies within the calendar month following each work period. company before the National Tax Authority DIAN Time: 10 days Procedure 8*. Affiliate the company to an Occupational Risk Cost: COP$1,528,275 [COP$718,010: departmental registration tax (0.7% of the Management Company (ARP) company’s initial capital); COP$665,000: commercial license (133.92% of the legal Time: 1 day minimum monthly wage); COP$83,000: commercial establishment fee; COP$3,500: Cost: No cost registration form; COP$26,000: registration at the Chamber of Commerce and Comments: The Occupational Risk Management Company (ARP) insures against registration of the public document on company constitution; COP$3,500: certificate risks due to work accidents and disability due to occupational illnesses. The company of existence and legal representation; COP$25,800: cost to register the company’s must affiliate its employees to a public or private ARP of its choice. The procedure books (COP$8,600 per book); COP$3,465: for the notaries’ fund]. for registration with the ARP takes a few minutes and involves the submission of the Comments: Business Service centers (CAEs) do not operate in Riohacha. Currently, form, but coverage begins from the following day. Monthly payments are also made there is a single form to register the company, which can be purchased at the by means of the integrated form for social security contributions (PILA). Chamber of Commerce of Riohacha. Once the form is filled out, it is revised by the Chamber of Commerce’s agents. Procedure 9*. Affiliate employees to the public pensions system Once the company or firm is registered, its owner or legal representative should Time: 15 days submit and request the registration of the company’s books by means of a letter ad- dressed to the Chamber of Commerce and fill out an application form. The first page Cost: No cost of each book or sheet should be submitted labeled (marked) in pencil at the top with Comments: The company must affiliate its employees to a pension fund, which may the name of the company and the intended use to be given to each book; they must be either the government’s Social Security Institute (ISS) or a private pension fund. also be numbered consecutively and contain no accounting records. Employees may select the fund of their choice. The application process to the ISS The procedures at the Chamber of Commerce are: takes one day and is completed once the appropriate form is submitted. However, the ISS may take, on average, 15 days to confirm the affiliation. An agent from the - Present the application form and books before any of the authorized booths public pension fund may visit the company and complete the registration procedure. - Pay the fee for registering the books. With the payment receipt, the entrepreneur can claim the books Procedure 10*. Affiliate employees to a private pension fund Advisers from the Chamber of Commerce also assign the NIT. Time: 1 day Cost: No cost Procedure 4. Open a bank account Comments: When employees select a private fund, a representative of the fund Time: 1 day will generally visit the company to assist in filling out the forms and expediting the Cost: No cost registration process. Comments: The company needs to open an account at a commercial bank in order to operate. Opening a savings account only takes a few minutes, but opening a Procedure 11*. Affiliate employees to a mandatory healthcare checking account may take up to three days, because the bank is required to verify plan the applicant’s data before approving the account. Each financial entity may have its Time: 8 days own additional requirements for opening an account, such as a minimum deposit amount. In general, a checking account can be opened with a minimum deposit of Cost: No cost COP$100,000, and a savings account can be opened with the equivalent of one legal Comments: The company is required to affiliate its employees to a Mandatory monthly minimum wage, which is currently COP$496,900. Health Plan (POS) through a Healthcare Promotion Entity (EPS). Each employee has the right to select the EPS of his or her choice, and companies are required to register Procedure 5*. Payment for the certificate of land use the employee at the selected EPS. The employee registration process varies depend- ing on the EPS and the employee’s records. Time: 1 day The EPS representative visits the company’s facilities, obtains the information required Cost: COP$16,563 for affiliation and submits the request to the EPS. Requirements: copy the identity Comments: The payment is made at the bank Banco de Occidente in favor of the card of each employee, complete the form, attach a copy of the employment contract; Municipal Office of Urban Control. when the employee has family, a copy of the civil registration of the children and of the identity card of the spouse or permanent companion must be attached. Procedure 6*. Obtain the land use certificate In August of 2008, a new EPS named Nueva EPS S.A. was created as a result of the Time: 7 days exceptional transfer of the affiliates of the public-sector EPS ISS, in the framework Cost: No cost of Decree 055 of 2007. Nueva EPS was established as a healthcare promotion entity Comments: After having paid at the bank the correspondent value, the office of under the contributive regime by means of Resolution 371 of April 3, 2008 of the Municipal Planning Office issues the certificate. National Health Superintendence. Procedure 7. Register the company with a family compensation Procedure 12*. Affiliate employees to a severance fund fund (caja de compensación familiar), the National Training Time: 1 day Service (SENA) and the Colombian Family Welfare Institute (ICBF) Cost: No cost Time: 2 days Comments: Each employee is free to select the severance fund of his or her choice. Cost: No cost The company submits the documents for affiliation and must deposit every year –on February 14th– payment of each employee’s severance entitlement. Comments: Once it is registered, the company must pay these payroll-based contributions within the first eight days of each month. The contribution is then distributed internally between SENA and ICBF. The registration procedure at a family *This procedure is simultaneous with a previous procedure. LIST OF PROCE %63&4t STARTING A BUSINESS 77 STARTING A BUSINESS Procedure 3. Open a bank account Santa Marta, Magdalena Time: 1 day Cost: No cost Procedure 1. Purchase the company books Comments: The company needs to open an account at a commercial bank in order Time: 1 day to operate. Opening a savings account only takes a few minutes, but opening a Cost: COP$21,000 [6 books (COP$3,500 per book, COP$35 per page, 100 pages each checking account may take up to three days, because the bank is required to verify book)] the applicant’s data before approving the account. Each financial entity may have its Comments: The company's books can be purchased from a retail store or in the own additional requirements for opening an account, such as a minimum deposit Chamber of Commerce. amount. In general, a checking account can be opened with a minimum deposit of Limited liability company shall use the following six books: COP$100,000, and a savings account can be opened with the equivalent of one legal monthly minimum wage, which is currently COP$496,900. 1. Inventory and Balance Book: An inventory and general balance sheet must be made at the start of activities and at least once a year to have a clear and com- plete picture of the assets Procedure 4. Register the company with a family compensation fund (caja de compensación familiar), the National Training 2. Main Ledger: All transactions are entered in this book using the double entry system, which allows for the monthly summary of all the account transactions Service (SENA) and the Colombian Family Welfare Institute (ICBF) 3. Cash book - daily: Accounting transactions in chronological order are entered in Time: 1 day this book, individually or summarized, for a maximum of one month Cost: No cost 4. Minutes Book: It could be of two types: Minutes book of shareholders’ meetings Comments: Once it is registered, the company must pay these payroll-based and minutes’ book of the Board of Directors. The first must be kept by all com- contributions within the first eight days of each month. The contribution is then panies, the second only by those companies that have a board of directors. The distributed internally between SENA and ICBF. The registration procedure at a family minutes of the meetings must be recorded in chronological order, and signed by compensation fund only takes a few minutes, but the request is subject to evaluation persons designated as secretary and president of the meetings for approval or rejection. 5. Book of shareholders: in this are recorded the shares, noting the title, number and The documents that must be submitted include: registration form, certificate of date of registration, and likewise for change of ownership existence and legal representation issued by the Chamber of Commerce, photocopy 6. Subsidiary Ledger: used to record chronologically details of the main accounts, of the legal representative’s identification card and the payroll list, with copies of the totaling debits, credits and balances that pass at the end of each period to the employees’ identification cards and documentation related to their children. daily and the main ledger, this book need not be registered with the Chamber of Decree 3667 of 8 November 2004, states that the self-assessment and payment of Commerce contributions to the Integrated Social Security System (“Sistema de Seguridad Social Once the company or firm is registered, its owner or legal representative should Integral“) and parafiscal contributions shall be completed by a single or integrated request the registration of the books by means of a letter addressed to the Chamber form and all employers shall make parafiscal contributions to the family compensa- of Commerce. The first page of each book or sheet should be submitted labeled tion funds, the SENA, the ICBF, the ESAP, industrial schools, technical institutes, and (marked) in pencil at the top with the name of the company and the intended use to contributions to integrated social security in the places determined by the adminis- be given to each book; they must also be numbered consecutively and contain no trative bodies within the calendar month following each work period. accounting records. Procedure 5*. Affiliate the company to an Occupational Risk Procedure 2. Register the company in the Mercantile Registry, Management company (ARP) obtain the certificate of existence and legal representation, Time: 1 day register the company’s books and register with the National Tax Cost: No cost Authority (DIAN) at the Business Services Center (CAE) of the Comments: The Professional Risk Management Company (ARP) insures against Chamber of Commerce risks due to work accidents and disability due to professional illnesses. The company Time: 2 days must affiliate its employees to a public or private ARP of its choice. The procedure for registration with the ARP takes a few minutes and involves the submission of the Cost: COP$1,565,690 [COP$718,010: departmental registration tax (0.7% of the form, but coverage begins from the following day. Monthly payments are also made company’s initial capital); COP$665,000: commercial license (133.92% of the legal by means of the integrated form for social security contributions (PILA). minimum monthly wage); COP$83,000: commercial establishment fee; COP$3,500: registration form; COP$26,000: registration at the Chamber of Commerce and registration of the public document on company constitution; COP$3,500: certificate Procedure 6*. Affiliate employees to the public pensions system of existence and legal representation; COP$51,600: cost to register the company’s Time: 1 day books (COP$8,600 per book); COP$15,080: sticker value]. Cost: No cost Comments: The CAE makes it possible to complete the following procedures simul- Comments: The company must affiliate its employees to a pension fund, which may taneously at a single location: be either the government’s Social Security Institute (ISS) or a private pension fund. 1. Register the company and the commercial establishment (if applicable) at the Employees may select the fund of their choice. The application process to the ISS Mercantile Registry takes one day and is completed once the appropriate form is submitted. An agent 2. Obtain a copy of the certificate of existence and legal representation from the public pension fund may visit the company and complete the registration procedure. 3. Register the company’s books 4. Register the company in the Unified Tax Registry (“Registro Único Tributario” or Procedure 7*. Affiliate employees to a private pension fund RUT) of the DIAN and obtain the Tax Identification Number (“Número de Identifi- Time: 1 day cación Tributaria” or NIT) Cost: No cost The company’s books are submitted to the Chamber of Commerce for the pages to be subscribed and numbered. A form requesting the books is filled out and the Comments: When employees select a private fund, a representative of the fund amount is paid directly at the cashier booth. If the company completes the company will generally visit the company to assist in filling out the forms and expediting the establishment procedure using the website www.crearempresa.com.co, it may at the registration process. same time request registration of the books, without having to wait for the company to be registered first. Registration for the payment of tax on industry and trade also Procedure 8*. Affiliate employees to a mandatory healthcare plan takes place immediately at CAE. Register with the National Tax Authority (DIAN) and Time: 1 day obtain the Tax Identification Number (NIT). These requests used to be in 2008 sepa- Cost: No cost rate procedures; after the inauguration of CAE in Santa Marta they became one. Comments: The company is required to affiliate its employees to a Mandatory The rates to register a company and commercial establishment, certificates and ap- Health Plan (POS) through a Healthcare Promotion Entity (EPS). Each employee has plication forms are national (Decree 393 of 2002) and correspond to the year 2009. the right to select the EPS of his or her choice, and companies are required to register the employee at the selected EPS. The employee registration process varies depend- ing on the EPS and the employee’s records. 78 DOING BUSINESS IN COLOMBIA 2010 The EPS representative visits the company’s facilities, obtains the information Cost: COP$806,800 [COP$665,000: commercial license (133.92% of the legal required for affiliation and submits the request to the EPS. Requirements: copy the minimum monthly wage); COP$83,000: commercial establishment fee; COP$3,500: identity card of each employee, complete the form, attach a copy of the employ- registration form; COP$26,000: registration at the Chamber of Commerce and ment contract; when the employee has family, a copy of the civil registration of the registration of the public document on company constitution; COP$3,500: certificate children and of the identity card of the spouse or permanent companion must be of existence and legal representation; COP$25,800: cost to register the company’s attached. books (COP$8,600 per book)]. In August of 2008, a new EPS named Nueva EPS S.A. was created as a result of the Comments: Business Service Centers (CAEs) do not currently operate in Sincelejo. exceptional transfer of the affiliates of the public-sector EPS ISS, in the framework Once the company or firm is registered, its owner or legal representative should of Decree 055 of 2007. Nueva EPS was established as a healthcare promotion entity submit and request the registration of the company’s books by means of a letter ad- under the contributive regime by means of Resolution 371 of April 3, 2008 of the dressed to the Chamber of Commerce and fill out an application form. The first page National Health Superintendence. of each book or sheet should be submitted labeled (marked) in pencil at the top with the name of the company and the intended use to be given to each book; they must Procedure 9*. Affiliate employees to a severance fund also be numbered consecutively and contain no accounting records. Time: 1 day The procedures at the Chamber of Commerce are: Cost: No cost - Present the application form and books before any of the authorized booths Comments: Each employee is free to select the severance fund of his or her choice. - Pay the fee for registering the books. With the payment receipt, the entrepreneur The company submits the documents for affiliation and must deposit every year –on can claim the books February 14th– payment of each employee’s severance entitlement. Advisers from the Chamber of Commerce also assign the NIT *This procedure is simultaneous with a previous procedure. Procedure 5. Open a bank account Time: 1 day STARTING A BUSINESS Cost: No cost Sincelejo, Sucre Comments: The company needs to open an account at a commercial bank in order to operate. Opening a savings account only takes a few minutes, but opening a Procedure 1. Purchase the company books checking account may take up to three days, because the bank is required to verify Time: 3 days the applicant’s data before approving the account. Each financial entity may have its own additional requirements for opening an account, such as a minimum deposit Cost: COP$10,500 [3 books (COP$3,500 per book, COP$35 per page, 100 pages each amount. In general, a checking account can be opened with a minimum deposit of book)] COP$100,000, and a savings account can be opened with the equivalent of one legal Comments: The company’s books can be purchased from a retail store or at the monthly minimum wage, which is currently COP$496,900. Chamber of Commerce. Limited liability company shall use the following four books: Procedure 6*. Register the company for the payment of Industry 1. Inventory and Balance Book: An inventory and general balance sheet must be and Commerce Tax made at the start of activities and at least once a year to have a clear and com- Time: 1 day plete picture of the assets Cost: COP$5,000 2. Main Ledger: All transactions are entered in this book using the double entry sys- Comments: This procedure constitutes the local fiscal registration. To register, the tem that allows the company to summarize on a monthly basis all its transactions entrepreneur must obtain an application form at the Municipal Government, fill it 3. Cash book - daily: Accounting transactions in chronological order are entered in out and submit it along with a certificate of existence and legal representation, copy this book, individually or summarized, for a maximum of one month of the RUT and copy of the identification card of the legal representative. Once the company is registered, its owner or legal representative should request the registration of the trade books by means of a letter addressed to the Chamber Procedure 7. Register the company with a family compensation of Commerce. The first page of each book or sheet should be submitted labeled fund (caja de compensación familiar), the National Training (marked) in pencil at the top with the name of the company and the intended use to Service (SENA) and the Colombian Family Welfare Institute (ICBF) be given to each book; they must also be numbered consecutively and contain no Time: 10 days accounting records. Cost: No cost Procedure 2. Obtain the provisional Unified Tax Registration (pre- Comments: Once it is registered, the company must pay these payroll-based RUT) with DIAN contributions within the first eight days of each month. The contribution is then distributed internally between SENA and ICBF. The registration procedure at a family Time: 1 day compensation fund only takes a few minutes, but the request is subject to evaluation Cost: No cost for approval or rejection. Comments: Before registering the company at the Chamber of Commerce, the The documents that must be submitted include: registration form, certificate of company's legal representative must personally request the pre-RUT from the DIAN existence and legal representation issued by the Chamber of Commerce, photocopy presenting the certificate of existence and legal representation of the company. The of the legal representative’s identification card and the payroll list, with copies of the pre-RUT is assigned immediately. If the legal representative cannot do it in person, employees’ identification cards and documentation related to their children. the request may be presented by his proxy. Decree 3667 of 8 November 2004, states that the self-assessment and payment of contributions to the Integrated Social Security System (“Sistema de Seguridad Social Procedure 3*. Payment of departmental registry tax Integral“) and parafiscal contributions shall be completed by a single or integrated Time: 1 day form and all employers shall make parafiscal contributions to the family compensa- Cost: COP$735,310 [COP$718,010: departmental registry tax (0.7% of the company’s tion funds, the SENA, the ICBF, the ESAP, industrial schools, technical institutes, and initial capital); COP$15,800: cost of systematization; COP$1,500: stamp duty in sup- contributions to integrated social security in the places determined by the adminis- port of the University of Sucre]. trative bodies within the calendar month following each work period. Comments: The Department of Sucre hires a private contractor who estimates the amount to be paid. The entrepreneur makes the payment to the bank presenting the Procedure 8*. Affiliate the company to a Professional Risk certificate of existence and legal representation. Management Company (ARP) Time: 1 day Procedure 4. Register the company with the Mercantile Cost: No cost Registry, obtain a copy of the certificate of existence and legal Comments: The Professional Risk Management Company (ARP) insures against representation, register the company’s books and register the risks due to work accidents and disability due to professional illnesses. The company company before the National Tax Authority DIAN must affiliate its employees to a public or private ARP of its choice. The procedure Time: 3 days for registration with the ARP takes a few minutes and involves the submission of the form, but coverage begins from the following day. Monthly payments are also made by means of the integrated form for social security contributions (PILA). LIST OF PROCE %63&4t STARTING A BUSINESS 79 Procedure 9*. Affiliate employees to the public pensions system Once the company or firm is registered, its owner or legal representative should Time: 1 day submit and request the registration of the company’s books by means of a letter ad- dressed to the Chamber of Commerce and fill out an application form. The first page Cost: No cost of each book or sheet should be submitted labeled (marked) in pencil at the top with Comments: The company must affiliate its employees to a pension fund, which may the name of the company and the intended use to be given to each book; they must be either the government’s Social Security Institute (ISS) or a private pension fund. also be numbered consecutively and contain no accounting records. Employees may select the fund of their choice. The application process to the ISS takes one day and is completed once the appropriate form is submitted. An agent Procedure 2*. Payment of departmental registration tax from the public pension fund may visit the company and complete the registration Time: 1 day procedure. Cost: COP$734,610 [COP$718,010: departmental registration tax (0.7% of the initial Procedure 10*. Affiliate employees to a private pension fund capital of the company); COP$16,600 for systematization service] Time: 1 day Comments: The tax is paid at the bank Banco Agrario. It is necessary to present the certificate of existence and legal representation. Cost: No cost Comments: When employees select a private fund, a representative of the fund Procedure 3. Obtain the provisional Unified Tax Registration (pre- will generally visit the company to assist in filling out the forms and expediting the RUT) from DIAN registration process. Time: 1 day Procedure 11*. Affiliate employees to a mandatory healthcare Cost: No cost plan Comments: Before registering the company before the Chamber of Commerce, the Time: 1 day company's legal representative must personally request from the DIAN the pre-RUT, presenting a certificate of existence and legal representation. The pre-RUT is as- Cost: No cost signed immediately. If the legal representative cannot attend personally, the request Comments: The company is required to affiliate its employees to a Mandatory may be presented by a proxy. Health Plan (POS) through a Healthcare Promotion Entity (EPS). Each employee has the right to select the EPS of his or her choice, and companies are required to register Procedure 4. Register the company with the Mercantile the employee at the selected EPS. The employee registration process varies depend- Registry, obtain a copy of the certificate of existence and legal ing on the EPS and the employee’s records. representation, register the company’s books and register the The EPS representative visits the company’s facilities, obtains the information company before the National Tax Authority (DIAN) required for affiliation and submits the request to the EPS. Requirements: copy the identity card of each employee, complete the form, attach a copy of the employ- Time: 6 days ment contract; when the employee has family, a copy of the civil registration of the Cost: COP$824,000 [COP$665,000: commercial license (133.92% of the legal children and of the identity card of the spouse or permanent companion must be minimum monthly wage); COP$83,000: commercial establishment fee; COP$3,500: attached. registration form; COP$26,000: registration at the Chamber of Commerce and In August of 2008, a new EPS named Nueva EPS S.A. was created as a result of the registration of the public document on company constitution; COP$3,500: certificate exceptional transfer of the affiliates of the public-sector EPS ISS, in the framework of existence and legal representation; COP$34,400: cost to register the company’s of Decree 055 of 2007. Nueva EPS was established as a healthcare promotion entity books (COP$8,600 per book)]. under the contributive regime by means of Resolution 371 of April 3, 2008 of the Comments: A Business Service Center (CAE) does not currently operate in Tunja, National Health Superintendence. although there is a project for its implementation. Once the company or firm is registered, its owner or legal representative should Procedure 12*. Affiliate employees to a severance fund submit and request the registration of the company’s books by means of a letter ad- Time: 1 day dressed to the Chamber of Commerce and fill out an application form. The first page of each book or sheet should be submitted labeled (marked) in pencil at the top with Cost: No cost the name of the company and the intended use to be given to each book; they must Comments: Each employee is free to select the severance fund of his or her choice. also be numbered consecutively and contain no accounting records. The company submits the documents for affiliation and must deposit every year –on The procedures at the Chamber of Commerce are: February 14th– payment of each employee’s severance entitlement. - Present the application form and books before any of the authorized booths - Pay the fee for registering the books. With the payment receipt, the entrepreneur *This procedure is simultaneous with a previous procedure. can claim the books Advisers from the Chamber of Commerce also assign the NIT STARTING A BUSINESS Tunja, Boyacá Procedure 5. Open a bank account Time: 1 day Procedure 1. Purchase the company’s books Cost: No cost Time: 1 day Comments: The company needs to open an account at a commercial bank in order Cost: COP$14,000 [4 books (COP$3,500 per book, COP$35 per page, 100 pages per to operate. Opening a savings account only takes a few minutes, but opening a book)] checking account may take up to three days, because the bank is required to verify Comments: The company’s books can be purchased from a retail store or from the the applicant’s data before approving the account. Each financial entity may have its Chamber of Commerce. own additional requirements for opening an account, such as a minimum deposit Limited liability company shall use the following six books: amount. In general, a checking account can be opened with a minimum deposit of COP$100,000, and a savings account can be opened with the equivalent of one legal 1. Inventory and Balance Book: An inventory and general balance sheet must be monthly minimum wage, which is currently COP$496,900. made at the start of activities and at least once a year to have a clear and com- plete picture of the assets Procedure 6*. Payment of the land use certificate 2. Main Ledger: All transactions are entered in this book using the double entry sys- tem, that allows a company to summarize on a monthly basis all its transactions Time: 1 day 3. Cash book - daily: Accounting transactions in chronological order are entered in Cost: COP$8,000 this book, individually or summarized, for a maximum of one month Comments: The entrepreneur must pay for this certificate at any commercial bank. 4. Minutes Book: It could be of two types: Minutes book of shareholders’ meetings The rate is fixed. and minutes’ book of the Board of Directors. The first must be kept by all com- panies, the second only by those companies that have a board of directors. The Procedure 7*. Obtain the land use certificate minutes of the meetings must be recorded in chronological order, and signed by Time: 9 days persons designated as secretary and president of the meetings Cost: No cost 80 DOING BUSINESS IN COLOMBIA 2010 Comments: To complete this procedure the company must present the following: Comments: The company must affiliate its employees to a pension fund, which may 1. A written request addressed to the Office of Municipal Planning providing: the be either the government’s Social Security Institute (ISS) or a private pension fund. company’s name, business, address, telephone number, signature and identity Employees may select the fund of their choice. The application process to the ISS card number of the applicant takes one day and is completed once the appropriate form is submitted. However, the ISS may take, on average, 8 days to confirm the affiliation. An agent from the 2. A photocopy of the most recent payment on property tax public pension fund may visit the company and complete the registration procedure. 3. The certificate of existence and legal representation 4. Duly granted power of attorney when acting by proxy Procedure 13*. Affiliate employees to a private pension fund 5. The regulation of condominiums and developments, if required Time: 1 day 6. The written consent of the landowner or property owner for the development of Cost: No cost the requested activity Comments: When employees select a private fund, a representative of the fund 7. Municipal certificate of good standing will generally visit the company to assist in filling out the forms and expediting the registration process. Procedure 8*. Register the company for the payment of Industry and Commerce Tax Procedure 14*. Affiliate employees to a mandatory healthcare Time: 1 day plan Cost: No cost Time: 3 days Comments: This procedure constitutes the local fiscal registration. To register, the Cost: No cost entrepreneur must obtain an application form at the Municipal Government, fill it Comments: The company is required to affiliate its employees to a Mandatory out and submit it along with a certificate of existence and legal representation, copy Health Plan (POS) through a Healthcare Promotion Entity (EPS). Each employee has of the RUT and copy of the identification card of the legal representative. the right to select the EPS of his or her choice, and companies are required to register the employee at the selected EPS. The employee registration process varies depend- Procedure 9*. Obtain the certificate from the Fire Department ing on the EPS and the employee’s records. Time: 20 days The EPS representative visits the company’s facilities, obtains the information Cost: No cost required for affiliation and submits the request to the EPS. Requirements: copy the Comments: This security control must be completed annually while the company identity card of each employee, complete the form, attach a copy of the employ- exists. The company requests an inspection which takes place within the following ment contract; when the employee has family, a copy of the civil registration of the 10 to 17 days. Then within two to four days after the inspection, the certificate is children and of the identity card of the spouse or permanent companion must be issued. attached. In August of 2008, a new EPS named Nueva EPS S.A. was created as a result of the Procedure 10. Register the company with a family compensation exceptional transfer of the affiliates of the public-sector EPS ISS, in the framework fund (caja de compensación familiar), the National Training of Decree 055 of 2007. Nueva EPS was established as a healthcare promotion entity under the contributive regime by means of Resolution 371 of April 3, 2008 of the Service (SENA) and the Colombian family Welfare institute (ICBF) National Health Superintendence. Time: 1 day Cost: No cost Procedure 15*. Affiliate employees to a severance fund Comments: Once it is registered, the company must pay these payroll-based Time: 1 day contributions within the first eight days of each month. The contribution is then Cost: No cost distributed internally between SENA and ICBF. The registration procedure at a family compensation fund only takes a few minutes, but the request is subject to evaluation Comments: Each employee is free to select the severance fund of his or her choice. for approval or rejection. The company submits the documents for affiliation and must deposit every year –on February 14th– payment of each employee’s severance entitlement. The documents that must be submitted include: registration form, certificate of existence and legal representation issued by the Chamber of Commerce, photocopy of the legal representative’s identification card and the payroll list, with copies of the *This procedure is simultaneous with a previous procedure. employees’ identification cards and documentation related to their children. Decree 3667 of 8 November 2004, states that the self-assessment and payment of STARTING A BUSINESS contributions to the Integrated Social Security System (“Sistema de Seguridad Social Valledupar, Cesar Integral“) and parafiscal contributions shall be completed by a single or integrated form and all employers shall make parafiscal contributions to the family compensa- Procedure 1. Purchase the company books tion funds, the SENA, the ICBF, the ESAP, industrial schools, technical institutes, and contributions to integrated social security in the places determined by the adminis- Time: 1 day trative bodies within the calendar month following each work period. Cost: COP$10,500 [3 books (COP$3,500 per book, COP$35 per page, 100 pages per book)] Procedure 11*. Affiliate the company to a Professional Risk Comments: The company’s books can be purchased from a retail store or at the Management Company (ARP) Chamber of Commerce. Time: 1 day Limited liability company shall use the following three books: Cost: No cost 1. Inventory and Balance Book: An inventory and general balance sheet must be Comments: The Professional Risk Management Company (ARP) insures against made at the start of activities and at least once a year to have a clear and com- risks due to work accidents and disability due to professional illnesses. The company plete picture of the assets must affiliate its employees to a public or private ARP of its choice. The procedure 2. Main Ledger: All transactions are entered in this book using the double entry for registration with the ARP takes a few minutes and involves the submission of the system which allows for the monthly summary of all the account transactions form, but coverage begins from the following day. Monthly payments are made by 3. Cash book - daily: Accounting transactions in chronological order are entered in means of the integrated form for social security contributions (PILA). this book, individually or summarized, for a maximum of one month Once the company or firm is registered, its owner or legal representative should Procedure 12*. Affiliate employees to the public pensions system submit and request the registration of the company’s books by means of a letter ad- Time: 8 days dressed to the Chamber of Commerce and fill out an application form. The first page Cost: No cost of each book or sheet should be submitted labeled (marked) in pencil at the top with the name of the company and the intended use to be given to each book; they must also be numbered consecutively and contain no accounting records. LIST OF PROCE %63&4t STARTING A BUSINESS 81 Procedure 2. Obtain the provisional Unified Tax Registration (pre- Procedure 8. Register the company with a family compensation RUT) from DIAN fund (caja de compensación familiar), the National Training Time: 1 day Service (SENA) and the Colombian Family Welfare Institute (ICBF) Cost: No cost Time: 3 days Comments: Before registering the company at the Chamber of Commerce, the Cost: No cost company's legal representative must personally request the pre-RUT from the DIAN Comments: Once it is registered, the company must pay these payroll-based presenting the certificate of existence and legal representation of the company. The contributions within the first eight days of each month. The contribution is then pre-RUT is assigned immediately. If the legal representative cannot do it in person, distributed internally between SENA and ICBF. The registration procedure at a family the request may be presented by his representative. compensation fund only takes a few minutes, but the request is subject to evaluation for approval or rejection. Procedure 3*. Payment of departmental registry tax The documents that must be submitted include: registration form, certificate of Time: 1 day existence and legal representation issued by the Chamber of Commerce, photocopy Cost: COP$718,010 (el 0.7% of the initial capital of the company). of the legal representative’s identification card and the payroll list, with copies of the employees’ identification cards and documentation related to their children. Comments: The tax is paid at Departmental Government’s office of Cesar. It is neces- sary to present the certificate of existence and legal incorporation. Decree 3667 of 8 November 2004, states that the self-assessment and payment of contributions to the Integrated Social Security System (“Sistema de Seguridad Social Procedure 4. Register the company with the Mercantile Integral“) and parafiscal contributions shall be completed by a single or integrated Registry, obtain a copy of the certificate of existence and legal form and all employers shall make parafiscal contributions to the family compensa- tion funds, the SENA, the ICBF, the ESAP, industrial schools, technical institutes, and representation, register the company’s books and register the contributions to integrated social security in the places determined by the adminis- company before the National Tax Authority (DIAN) trative bodies within the calendar month following each work period. Time: 3 days Cost: COP$806,800 [COP$665,000: commercial registration (133.92% of the Valid Procedure 9*. Affiliate the company to a Professional Risk Monthly Legal Minimum Wage); COP$83,000: commercial establishment fee; Management Company (ARP) COP$3,500: registration form; COP$26,000: registration at the Chamber of Commerce Time: 1 day and registration of the public document on company constitution; COP$3,500: Cost: No cost certificate of existence and legal representation; COP$25,800: cost to register the company’s books (COP$8,600 per book)]. Comments: The Professional Risk Management Company (ARP) insures against risks due to work accidents and disability due to professional illnesses. The company Comments: Business Service Centers (CAEs) do not currently operate in Valledupar. must affiliate its employees to a public or private ARP of its choice. The procedure Once the company or firm is registered, its owner or legal representative should for registration with the ARP takes a few minutes and involves the submission of the submit and request the registration of the company’s books by means of a letter ad- form, but coverage begins from the following day. Monthly payments are made by dressed to the Chamber of Commerce and fill out an application form. The first page means of the integrated form for social security contributions (PILA). of each book or sheet should be submitted labeled (marked) in pencil at the top with the name of the company and the intended use to be given to each book; they must Procedure 10*. Affiliate employees to the public pensions system also be numbered consecutively and contain no accounting records. Time: 5 days The procedures at the Chamber of Commerce are: Cost: No cost - Present the application form and books before any of the authorized booths Comments: The company must affiliate its employees to a pension fund, which may - Pay the fee for registering the books. With the payment receipt, the entrepreneur be either the government’s Social Security Institute (ISS) or a private pension fund. can claim the books Employees may select the fund of their choice. The application process to the ISS Advisers from the Chamber of Commerce also assign the NIT. takes one day and is completed once the appropriate form is submitted. However, the ISS may take, on average, 5 days to confirm the affiliation. An agent from the Procedure 5*. Obtain a land use certificate public pension fund may visit the company and complete the registration procedure. Time: 10 days Cost: No cost Procedure 11*. Affiliate employees to a private pension fund Comments: The certificate is requested from the Office of Municipal Planning, and Time: 1 day the property must be up to date with all taxes. Cost: No cost Comments: When employees select a private fund, a representative of the fund Procedure 6*. Register the company for the payment of Industry will generally visit the company to assist in filling out the forms and expediting the and Commerce Tax registration process. Time: 1 day Cost: No cost Procedure 12*. Affiliate employees to a mandatory healthcare plan Comments: This procedure constitutes the local fiscal registration. To register, the entrepreneur must obtain an application form at the Municipal Government, fill Time: 15 days it out and submit it along with a certificate of existence and legal representation, Cost: No cost copy of the RUT and copy of the identification card of the legal representative. This Comments: The company is required to affiliate its employees to a Mandatory procedure is the local tax registration. Health Plan (POS) through a Healthcare Promotion Entity (EPS). Each employee has the right to select the EPS of his or her choice, and companies are required to register Procedure 7. Open a bank account the employee at the selected EPS. The employee registration process varies depend- Time: 1 day ing on the EPS and the employee’s records. Cost: No cost The EPS representative visits the company’s facilities, obtains the information Comments: The company needs to open an account at a commercial bank in order required for affiliation and submits the request to the EPS. Requirements: copy the to operate. Opening a savings account only takes a few minutes, but opening a identity card of each employee, complete the form, attach a copy of the employ- checking account may take up to three days, because the bank is required to verify ment contract; when the employee has family, a copy of the civil registration of the the applicant’s data before approving the account. Each financial entity may have its children and of the identity card of the spouse or permanent companion must be own additional requirements for opening an account, such as a minimum deposit attached. amount. In general, a checking account can be opened with a minimum deposit of In August of 2008, a new EPS named Nueva EPS S.A. was created as a result of the COP$100,000, and a savings account can be opened with the equivalent of one legal exceptional transfer of the affiliates of the public-sector EPS ISS, in the framework monthly minimum wage, which is currently COP$496,900. of Decree 055 of 2007. Nueva EPS was established as a healthcare promotion entity under the contributive regime by means of Resolution 371 of April 3, 2008 of the National Health Superintendence. 82 DOING BUSINESS IN COLOMBIA 2010 Procedure 13*. Affiliate employees to a severance fund The company’s books are submitted to the Chamber of Commerce for the pages to be subscribed and numbered. A form requesting the books is filled out and the Time: 1 day amount is paid directly at the cashier booth. The employer is given consecutive Cost: No cost pages, numbered, labeled, and ready for use, or the employer brings the pages Comments: Each employee is free to select the severance fund of his or her choice. numbered, marked and only pays COP $ 8,600 for each book registered. If the The company submits the documents for affiliation and must deposit every year –on company completes the company establishment procedure using the website www. February 14th– payment of each employee’s severance entitlement. crearempresa.com.co, it may at the same time request registration of the books, without having to wait for the company to be registered first. *This procedure is simultaneous with a previous procedure. The rates to register a company and commercial establishment, certificates and ap- plication forms are national (Decree 393 of 2002) and correspond to the year 2009. STARTING A BUSINESS Procedure 3. Open a bank account Villavicencio, Meta Time: 1 day Procedure 1. Purchase the company books Cost: No cost Comments: The company needs to open an account at a commercial bank in order Time: 1 day to operate. Opening a savings account only takes a few minutes, but opening a Cost: COP$14,000 [4 books (COP$3,500 per book, COP$35 per page, 100 pages per checking account may take up to three days, because the bank is required to verify book)] the applicant’s data before approving the account. Each financial entity may have its Comments: The company’s books can be purchased from a retail store or from the own additional requirements for opening an account, such as a minimum deposit Chamber of Commerce. amount. In general, a checking account can be opened with a minimum deposit of Limited liability company shall use the following four books: COP$100,000, and a savings account can be opened with the equivalent of one legal 1. Inventory and Balance Book: An inventory and general balance sheet must be monthly minimum wage, which is currently COP$496,900. made at the start of activities and at least once a year to have a clear and com- plete picture of the assets Procedure 4*. Obtain a land use certificate 2. Main Ledger: All transactions are entered in this book using the double entry Time: 7 days system which allows for the monthly summary of all the account transactions Cost: COP$33,540 3. Journal - daily: Accounting transactions in chronological order are entered in this Comments: The certificate can be obtained at no cost by submitting a written book, individually or summarized, for a maximum of one month petition before the Municipal Planning Department. Alternatively, it can also be 4. Minutes Book: It could be of two types: Minutes book of shareholders’ meetings requested and obtained in less time from the urban curator by paying an additional and minutes’ book of the Board of Directors. The first must be kept by all com- fee of approximately COP$33,450. panies, the second only by those companies that have a board of directors. The minutes of the meetings must be recorded in chronological order, and signed by Procedure 5. Register the company with a family compensation persons designated as secretary and president of the meetings fund (caja de compensación familiar), the National Training Once the company or firm is registered, its owner or legal representative should Service (SENA) and the Colombian Family Welfare Institute (ICBF) submit and request the registration of the company’s books by means of a letter ad- Time: 1 day dressed to the Chamber of Commerce and fill out an application form. The first page Cost: No cost of each book or sheet should be submitted labeled (marked) in pencil at the top with Comments: Once it is registered, the company must pay these payroll-based the name of the company and the intended use to be given to each book; they must contributions within the first eight days of each month. The contribution is then also be numbered consecutively and contain no accounting records. distributed internally between SENA and ICBF. The registration procedure at a family compensation fund only takes a few minutes, but the request is subject to evaluation Procedure 2. Register the company in the Mercantile Registry, for approval or rejection. obtain the certificate of existence and legal representation, The documents that must be submitted include: registration form, certificate of register the company’s books and register with the National Tax existence and legal representation issued by the Chamber of Commerce, photocopy Authority (DIAN) at the Business Services Center (CAE) of the of the legal representative’s identification card and the payroll list, with copies of the Chamber of Commerce employees’ identification cards and documentation related to their children. Time: 2 days Decree 3667 of 8 November 2004, states that the self-assessment and payment of Cost: COP$1,841,129 [COP$1,025,729: departmental registration tax (1% of the contributions to the Integrated Social Security System (“Sistema de Seguridad Social company’s initial capital); COP$665,000: commercial license (133.92% of the legal Integral“) and parafiscal contributions shall be completed by a single or integrated minimum monthly wage); COP$83,000: commercial establishment fee; COP$3,500: form and all employers shall make parafiscal contributions to the family compensa- registration form; COP$26,000: registration at the Chamber of Commerce and tion funds, the SENA, the ICBF, the ESAP, industrial schools, technical institutes, and registration of the public document on company constitution; COP$3,500: certificate contributions to integrated social security in the places determined by the adminis- of existence and legal representation; COP$34,400: cost to register the company’s trative bodies within the calendar month following each work period. books (COP$8,600 per book)]. Comments: CAE, which started its operations at the Chamber of Commerce of Vil- Procedure 6*. Affiliate the company to a Professional Risk lavicencio since November of 2007, allows the following procedures to be completed Management Company (ARP) in one step and at the same place: Time: 1 day 1. Register the company and the commercial establishment (if applicable) at the Cost: No cost Mercantile Registry Comments: The Professional Risk Management Company (ARP) insures against 2. Obtain a copy of the certificate of existence and legal representation risks due to work accidents and disability due to professional illnesses. The company 3. Register the company’s books must affiliate its employees to a public or private ARP of its choice. The procedure 4. Register the company in the Unified Tax Registry (“Registro Único Tributario” or for registration with the ARP takes a few minutes and involves the submission of the RUT) of the DIAN and obtain the Tax Identification Number (“Número de Identifi- form, but coverage begins from the following day. Monthly payments are also made cación Tributaria” or NIT) by means of the integrated form for social security contributions (PILA). 5. Register with the Municipal Treasury for payment of the Industry and Commerce Tax Procedure 7*. Affiliate employees to the public pensions system The Chamber also sends a report of newly registered companies to certain entities Time: 1 day such as the Fire Department and the secretariats of: Municipal Health, Finance, Cost: No cost Government, Planning, and Environment, which then visit the companies to verify Comments: The company must affiliate its employees to a pension fund, which may compliance with all the required standards according to the type of activity. be either the government’s Social Security Institute (ISS) or a private pension fund. Employees may select the fund of their choice. The application process to the ISS takes one day and is completed once the appropriate form is submitted. An agent from the public pension fund may visit the company and complete the registration procedure. LIST OF PROCE %63&4t DEALING WITH CONSTRUCTION PERMITS 83 Procedure 8*. Affiliate employees to a private pension fund Comments: The rate to obtain this certificate is fixed, and does not depend on the value of the property. The payment is collected by the Municipal Office of the Trea- Time: 1 day sury (COP$ 8,300 for each certificate + COP$ 1,500 value of the stamp duty in favor Cost: No cost of hospitals (estampilla Pro-hospital) + COP$ 500: value of the stamp duty in favor of Comments: When employees select a private fund, a representative of the fund senior citizens (estampilla Pro-anciano). will generally visit the company to assist in filling out the forms and expediting the The stamp for hospitals and for senior citizens should be obtained at the same booth registration process. of the Municipal Office of the Treasury where the certificate of obtain of no outstand- ing payments on property tax is obtained. Procedure 9*. Affiliate employees to a mandatory healthcare plan Time: 1 day Procedure 4. Payment of pro- development stamp duty Cost: No cost (estampilla pro-desarrollo) to obtain certificate of no outstanding Comments: The company is required to affiliate its employees to a Mandatory payments on property tax Health Plan (POS) through a Healthcare Promotion Entity (EPS). Each employee has Time: 1 day the right to select the EPS of his or her choice, and companies are required to register Cost: COP$1,500 the employee at the selected EPS. The employee registration process varies depend- Comments: It is obtained at the Office of the Departmental Treasury and is required ing on the EPS and the employee’s records. to obtain the certificate of no outstanding payments on property tax. The EPS representative visits the company’s facilities, obtains the information required for affiliation and submits the request to the EPS. Requirements: copy the Procedure 5. Obtain construction license identity card of each employee, complete the form, attach a copy of the employ- Time: 60 days. The minimum term set by Law to complete this procedure is 10 ment contract; when the employee has family, a copy of the civil registration of the business days; the maximum is 45 business days. The term is established to grant the children and of the identity card of the spouse or permanent companion must be neighbors the opportunity to oppose the construction, if they feel affected. attached. Cost: COP$8,330,628. The formula for the calculation of the expenses is the follow- In August of 2008, a new EPS named Nueva EPS S.A. was created as a result of the ing: E=(Cf*i*m)+((Cv*i*j*m)*1.16.) For the case of Armenia is: E = (865,068 x 4 x exceptional transfer of the affiliates of the public-sector EPS ISS, in the framework 0.641) + ((397,520 x 4 x 5.17 x 0.641) x 1.16) of Decree 055 of 2007. Nueva EPS was established as a healthcare promotion entity under the contributive regime by means of Resolution 371 of April 3, 2008 of the Comments: The constructor must present the following documents (Article 18 of National Health Superintendence. Decree 564 of 2006): 1. Copy of the ownership history and no-lien certificate, with an issue date of less Procedure 10*. Affiliate employees to a severance fund than one month prior to the date of the request Time: 1 day 2. The unified national license application form, adopted through Resolution 0984 of 2005 of the Ministry of the Environment, Housing, and Territorial Development Cost: No cost 3. Copy of the certificate of existence and legal representation, with an issue date of Comments: Each employee is free to select the severance fund of his or her choice. less than one month prior to the date of the request The company submits the documents for affiliation and must deposit every year –on February 14th– payment of each employee’s severance entitlement. 4. Copy of the documents or tax statements proving payment of property taxes for the previous five years 5. Drawings with the location. *This procedure is simultaneous with a previous procedure. 6. List of addresses of the neighboring properties. The urban curator will issue two receipts after the approval of the construction license: LIST OF PROCEDURES Costs of the construction works which destination is the urban curator. Dealing with construction permits Cost of the urban boundary tax, which destination is the Municipal Office of the Treasury. Procedure 6. Pay urban boundary tax Armenia, Quindío Time: 1 day. Procedure 1. Obtain the ownership history and no-lien certificate Cost: COP$3,145,175 Time: 1 day Procedure 7. Obtain previous approval for water connection Cost: COP$11,840 services Comments: This certificate (Certificado de Libertad y Tradición) provides the legal information on the property and on its current and previous ownership. The rate Time: 15 days is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter modified by Cost: COP$62,280 Resolution 0035 of 2009. Any individual or legal entity can request this certificate at Comments: The cost is fixed as per Resolution 0386 of July 21of 2009. It is important the Registry Office. to consider that the resolution does not establish a difference in the cost for residen- tial or commercial projects. Procedure 2*. Obtain the certificate of existence and legal The owner of the lot must request a Certificate of Technical and Commercial Require- representation of the Construction Company ments (certificate of availability) from Managerial office of the company EPA ESP, Time: 1 day (simultaneous with procedure 1) and fill out an application form called “Application for Availability of Public Services, Cost: COP$3,500 Water works, and Sanitation,” along with copies of the following documents: Comments: When the parties are limited liability companies, a certificate of legal ex- 1. Location of the lot in the general map of the Agustin Codazzi Geographical istence and representation must be requested from the Chamber of Commerce. This Institute document certifies the existence of the legal entity, indicates its legal representative 2. Informative indication of boundaries and provides information on its registered address, its partners, its capital and the date of establishment. The rate is set according to Decree 393 of 2002. Procedure 8*. Request connection to electricity service Time: 1 day (simultaneous with procedure 7) Procedure 3*. Obtain certificate of no outstanding payments on Cost: No cost property tax Comments: The owner of the lot must request the connection from the service Time: 1 day (simultaneous with procedures 1 and 2) provider company EDEQ SA ESP and attach copy of the following documents: Cost: COP$10,300 1. Filled out application form 2. Ownership history and no-lien certificate 3. Written authorization from the owner of the lot if the applicant is not the owner, and photocopy of the identity card of the owner 84 DOING BUSINESS IN COLOMBIA 2010 Procedure 9*. Obtain telephone connection Procedure 3. Request and obtain certificate of boundaries Time: 3 days (simultaneous with procedures 7 and 10) Time: 15 days Cost: No cost Cost: No cost Comments: A request is submitted to the Planning Office to establish the boundar- Procedure 10. Receive inspection from authorized contractor ies where the construction will take place. The Municipal Planning Office visits the (audit of the grids) property and then issues a document indicating the specifics of the property, curb Time: 30 days and construction. The request must be accompanied by the ownership history and no-lien certificate and the drawings of the project. Article 597 of Municipal Agree- Cost: COP$96,112 ment 003 of 2007 –that amended article 401 of Decree 0154 of 2000, sets forth that Comments: Empresas Públicas de Armenia EPA ESP when performing the supervi- the Secretariat of District Planning must issue this certificate within 10 business days. sion and evaluation of the construction of the hydro-sanitary grids, verify that they comply with the information established in the approved designs, and that the Procedure 4. Obtain construction license connection of the grids is located in the sites defined in the certificate of availability that was issued. Time: 30 days Cost: COP$11,111,836. The formula for calculating the rate is as follows: E = (Cf*i*m) Procedure 11*. Obtain Certification of Compliance with + ((Cv*i*j*m)*1.16). For Barranquilla, is: E = (865,068 x 4 x 0.855) + ((397,520 x 4 x Installation Rules for Final Use and Distribution (hereinafter 5.17 x 0.855) x 1.16) “RETIE certificate”) Comments: The constructor must present the following documents (Article 18 of Decree 564 of 2006): Time: 30 days 1. Copy of the ownership history and no-lien certificate, with an issue date of less Cost: COP$846,800 than one month prior to the date of the request Comments: The cost of the certificate depends on the city. For Armenia it was 2. The unified national license request form, established through Resolution 0984 of provided by the Center for Research and Technological Development CIDET. 2005, issued by the Ministry of the Environment, Housing and Territorial Develop- ment Procedure 12. Final inspection by the service provider company EPA ESP 3. Copy of the Certificate of existence and legal representation, issued less than one month earlier Time: 1 day 4. Copy of the documents or tax statements proving payment of property taxes for Cost: No cost the previous five years Comments: In this case because it is the construction of a two-floor warehouse, the 5. Drawing of the site service of provisional undertaking is discharged and will be the final undertaking. 6. List of the addresses of neighboring properties Thus it has no cost. The constructor requests the final audit of the project to obtain the approval of the hydro-sanitary grids. The service provider company issues the The urban curator reviews the documentation, and two days later indicates the in- certificate of approval and legalizes the meter device before the Commercial Direc- formation that must be posted on a bulletin board that should be placed in a visible torate of the EPA ESP. location at the property. This information may be received by phone. The constructor then installs the bulletin board at the property and sends a scanned image to the Procedure 13*. Obtain connection to electricity service urban curator as proof that the bulletin board was installed. Meanwhile, the urban curator contacts the neighbors and informs them about the construction project; Time: 10 days. if within five business days no objections are made, the urban curator begins the Cost: No cost process of issuing the license. Comments: Within a term no greater than 7 business days, the company EDEQ SA ESP must send an auditor to inspect the site and estimate the cost of the connection. Procedure 5*. Pay urban boundary tax For the company EDEQ to complete the connection, it is necessary to present the Time: 1 day (simultaneous with procedure 4) RETIE certificate. Cost: COP$6,607,740. The rate is calculated as follows: price per square meter (com- mercial use) x square meters x 1.5% = 338,702.12 x 1,300.6 x 1.5%. Resolution 002 of Procedure 14. Final inspection by the Municipal Government 2008 specifies the price per square meter depending on the use to be given to the Time: 1 day property. Cost: No cost Comments: Part of the tax must be paid in advance at the time the license is issued. To this effect, the estimated cost of the construction project is used as the taxable * This procedure is simultaneous with a previous procedure. base. When the project is finished, a statement must be submitted indicating the final taxable base, which is the cost of the project, from which the advance payment is deducted (Municipal Agreement 030 of December 30 of 2008). This regulation DEALING WITH CONSTRUCTION PERMITS causes substantial problems to construction companies, because an initial amount is Barranquilla, Atlántico paid up front, but when the project is finished they must negotiate with the Munici- pal Government the payment or reimbursement of the additional amount, based on Procedure 1. Obtain the ownership history and no-lien certificate the final cost of the project. Time: 1 day Procedure 6. Request and obtain an estimation of costs for Cost: COP$11,840 connection to water service Comments: This certificate (Certificado de Libertad y Tradición) provides the legal information on the property and on its current and previous ownership. The rate Time: 11 days is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter modified by Cost: No cost Resolution 0035 of 2009. Any individual or legal entity can request this certificate at Comments: The construction company makes the request for the connection of the Registry Office. water service either by e-mail (cliente@aaa.com.co) or by fax (3614111), indicat- ing: the property’s address, activity to be performed and drawing of the location. Procedure 2*. Obtain of certificate of existence and legal These documents may be either attached to the e-mail or sent via fax. Based on the representation of the Construction Company request, the service provider company Triple A sends an agent to visit the site and Time: 1 day (simultaneous with procedure 1) estimate the cost of the connection. Cost: COP$3,500 Procedure 7*. Request connection to electricity service Comments: When the parties are limited liability companies, a certificate of legal ex- Time: 15 days (simultaneous with procedure 6) istence and representation must be requested from the Chamber of Commerce. This document certifies the existence of the legal entity, indicates its legal representative Cost: COP$439,000. This cost includes: [COP$202,000: meter + COP$69,000: meter and provides information on its registered address, its partners, its capital and the box + COP$110,000 (11,000 x 10): connection line + COP$58,000: labor]. date of establishment. The rate is set according to Decree 393 of 2002. LIST OF PROCE %63&4t DEALING WITH CONSTRUCTION PERMITS 85 DEALING WITH CONSTRUCTION PERMITS Comments: The connection is requested using a form that is downloaded from the website of the company Electri Caribe. The request should include: the certificate of Bogotá, D. C. existence and legal representation, photocopy of the identification card of the owner of the lot or the legal representative, and the filled-out form. All the information Procedure 1. Obtain the ownership history and no-lien certificate on the documents and steps required to get a connection to electricity service is Time: 1 day posted at the website www.electricaribe.com. Once the required documentation has been submitted and the payment has been made, an appointment is made with the Cost: COP$11,000 client to inspect and review the materials, and a minute on the review is written up Comments: This certificate (Certificado de Libertad y Tradición) provides the legal and signed indicating acceptance by the development engineer, the client, and the information on the property and on its current and previous ownership. The rate engineer in charge of the project. is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter modified by Resolution 0035 of 2009. Any individual or legal entity can request this certificate at Procedure 8*. Obtain a telephone connection the Registry Office. Time: 5 days (simultaneous with procedure 7) Procedure 2. Obtain construction license Cost: No cost Time: 33 days Comments: It may be requested by phone or in person. The cost of the connection is free when a clause of minimum time of service is signed. The client must provide Cost: COP$12,190,529 a photocopy of the Certificate of existence and legal Representation issued no more Comments: The constructor must present the following documents (Article 18 of than 3 months earlier, a photocopy of the identification card of the legal representa- Decree 564 of 2006): tive and the exact address of the warehouse. 1. Copy of the ownership history and no-lien certificate, with an issue date of less than one month prior to the date of the request Procedure 9. Pay connection to water service 2. The unified national license request form, established through Resolution 0984 of Time: 1 day 2005, issued by the Ministry of the Environment, Housing and Territorial Develop- Cost: COP$500,000 ment Comments: This includes the full connection: materials, labor, meter and check 3. Copy of the Certificate of existence and legal representation, issued less than one valve. This cost is an estimate; it may be higher depending on the distance from the month earlier site to the local grid. A few days after the client pays the connection budget at the 4. Copy of the documents or tax statements proving payment of property taxes for offices of Triple A, the company sends the crew to perform the connection. The com- the previous five years pany does not charge for connection rights; it only charges for the connection work. 5. Drawing of the site 6. List of the addresses of neighboring properties Procedure 10*. Obtain RETIE certificate 7. Manifestation whether the project under consideration will be assigned as a Time: 1 day (simultaneous with procedure 9) social interest dwelling. Such evidence must be recorded within the act that Cost: COP$150,000(market price) resolves the license Comments: Before electricity can be connected, the construction company must Article 21 of Decree 564 also establishes these additional documents for construc- submit the RETIE certificate, which is issued by companies authorized to this ef- tion license applications: fect by the Superintendence of Industry and Commerce. The certifying company -Copy of: confirms that the building complies with RETIE rules and issues its opinion on power distribution, transformation and final use. (a) the report of the structural calculations and the structural designs; and of (b) the reports of other nonstructural designs and of geotechnical and soil studies Procedure 11. Obtain connection to water service that determine the stability of the work, elaborated according to the norms in force at the moment of application, duly signed and labeled by professionals Time: 25 days authorized for such purpose Cost: No cost These persons will be legally responsible for the designs and the information in Comments: Triple A generally takes one day to install the final connection, even them though the company says it may take between 10 and 15 business days. On this - Heliographic and magnetic copy of the architectural project, elaborated accord- regard, construction companies report that the times vary significantly, because ing to the architectural and urban planning norms in force at the moment of sometimes they make the connection in 15 days, but other times it takes up to a application, duly signed and labeled by a registered architect who will be legally month. responsible for the design and the information contained therein. Procedure 12*. Obtain connection to electricity service - If the application is presented to a different authority than issued the original license, the interested party will present the previous licenses. Time: 1 day (simultaneous with procedure 11) Decree 1272 (2009) introduces risk based categories to determined the time to Cost: COP$349,526: The cost of connection is COP$174,763 per hour. It is assumed complete this process. The case study analyzed by Doing Business will be Category that it takes two hours. III (Medium 57 complex between 500 sq meters and 2,000 sq meters) and should be Comments: The Service or Account Executive staff member delivers the notification approved by the Curator within 33 days (25 calendar days). However, if it requests indicating the time and hour when the connection will be made. In order to make additional documentation, such requests suspend the 33-day term until the request- the connection, the client must show the RETIE. Other requirements include: ing party presents the additional documents. In addition to the suspension of the 1. Coordination of the works is the responsibility of an on-site electrical engineer, terms explained above, the urban curator may extend the original 35-day term -only who must be accredited by Electri caribe if correctly justified by written resolution- to up to 90 calendar days. If process has no 2. The works will only begin when the representative of Electri caribe is confirmed as delays the "silent is consent" rule will apply and license will be issued in 45 calendar the connection agent days. 3. The construction company’s staff must comply with all work safety rules for the The cost to complete COP$12,190,528 work to be performed and present a copy of the updated company statements of The license cost is calculated by the formula below, defined in Article 108 of Statu- payments to the social security system (ARP, EPS and pensions) tory Decree 564, 2006: E = (Cf*i*m) + (Cv*i*j*m) Procedure 13. Final inspection by the Municipal Government Where: Time: 1 day Cf = fixed charge, according to the use and area: COP$865,068 (including VAT). Cost: No cost Cv = variable charge, according to the use and area: COP$397,520 (formula defined by Article 108 - 80% of minimum salary). *This procedure is simultaneous with a previous procedure. i = use and socioeconomic stratification index, 4 (defined by Article 108). m = town factor, according to market, 0.938 (for Bogotá, according to Article 110). j = Ratio between expenses and square meters, given by the formula assigned in 86 DOING BUSINESS IN COLOMBIA 2010 Paragraph 3, Article 108 of the Statutory Decree 564 of 2006. The variable j is calcu- Procedure 7. Request connection to electricity service lated as 3.8/[0.12+(800/Q)], where Q is the total area in sq. m. Applying this formula, Time: 1 day the "j" ratio is equal to 5.17. Cost: COP$5,000,000 Then, applying the formula to the aforementioned values, the cost of the license (E) Comments: The owner of the lot (or a representative) must request that Codensa would be the following: install the electric utilities by furnishing copies of the following documents: E = (865,068 x 4 x 0.938) + (397,520 x 4 x 5.17 x 0.938 + 16% VAT). - Nomenclature certificate (boletín de nomenclatura) of the plot where the ware- E = 3,245,735 + 8,944,793 house will be located E= 12,190,528 - Certificate of ownership history and no-lien certificate Article 108 of Decree No. 564, 2006, specifies that licenses may not be granted by - Authorization of the plot owner for the service installation request if the owner is the urban curator without the previous payment of any taxes caused by the license not requesting the service directly procedure. Constructor must also pay the urban delimitation and occupation tax (im- - A description of the use that will be given to the warehouse (whether commercial puesto de delineación urbana y ocupación) at the local bank. The fees and taxes must or industrial) be deposited at a designated account held by the district authorities at any bank in Bogotá. Direct costs are those related to materials, labor, and ancillary elements such No later than 20 days after requesting the connection, Codensa must send a service as tools and so forth. Indirect costs relate to fees charged by the architects and the agent that will review the construction and estimate the connection costs. engineers and to ancillary payments related to such honoraria. It does not include costs for taxes, land acquisition, project financing, or utility surcharges. Procedure 8. Receive inspection from authorized contractor Time: 1 day Procedure 3. Pay urban boundary tax Cost: No cost Time: 1 day Comments: No later than 20 days after requesting the connection, Codensa must Cost: COP$22,063,360 send a service agent that will review the construction and estimate the connection Comments: The fees and taxes must be deposited at a designated account held by costs. the district authorities at any bank in Bogotá. Urban delimitation and occupation tax for the warehouse amounts (calculated at a rate of 2.6% over the Minimum building Procedure 9. Obtain electricity service direct completion costs). Time: 11 days Minimum building direct completion costs (MBDCC)* - estimated by DANE (National Cost: No cost Statistics Department): COP$652,461/sq. m. (only direct costs) x 1,300.6 sq. m. = Comments: If the party agrees with the quote (see previous procedure), Codensa COP$905,545,651.38 x 2.6% = COP$22,063,360.19 must complete the installation within 10 days after the installation approval. Gener- ally, it takes 3 days after the party agrees with Condensa’s quote. 58 * MBDCC in 2008 was 696,252 but it was updated by DANE in January 2009 to 652,461. Procedure 10. Obtain a telephone connection This is a one-time payment. Direct costs are those related to materials, labor, and ancillary elements such as tools and so forth. Indirect costs relate to fees charged by Time: 4 days the architects and engineers and to ancillary payments for such honoraria. It does Cost: COP$200.000 not include costs for taxes, land acquisition, project financing, and utility surcharges. Comments: The line may be requested by phone or in person at any of the points of The fees and taxes must be deposited at a designated account held by the district service. In both cases, the party requesting the installation must provide its citizen's authorities at any bank in Bogotá. This tax is payable once the license has been ap- identification number, the information on the exact plot location, and the stratus of proved, and it is a precondition for the delivery of the approved license. If at the end the place where the plot is located. of the construction the actual costs surpass the estimated ones, BuildCo must pay an additional 3% on the difference. Procedure 11. Final inspection by the Municipal Government Time: 1 day Procedure 4. Obtain previous authorization of water connection Cost: No cost service Comments: Through its agents, the mayor’s office (Alcaldía Distrital) is the entity in Time: 10 days charge of monitoring and controlling construction projects in Bogotá. This is true Cost: COP$1,845,300 also of municipal major's offices nationwide for construction projects developed Comments: The owner of the lot (or a representative) must request a water connec- within their jurisdictions. The inspections are carried out to confirm that the con- tion by providing Bogotá’s public water utility (Empresa de Acueducto y Alcantarillado struction is being completed according to the construction license. de Bogotá, EAAB) with copies of the following documents: - Nomenclature certificate (boletín de nomenclatura) of the plot where the ware- *This procedure is simultaneous with other procedures. house will be located - Ownership history and no-lien certificate for the lot DEALING WITH CONSTRUCTION PERMITS - Authorization of the owner of the lot for the installation service request, if the Bucaramanga, Santander owner is not requesting the service directly - Description of the warehouse purpose (whether commercial or industrial). Procedure 1. Obtain ownership history and no-lien certificate According to Resolution 1281 from August 2008 the cost is: COP$1,123,520 for Time: 1 day connection fee and COP$699,120 to install the meters and COP$22,660 for meter verification. EAAB has 21 points of service at the different service centers that the Cost: COP$11,840 local government has established throughout Bogotá Comments: This certificate (Certificado de Libertad y Tradición) provides the legal information on the property and on its current and previous ownership. The rate Procedure 5. Receive inspection from authorized contractor is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter modified by (audit of the grids) Resolution 0035 of 2009. Any individual or legal entity can request this certificate at the Registry Office. Time: 1 day Cost: No cost Procedure 2*. Obtain certificate of existence and legal Comments: EAAB undertakes supervision, control, and evaluation of construction representation of the Construction Company according to regulations. It takes place during the whole construction process Time: 1 day (simultaneous with procedure 1) Cost: COP$3,500 Procedure 6. Obtain connection to water service Time: 10 days Cost: No cost Comments: EAAB undertakes the final inspection LIST OF PROCE %63&4t DEALING WITH CONSTRUCTION PERMITS 87 Comments: When the parties are Limited Liability Companies, the Certificate of exis- Procedure 8. Pay tax for urban zoning and stamp duties pro- tence and legal Representation must be requested from the Chamber of Commerce. Industrial University of Santander (UIS) and pro- Caja de Previsión This document certifies the existence of the legal entity, as well as other aspects such Nacional as its date of incorporation, its expiration date, registered address, partners, capital, legal representative, his or her authorization to enter into deals in the name of the Time: 1 day company, and its line of business. The rates for public registration services are set Cost: COP$751,666. For this type of construction, the urban zoning tax is calculated according to what is established in Decree 393 of 2002. according to the following formula: COP$524 for each m2 of construction + 10% (use and excavation). Procedure 3*. Pay certificate of no outstanding payments on Then: 524 * 1,300.6 m2 = 681,514.4 + 68,151.44 = COP$749,665.84 property tax and no outstanding contribution obligations In addition stamps pro UIS and Caja de Previsión are paid. on property value increases due to public works for the Stamp pro- UIS is paid according to where the project is located: metropolitan area Zoning status 1 and 2: No charge Time: 1 day (simultaneous with procedures 1 and 2) Zoning status 3 and 4: COP$710,600 Cost: COP$14,500[COP$3,100 (certificate of no outstanding payments on property Zoning status 5 and 6: COP$1,421,090 tax) + COP$3,100 (certificate of the legal price estimated for the property) + COP$8,300: (certificate of no outstanding contribution obligation on property value Since the zoning status where commercial development areas for warehouses are increases due to public works for the metropolitan area)]. presently located in Bucaramanga’s perimeter, it is highly probable that the ware- house may be in the zoning status 1 and 7, so there would not be any charge. Comments: The fee for the certificates is paid at a local commercial bank. For the stamp pro-Caja de Prevision Nal COP$ $4 are paid for each 3 m2 of construc- Procedure 4. Obtain certificate of no outstanding payments tion, (1,300 m2) * COP$4/3 m2 = 1,734.33, that is COP$2,000. For the stamp pro-Caja on property tax and no outstanding contribution obligations de Previsión Nacional COP$4 are paid for each 3 m2 (1,300 m2) * COP$4/3 m2 = 1,734.33, that is COP$2,000. on property value increases due to public works for the metropolitan area Comments: Payment can be made both at the urban curator’s office and at the Municipal Government. The procedure is regulated by Agreement 44, of 2008, and Time: 1 day the stamp duties by Municipal Orders 012 of 2005, and 014 of 2008. Cost: No cost Comments: The Municipal Government is the entity in charge of issuing this docu- Procedure 9. Request provisional approval for sewage service ment. Time: 30 days Cost: No cost Procedure 5. Obtain certificate of no outstanding contribution Comments: With the zoning status chart and a form, the property’s owner or its obligations on property value increases due to public works for legal representative requests the service from Santander’s Public Enterprise of Sew- the metropolitan area age System (EMPAS), which verifies and approves its availability; the process includes Time: 1 day an inspection visit. Then all documents with the designs of the internal and external Cost: No cost grids must be also submitted, in order for the company to approve the project. Once Comments: This document certifies that the payments of contributive tariffs for the constructor gets the approval, he presents it before the sewage company. value increase of the property in the metropolitan area is up to date. This procedure The constructor can also apply for a temporary authorization and provisional con- is carried out at the Bucaramanga’s Metropolitan Area Office. nection of water facilities. The process takes 10 days, and the following documents must be submitted: Procedure 6. Obtain construction license 1. Photocopy of the construction license Time: 60 days 2. Legible photocopy of certificate of the company’s existence and legal representa- Cost: COP$9,877,188. The formula for the calculation of the expenses is the follow- tion ing: E=(Cf*i*m)+(Cv*i*j*m), VAT included. For Bucaramanga is: 3. To be duly connected to the sewage system E= (865,068 x 4 x 0,760) + (397,520 x 4 x 5.17 x 0.760 + VAT). These figures coincide When the provisional registration is approved, the certificate that permits to request with the theoretical ones according to the factor applied for this city according to the water works system is also issued. Decree 564 de 2006. Comments: The constructor must submit the following documents (Article 18 of Procedure 10*. Receive inspection for electricity connection Decree 564 of 2006): Time: 10 days (simultaneous with procedure 9) 1. Copy of the ownership history and no-lien certificate, with an issue date no later Cost: No cost than one month prior to the date of the request Comments: The following documents are annexed for this purpose: Once the 2. The unified national license request form, established through Resolution 0984 of service availability is approved, information on the project must be submitted for its 2005, issued by the Ministry of the Environment, Housing and Territorial Develop- revision and approval. ment 1. Plan of electricity installation at half tension (HT) MT (70x100cm) 3. Copy of the existence and legal representation certificate, with an issue date of 2. Plan of electricity installation at low tension (LT) BT (50x70cm) less than one month prior to the date of the request 3. Approved service availability 4. Copy of the documents or tax statements proving payment of property taxes for 4. Photocopy of professional license of engineer responsible for the electricity plan the previous five years 5. Licenses and permits (free accesses, grid connections, etc.) 5. Drawing of the site and identification of the property 6. List of the addresses of neighboring properties Procedure 11*. Obtain a telephone connection Procedure 7. Obtain bulletin of properties’ numbers and Time: 8 days (simultaneous with procedures 9 and 10) addresses (Boletín de nomenclatura) Cost: No cost Time: 1 day Comments: The company mostly used is TeleBucaramanga ESP. The connection is requested and the company sends the contract or clause that must be filled out with Cost: COP$42,150 (fee for a warehouse) the nomenclature bulletin and a photocopy of the certificate of existence and legal Comments: This procedure is regulated by article 172 of Agreement 44, 2008. The representation. tariff is based on the contribution (tasa) of urban nomenclature, which originates The company receives these documents, and within the following 5 or 8 days the in the assignment of properties’ identification numbers and addresses. It may be service is installed. This has no charges, but for the monthly fee that is paid according obtained through request before the urban curator’s Office (Article 9 of Agreement to the selected telephone plan. 017, 1990). 88 DOING BUSINESS IN COLOMBIA 2010 Procedure 12. Request provisional authorization for the Procedure 17. Obtain electricity connection connection to water service Time: 15 days (simultaneous with procedure 16) Time: 20 days Cost: COP$92,000: Cost according to zoning status Cost: COP$120,000 (It corresponds to the cost of the measuring meter device) Comments: This procedure corresponds to the legalization of the measuring meter Comments: The first step is to request availability; to do so the availability request device and final submittal of grid. Once the revision of the previous connection is ap- form and the zoning status chart must be submitted. proved, the service request forms must be submitted, and the following documents Once the service availability is approved, the property’s owner – or the legal repre- must be annexed: sentative – requests the connection to the Bucaramanga’s Metropolitan Water works 1. Electricity plan approved by the company (MB), annexing the following documents: 2. Copy of service availability (signed with approval of connection revision) 1. The real estate nomenclature bulletin 3. Statement of compliance of RETIE 2. License to intervene the public space 4. Documents to identify user and site 3. Sewage authorization letter (provisional registration) 5. The site’s nomenclature bulletin 4. Certificate of ownership history and no-lien certificate 6. Certificate of existence and legal representation 5. Certificate of existence and legal representation of the company 7. Certificate of ownership history no-lien certificate Once the request is submitted, the water works company studies the project and 8. Service request form approves a temporary measuring meter device. This procedure takes around 10 to 9. Payment of connection charges 15 days, time during which AMB officers visit the site and revise the specifics of the project. 10. Concept of inspection authority Once the above requirements are met, the user is authorized to connect to the grid Procedure 13. Revision and legalization of definite registration in the service availability form. for sewage system Procedure 18. Final inspection by the Municipal Government Time: 15 days Time: 6 days Cost: COP$296,100 (Connection rights according to zoning status) Cost: No cost Comments: Once construction works are finished, the legalization of the definite registration is requested. The annexes to the application are: Comments: For the final inspection and to accept construction by the Municipal Government, the public utilities connection certificate is requested. 1. Photocopy of the nomenclature bulletin 2. Sewage system master plan *This procedure is simultaneous with a previous procedure 3. Original minutes and two copies – at external project coordination the digital files are supplied DEALING WITH CONSTRUCTION PERMITS 4. Construction works infrastructure receipt of intervention of public space 5. Stability insurance policy in favor of EMPAS for 20% of the cost of the works and Cali, Valle Del Cauca for a minimum of 5 years 6. If grids go through other owners’ sites, a legalized copy of the deed of constitu- Procedure 1. Obtain ownership history and no-lien certificate tion of the easement must be submitted Time: 1 day 7. Construction works must be finished. Cost: COP$11,840 8. The sewage system must be duly connected. Comments: This certificate provides the legal information on the property and on 9. Payment of connection rights depending on the zoning status. its current and previous ownership. The rate is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter as amended by Resolution 0035 of 2009. Any individual Procedure 14. Revision and legalization of definite water or legal entity can request the issue of an ownership history and no-lien certificate of a property at the Registry Office. connection Time: 1 day Procedure 2*. Obtain of certificate of existence and legal Cost: COP$744,257 [(COP$864,257 (cost of registration) - COP$120,000 (cost of representation of the Construction Company measuring meter device already paid for)] Time: 1 day (simultaneous with procedure 1) Comments: When the project is finished, legalization of measuring meter device is Cost: COP$3,500 carried out by paying registration and attaching certification of existence of definite sewage system issued by EMPAS. Comments: When the parties are Limited Liability Companies, the Certificate of exis- tence and legal Representation must be requested from the Chamber of Commerce. Procedure 15*. Obtain RETIE certificate This document certifies the existence of the legal entity, as well as other aspects such as its date of incorporation, its expiration date, registered address, partners, capital, Time: 5 days legal representative, his or her authorization to enter into deals in the name of the It is the time it takes between application and visit to issue certification. company, and its line of business. The rates for public registration services are set Cost: COP$1,000,000.The cost is subject to competition between certifying compa- according to what is established in Decree 393 of 2002. nies. According to Decree 1272 of 2009, in cities with over 500,000 inhabitants where Comments: This procedure is applied according to what is set by Resolution CREG virtual consultation services exist, the urban curator must verify on line the docu- 070 of1998. ments for application of urban license, including the certificate of existence and legal representation. Procedure 16. Final inspection of electricity grids Time: 1 day Procedure 3*. Pay stamp duty and submit receipt of payment on Cost: COP$54,000 (according to zoning status) property tax Comments: Once the construction’s electricity installation is finished, procedure for Time: 1 day (simultaneous with procedures 1 and 2) the revision of the connection must be carried out, and corresponding payments Cost: COP$3,000 [Cost of procedure is the same as the cost of the stamps COP$1,000 must be made. (stamp pro-development) + COP$1,500(stamp pro-hospitals) + COP$500 (stamp At the moment the revision application is made, the certified license of the profes- pro-Valle University)] sional in charge of the electricity installation must be submitted, together with the Comments: If the person has already paid the property tax, they submit his pay- certificate of compliance with RETIE, the format of availability of service, and the ment receipt together with payment of stamps. It is a simple and fast procedure. payment receipt for the revision of the connection. LIST OF PROCE %63&4t DEALING WITH CONSTRUCTION PERMITS 89 Procedure 4. Apply for and obtain boundary’s certificate Procedure 8. Pay urban boundary tax Time: 25 days Time: 1 day Cost: COP$55,900 [An initial payment is made for COP$24,000, depending on the Cost: COP$1,527,223. [C = m2 * cost of m2 * 1.5% = 1.5% * 1,300.6 * 78,283 (The zoning status (zoning status 4). To obtain the boundary’s certificate, payment is cost of the m2 is based on Resolution 214, 1999 and, in this case “type 4 industrial made according to zoning status and the number of linear meters between the warehouse for storing” is used)] construction site and the by-way. The additional cost would be COP$30,000 plus the Comments: The urban curator revises and determines the amount to be paid pro-urban development stamp, COP$1,000] corresponding to the urban boundary tax based on Resolution 214 of 1999. The Comments: According to Decree 419, 1999 and Territorial Ordering Plan (Agreement payment receipt is attached to the license documents. This procedure is carried out 069) “POT”, first the user has to come to the booth on the 11th floor of CAM Munici- during the license application process. According to constructors, the said resolution pal Government Tower, where they request a form to be filled out with all the data is outdated and, therefore, the amounts to be paid to calculate the m2 are obsolete. regarding the site and the applicant. He drafts a map or plan where the site’s refer- For this procedure it is necessary to: ence points are described to facilitate and speed up its location, be that visiting the 1. Obtain the outlining form at the Municipal Treasury office property or on the plan; annexed is the ownership history and no-lien certificate of the property with the property’s boundaries. Receipt of documents is only on the 11 2. Fill out the form according to the liquidation table floor of the Municipal Government on Tuesdays and Thursdays from 8 a.m. to 12 p.m. 3. Pay the tax at the municipal Treasury office Once these steps are met, applicant can request an answer on Tuesdays or Thursdays 4. Submit the form already paid at the Cadastral office located in the basement of from 2 to 5 p.m. in the booth. If it is a favorable answer a second receipt must be paid the Treasury office for which they will get at the booth and it varies according to the linear meters that the property has in its front area. Procedure 9. Request and obtain the fire department certificate, and submit hydro sanitary designs and fire prevention grids Procedure 5. Request and obtain land use certificate Time: 15 days Time: 35 days Cost: COP$417,739 (COP$200 per m2 of constructed area plus VAT to obtain a Cost: COP$7,500 (Fixed cost) provisional certificate. To obtain the final certificate the payment is for COP$100,000 Comments: The land use certificate determines whether the POT allows the project plus VAT). to be constructed on that property. Comments: The document with the hydro sanitary designs and the fire protection This procedure is not common for housing developments, but it is required for the grids is submitted together with the plans and design memory. The Fire department construction of industrial or commercial projects (Law 232 of 1995). Initially users inspects compliance with safety standards and with the rules to prevent fires and come to the booth on the 11 floor of the Municipal Government Tower, where they then approves the design for the fire protection system. This procedure can start request a form that is filled out with their personal data and the site where the before obtaining the construction license, but its completion is a pre-requisite to ob- economic activity is to take place. Then they annex original and copy of the payment tain authorization for utilities connections. The certificate is issued by the Safety and receipt of property tax. After payment is made, they return to the booth on the 11 Projects Department of Cali’s Volunteer Fire Department which verifies compliance floor of the Municipal Government and hand in the documents, which are received with these minimum standards: only on Mondays, Wednesdays and Fridays from 8 a.m. to 12m. 1. Have devices for protection from fires: extinguishers 2. Set up exits and emergency pathways Procedure 6. Obtain construction license 3. Have proper standards for handling fuels, gasoline, oil, gas, etc Time: 28 days 4. Set up adequate warning signs i.e. Danger, No smoking, High Voltage, Emergency Cost: COP$12,190,529. The formula for the calculation of the expenses is the follow- Exit, etc ing: E=(Cf*i*m)+(Cv*i*j*m) VAT included. For Cali the figures are: E = (865,068 x 4 x 0.938) + (397,520 x 4 x 5.17 x 0.938+VAT). 5. Proper fire protection equipment Comments: The constructor must submit the following documents (Article 18 of 6. Contingency plans Decree 564 of 2006): Procedure 10. Obtain fire department certificate after testing 1. Copy of the ownership history and no-lien certificate, with an issue date no later than one month prior to the date of the request hydraulic grids 2. The unified national license request form, established through Resolution 0984 of Time: 1 day 2005, issued by the Ministry of the Environment, Housing and Territorial Develop- Cost: COP$1,160,000 (COP$1,000,000 plus VAT). ment Comments: After an inspection from the fire department, Siamesas must approve 3. Copy of the ownership history and no-lien certificate, with an issue date of less the grids designs for fire prevention. than one month prior to the date of the request 4. Copy of the documents or tax statements proving payment of property taxes for Procedure 11*. Obtain previous authorization for connection to the previous five years water service 5. Drawing of the site and identification of the property Time: 20 days (simultaneous with procedure 9) 6. List of the addresses of neighboring properties Cost: COP$540,000 [COP$90,000(measuring meter device),+ COP$9,000 (calibration) In cities with more than 500,000 inhabitants where virtual means of technological + COP$320,000 (materials general grids) + COP$120,000 (labor)] consultation or electronic information is easy, the urban curator, must verify on line Comments: An inspector from the water work company visits the site and submits that the information registered in the system correspond to the documents provided a report to EMCALI’s technical area. The constructor then makes an estimate for the by the constructor. costs of the general grid, labor and tests for the measuring meter device. Procedure 7. Pay and obtain assignment of nomenclature Procedure 12*. Request connection to electricity service Time: 1 day Time: 1 day (simultaneous with procedure 11) Cost: COP$140,500: fixed fee Cost: No cost Comments: At the moment of the issuance of the urbanism and construction Comments licenses, the three urban curators in the city send the projects to the Sub-directorate It is necessary to get a transformer only if the construction disrupts electricity of Urban Ordering of the Planning Department so that the latter assigns the prop- charges in the area. erty’s nomenclature (number and address). Users go to booth 11 of the Municipal Government Tower to submit the following documents: Procedure 13*. Obtain a telephone connection 1. Memorandum from the urban curator making the request Time: 7 days 2. Bordering lines or basic scheme Cost: No cost 3. Architecture drawings which must have: areas chart, block location, specifying the Comments: Telephone connection is a simple process. One can call the telephone location of the site with its nomenclature and by-ways crossings, and the domicile company to request the service. If the constructor is already a customer or if a year- address of two neighbors next to the left and right side of the property contract is signed, the telephone connection has no charge. 90 DOING BUSINESS IN COLOMBIA 2010 Procedure 14. Inspection by EMCALI to approve the construction Pursuant to Decree 1272 of 2009, in cities with over 500,000 inhabitants where there are technological means for on line consultations, urban curator must verify That the and authorize the water connection information registered in the system corresponds to the documents and certificates Time: 1 day provided by the constructor, Cost: No cost Comments: At the end of the construction works, the project is submitted for Procedure 3*. Obtain certificate of no outstanding payments on final approval, the provisional connection is dismantled and the definite one is property tax authorized. Time: 1 day (simultaneous with procedures 1 and 2) Cost: No cost. Procedure 15. Obtain water connection service Comments: The certificate is issued only if the constructor is up to date with his Time: 1 day payments. Cost: No cost Comments: On the day it is installed a final revision is effected. In the case of large Procedure 4. Pay certificate of no outstanding contribution construction projects the inspections are carried out later. obligation on property value increases due to public works Time: 1 day Procedure 16*. Obtain RETIE certificate Cost: COP$20,000 Time: 1 day Cost: COP$150,000 (market value in Cali) Procedure 5: Obtain certificate of no outstanding contribution Comments: This procedure is carried out once the construction works are finished. obligation on property value increases due to public works In Cali it takes a day since there are local certifying officers. This is contrary to what Time: 1 day was taking place in 2008 when due to the lack of local certifying officers, it was nec- Cost: No cost essary to obtain the certificate in Bogota which took longer and had greater costs. Comments: The certificate is required by the urban curator to issue the construction Procedure 17. Receive inspection and obtain an estimate for license. electricity connection Procedure 6. Obtain construction license Time: 7 days Time: 40 days (the minimum deadline is 10 business days; and the maximum is 45 Cost: No cost business days) Comments: The construction company submits its project for connections to Cost: COP$11,696,670. The formula for the calculation of the expenses is the fol- electricity. EMCALI revises the project, inspects the site and then approves the con- lowing: E=(Cf*i*m)+((Cv*i*j*m)*1.16.) For Cartagena, is: E = (865,068 x 4 x 0.9) + nection. Overall, to request and obtain connection to electricity service is easier than ((397,520 x 4 x 5.17 x 0.9) x 1.16) obtaining water service. However, it costs more. Comments: The constructor must submit the following documents (Article 18 of Decree 564 of 2006): Procedure 18*. Obtain connection to electricity service 1. Copy of the ownership history and no-lien certificate, with an issue date no later Time: 12 days (simultaneous with procedures 11 and 14) than one month prior to the date of the request Cost: COP$1,750,000. It includes labor, materials and measuring meter device. 2. The unified national license request form, established through Resolution 0984 of Comments: With the presentation of the RETIE certificate, EMCALI visits the site and 2005, issued by the Ministry of the Environment, Housing and Territorial Develop- immediately installs the service. ment 3. Copy of the certificate of existence and legal representation, with an issue date of Procedure 19. Final inspection by the Municipal Government less than one month prior to the date of the request Time: 1 day 4. Copy of the documents or tax statements proving payment of property taxes for Cost: No cost the previous five years 5. Drawing of the site and identification of the property. *This procedure is simultaneous with a previous procedure 6. List of the addresses of neighboring properties DEALING WITH CONSTRUCTION PERMITS Procedure 7. Pay boundary tax Cartagena, Bolívar Time: 1 day Cost: COP$10,794,980 (In the case of new constructions, the amount is 1% of Procedure 1. Obtain ownership history and no-lien certificate the cost of the construction, and an additional stamp is paid for 1% of what the expenses are) Time: 1 day Cost: COP$11,840 Procedure 8. Obtain the previous authorization to connect the Comments: This certificate provides the legal information on the property and on water service its current and previous ownership. The rate is set according to Decrees 1250 of 1970 Time: 20 days (maximum 30 calendar days) and 2280 of 2008, the latter as amended by Resolution 0035 of 2009. Any individual or legal entity can request the issue of an ownership history and no-lien certificate of Cost: COP$350,000 a property at the Registry Office. Comments: Cartagena’s water works company certifies the availability of water connection. This procedure is necessary because in some areas constructions are not Procedure 2*. Obtain certificate of existence and legal permitted due to sewage restrictions. representation of the Construction Company Time: 1 day (simultaneous with procedure 1) Procedure 9. Final inspection by Cartagena’s water Company Cost: COP$3,500 Time: 15 days Comments: When the parties are Limited Liability Companies, the Certificate of exis- Cost: No cost tence and legal Representation must be requested from the Chamber of Commerce. This document certifies the existence of the legal entity, as well as other aspects such Procedure 10*. Request connection to electricity service as its date of incorporation, its expiration date, registered address, partners, capital, Time: 7 days (simultaneous with procedure 8) legal representative, his or her authorization to enter into deals in the name of the Cost: No cost company, and its line of business. The rates for public registration services are set Comments: With this application the design and availability of the connection are according to what is established in Decree 393 of 2002. approved. LIST OF PROCE %63&4t DEALING WITH CONSTRUCTION PERMITS 91 Procedure 11. Obtain the RETIE certificate Comments: The urban curator makes an estimate for the cost. It is then paid at one of booths of the bank located at the Municipal Government. This cost is established Time: 15 days by letter b) of Article 200 of the Tax Statute for the municipality of San Jose de Cost: COP$2,250,000 Cúcuta. Comments: Cost includes all the forms that must be filled for the power company, cost of inspection and certification required to construct the warehouse. Procedure 5. Pay pro-development stamp duty (estampilla pro- desarrollo) Procedure 12. Obtain connection to electricity service Time: 1 day Time: 10 days Cost: COP$844,500 Cost: COP$5,000,000 Comments: This stamp is paid at the bank Banco de la República in favor of the Public University of Norte de Santander. Procedure 13*. Obtain telephone connection Time: 5 days (simultaneous with procedures 8 and 10) Procedure 6. Pay pro-culture stamp duty (estampilla pro-cultura) Cost: No cost Time: 1 day Comments: Time depends on the operator’s schedule. On average this procedure Cost: COP$496,500 [Equivalent to one legal minimum monthly wage in force takes 5 days. (smlmv)] Comments: This stamp is paid at the bank Banco Popular and its recipient is the Procedure 14. Final inspection by the Municipal Government municipality. Time: 1 day Cost: No cost Procedure 7. Payment of tax on construction work leftovers Comments: The office in charge of the inspection is the Urban Control Division. The Time: 1 day minor Municipal Government (Alcaldía menor) opens a log when the project starts Cost: COP$465,615 and conducts periodic visits. Comments: Tax on construction work leftovers costs COP$358 * the number of meters constructed. *This procedure is simultaneous with a previous procedure. This stamp is paid at the bank Banco Davivienda and its recipient is the foundation Funambiente. DEALING WITH CONSTRUCTION PERMITS Procedure 8. Obtain construction license Cúcuta, Norte de Santander Time: 25 days Procedure 1. Obtain ownership history and no-lien certificate Cost: COP$11,696,670. The formula for the calculation of the expenses is the follow- Time: 1 day ing: E=(Cf*i*m)+((Cv*i*j*m)*1.16.) For Cúcuta is = (865,068 x 4 x 0.9) + ((397,520 x 4 x 5.17 x 0.9) x 1.16) Cost: COP$11,840 Comments: The constructor must present the following documents (Article 18 of Comments: This certificate provides the legal information on the property and on Decree 564 of 2006): its current and previous ownership. The rate is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter as amended by Resolution 0035 of 2009. Any individual 1. Copy of the ownership history and no-lien certificate, with an issue date no later or legal entity can request the issue of an ownership history and no-lien certificate of than one month prior to the date of the request a property at the Registry Office. 2. The unified national license request form, established through Resolution 0984 of 2005, issued by the Ministry of the Environment, Housing and Territorial Develop- Procedure 2*. Obtain certificate of existence and legal ment representation of the construction company 3. Copy of the certificate of existence and legal representation, with an issue date of Time: 1 day (simultaneous with procedure 1) less than one month prior to the date of the request Cost: COP$6,600 [COP$3,500 (fixed national fee) + COP$2,100 (duty stamp pro- 4. Copy of the documents or tax statements proving payment of property taxes for hospital)] the previous five years Comments: When the parties are Limited Liability Companies, the Certificate of exis- 5. Drawing of the site and identification of the property tence and legal Representation must be requested from the Chamber of Commerce. 6. List of the addresses of neighboring properties This document certifies the existence of the legal entity, as well as other aspects such as its date of incorporation, its expiration date, registered address, partners, capital, Procedure 9. Obtain previous authorization for water connection legal representative, his or her authorization to enter into deals in the name of the service company, and its line of business. The rates for public registration services are set Time: 15 days according to what is established in Decree 393 of 2002. Cost: COP$2,800,000 The procedure is completed before Cucuta’s Chamber of Commerce and it could take less. Payments are made directly at the Chamber of Commerce and fees are set Comments: The constructor requests from the company Aguas Capital the viability according to Decree 393 of 2002. and availability of the service. The company holds a committee meeting every Friday and responds in no less than 10 days. Requirements for this procedure are: cadastral chart, copy of residential tax and the written request. Procedure 3*. Obtain certificate of no outstanding payments on property tax Procedure 10*. Request connection to electricity service Time: 4 days (simultaneous with procedures 1 and 2) Time: 30 days (simultaneous with procedure 9) Cost: COP$30,000 [COP$2,100 (stamp duty pro- hospital Erasmo Meoz) + COP$8,700 Cost: No cost (Metrovivienda) + COP$15,600 (municipal stamps) + COP$ 3,600 (cost of systematiza- tion)] Comments: It is approved through Resolution issued by Electricity Central of Norte de Santander. Comments: To obtain the certificate, it is necessary to have photocopies of the receipts of previous payments on property tax. Once the request is made, it takes 4 days for its delivery. This procedure is ruled by Municipal Agreements 02 of 1999, 43 Procedure 11*. Obtain a telephone connection of 2002 and 26 of 2007. Time: 1 day (simultaneous with procedures 9 and 10) Cost: No cost Procedure 4. Pay boundary tax Comments: The procedure for obtaining a telephone line has no cost and does not Time: 1 day take longer than a day. Cost: COP$4,222,515 [T = COP$649,318*6,503 (project area in square meters)*0.5%] 92 DOING BUSINESS IN COLOMBIA 2010 Procedure 12. Audit of the grids Procedure 4*. Obtain the certificate of “paramento” Time: 8 days Time: 60 days Cost: No cost Cost: COP$40,000: fixed fee Comments: The company Aguas Capital is in charge of conducting periodic supervi- Comments: The amount is set by the Municipal Government and corresponds to the sions on the construction works. duty stamps. The certificate is valid for a year; it is usually issued when the construc- tion works are to be started. It is not a common practice to get it when purchasing Procedure 13*. Obtain RETIE certificate the property, considering its short validity term. Time: 7 days (simultaneous with procedure 12) Procedure 5. Obtain construction license Cost: COP$170,000 [COP$ 100,000 (cost of construction drawings) + COP$70,000 (verification)] Time: 60 days Comments: The project to install the connection must be signed by an electrical Cost: COP$9,877,188. The formula for the calculation of the expenses is the follow- engineer. Electricity Central of Norte de Santander only revises the documents per- ing: E=(Cf*i*m)+((Cv*i*j*m)*1.16.) For Ibagué is: E = (865,068 x 4 x 0.76) + ((397,520 taining the RETIE. The procedure entails a mixed-type regulation; even though RETIE x 4 x 5.17 x 0.76) x 1.16) sets a national technical framework, the standard involves municipal norms. Comments: The constructor must submit the following documents (Article 18 of Decree 564 of 2006): Procedure 14* Final inspection by the water works company 1. Copy of the ownership history and no-lien certificate, with an issue date no later Time: 1 day than one month prior to the date of the request Cost: No cost 2. The unified national license request form, established through Resolution 0984 of Comments: The procedure cannot be completed if for some reason the company 2005, issued by the Ministry of the Environment, Housing and Territorial Develop- Aguas Capital is also in charge of the construction works. The constructor submits ment the application requesting the inspection and indicating the kind of activities to be 3. Copy of the certificate of existence and legal representation, with an issue date of performed. The inspections are based on the project’s drawings. less than one month prior to the date of the request 4. Copy of the documents or tax statements proving payment of property taxes for Procedure 15*. Obtain connection to electricity service the previous five years Time: 20 days (simultaneous with procedure 14) 5. Drawing of the site and identification of the property Cost: COP$600,000 6. List of the addresses of neighboring properties Comments: The approved project for indoor installations is issued by a RETIE certify- 7. In addition, for any construction works, constructors must have an elastic spec- ing entity. After issuance of RETIE, the electricity company takes 20 days to install trum for earthquake resistance design. This step can be completed through the and connect the service. website of the Municipal Government of Ibagué Procedure 16. Final inspection by the Municipal Government Procedure 6. Pay urban boundary tax Time: 1 day Time: 1 day Cost: No cost Cost: COP$3,846,834 [Tax = (legal minimum monthly wage/30)*25%* square meters to be constructed] *This procedure is simultaneous with a previous procedure. Comments: This procedure established in June 1st of 2009. It is ruled by Municipal Agreement 10 of May 11 of 2009. The agreement was further complemented by Decree 1-0344 of June of 2009; it applies to new buildings or to refurbishing existing DEALING WITH CONSTRUCTION PERMITS ones. It sets exemptions VIP and VIS to projects in zoning status 1, 2 and 3. Ibagué, Tolima Procedure 7. Request and obtain previous authorization to Procedure 1. Obtain ownership history and no-lien certificate connect water and sewage service Time: 1 day Time: 30 days Cost: COP$11,840 Cost: No cost Comments: This certificate provides the legal information on the property and on Comments: The application must be submitted at least two months before the its current and previous ownership. The rate is set according to Decrees 1250 of 1970 works are started in order to have an estimate for the cost of the hydro-sanitary and 2280 of 2008, the latter as amended by Resolution 0035 of 2009. Any individual connection’s work. or legal entity can request the issue of an ownership history and no-lien certificate of a property at the Registry Office. Procedure 8*. Request connection to electricity service Time: 19 days (simultaneous with procedure 7) Procedure 2*. Obtain certificate of existence and legal Cost: No cost representation of the Construction Company Comments: This procedure is regulated by CREG Resolution of 1978. The constructor Time: 1 day (simultaneous with procedure 1) must fill out the feasibility data chart with the following documents: Cost: COP$3,500 1. Copy of the professional license of the electric technician Comments: When the parties are Limited Liability Companies, the Certificate of exis- 2. Copy of certificate of ownership history and no-lien certificate tence and legal Representation must be requested from the Chamber of Commerce. This document certifies the existence of the legal entity, as well as other aspects such 3. Photocopy of the legal representative’s identification card as its date of incorporation, its expiration date, registered address, partners, capital, 4. Certificate of existence and legal representation legal representative, his or her authorization to enter into deals in the name of the 5. Copy of the protocol for the measuring meter device company, and its line of business. The rates for public registration services are set 6. Copy of the invoice for the measuring meter device according to what is established in Decree 393 of 2002. Procedure 9*. Obtain a telephone connection Procedure 3*. Obtain certificate of no outstanding payments on property tax Time: 1 day (simultaneous with procedures 7 and 8) Cost: No cost Time: 1 day (simultaneous with procedures 1 and 2) Comments: This procedure is ruled by Law 142 of 1994, (Law on public utilities Cost: No cost services). Comments: If the person requires an additional copy of the certificate, it costs COP$4,000, that is paid at a local commercial bank. Procedure 10. Inspection of hydro sanitary grids Time: 30 days Cost: No cost LIST OF PROCE %63&4t DEALING WITH CONSTRUCTION PERMITS 93 Comments: Once the construction company finishes the construction of the grids, Procedure 4. Obtain construction license it will request an approval from the Company IBAL that verifies that the works meets Time: 45 days the requirements of RAS Standard, 2000, Sistec and Icontec. Cost: COP$10,527,003. The formula for the calculation of the expenses is the fol- This procedure is regulated by Municipal Resolution 202 of 2008, amended by lowing: E=(Cf*i*m)+((Cv*i*j*m)*1.16.) For Manizales is: E = (865,068 x 4 x 0.81) + Resolution 1000 of 2008. This regulation was sued before the Administrative Court of ((397,520 x 4 x 5.17 x 0.81) x 1.16) Tolima, which overthrew its application as of May 21 of 2009. Comments: The constructor must present the following documents (Article 18 of Decree 564 of 2006): Procedure 11*. Obtain RETIE certificate 1. Copy of the ownership history and no-lien certificate, with an issue date no later Time: 30 days (simultaneous with procedure 10) than one month prior to the date of the request Cost: COP$846,800 2. The unified national license request form, established through Resolution 0984 of Comments: The amount of the certificate depends on the city. 2005, issued by the Ministry of the Environment, Housing and Territorial Develop- ment Procedure 12. Inspection by the electricity company ENERTOLIMA 3. Copy of the certificate of existence and legal representation, with an issue date of Time: 1 day less than one month prior to the date of the request Cost: COP$133,000 (fixed fee set by ENERTOLIMA) 4. Copy of the documents or tax statements proving payment of property taxes for Comments: This procedure is completed in accordance to what is set by CREG the previous five years Resolution 070 of 1998. 5. Drawing of the site and identification of the property 6. List of the addresses of neighboring properties Procedure 13. Obtain connection to electricity service Time: 30 days Procedure 5. Pay urban boundary tax Cost: COP$92,300 (fixed fee set by ENERTOLIMA per connection unit) Time: 1 day Comments: This procedure is completed according to what is set by CREG Resolu- Cost: COP$8,957,271. [The urban boundary tax corresponds to 1% of the total sum tion 070 of 1998. of the construction’s budget. The budget is determined by the product of the total number of meters of the construction multiplied by the cost of square meter set by Procedure 14. Request and obtain occupation permit certificate article 34 of Agreement 704 of 2008. For this case: 1,300.6 m2 * 688,703.00 (1.66 Time: 1 day smlmv)] Cost: No cost Comments: After all the documents are accepted for the construction license and its approval, the urban curator issues two payment receipts: the first one corresponds Comments: Even though the procedure is regulated at a national level, it is not ap- to the amount of the expenses according to the formula, collected by a bank, and in plied by the municipality due to the lack of capacity of the administrative staff to put favor of the urban curator; and the second corresponds to the urban boundary tax, it into practice. It is ruled by article 46 of Decree 564 of 2006. according to the formula; its payment is made through a bank and it is made in favor of the Municipal Tax Office. *This procedure is simultaneous with a previous procedure. Procedure 6. Obtain authorization for water connection services DEALING WITH CONSTRUCTION PERMITS Time: 1 day Manizales, Caldas Cost: No cost Procedure 1. Obtain ownership history and no-lien certificate Procedure 7. Audit of the grids Time: 1 day. Time: 15 days Cost: COP$11,840 Cost: No cost Comments: This certificate provides the legal information on the property and on its current and previous ownership. The rate is set according to Decrees 1250 of 1970 Procedure 8. Final inspection by the water Company of Manizales and 2280 of 2008, the latter as amended by Resolution 0035 of 2009. Any individual Aguas de Manizales or legal entity can request the issue of an ownership history and no-lien certificate of Time: 1 day a property at the Registry Office. Cost: No cost Procedure 2*. Obtain a certificate of existence and legal Procedure 9*. Obtain RETIE certificate representation of the Construction Company Time: 12 days (simultaneous with procedure 6) Time: 1 day (simultaneous with procedure 1) Cost: COP$2,000,000 Cost: COP$3,500 Comments: The RETIE certificate is a national requirement; its purpose is to prove Comments: When the parties are Limited Liability Companies, the Certificate of exis- that construction companies will have adequate installation of electricity grids. It is a tence and legal Representation must be requested from the Chamber of Commerce. requisite to obtain the connection to electricity service. This document certifies the existence of the legal entity, as well as other aspects such as its date of incorporation, its expiration date, registered address, partners, capital, Procedure 10. Request connection to electricity service legal representative, his or her authorization to enter into deals in the name of the company, and its line of business. The rates for public registration services are set Time: 1 day according to what is established in Decree 393 of 2002. Cost: No cost Procedure 3*. Request land use certificate Procedure 11. Obtain electricity connection Time: 15 days (simultaneous with procedures 1 and 2) Time: 4 days Cost: No cost Cost: No cost Comments: To request the land use certificate, the record of the identification of the Comments: There is an inspection to the grids, on the same day the service is con- property and the construction project must be submitted. This certificate is valid for nected. a year, and is usually issued when the construction works are to be started. It is not a common practice to request it before the property is acquired, taking into account Procedure 12*. Obtain a telephone connection its validity term; in addition, it depends on the Territorial Ordering Plan (POT), which Time: 3 days (simultaneous with procedures 6 and 9) is updated every year. Cost: No cost Comments: Time varies depending on the company rendering service. 94 DOING BUSINESS IN COLOMBIA 2010 Procedure 13. Final inspection by the Municipal Government construction for uses other than housing, AM: constructed area that is not part of the construction index, GM: tax rate per square meter of construction that is not part of Time: 1 day the construction index for uses other than housing, K1: component of the construc- Cost: No cost tion index, K3: component of the value of the range of parking spaces for use other than housing. The amounts range between COP$4 million and 26 million] *This procedure is simultaneous with a previous procedure. Comments: This procedure is regulated by Municipal Agreement 67 of 2008. DEALING WITH CONSTRUCTION PERMITS Procedure 6. Request inspection for connection to water and sewer grids Medellín, Antioquia Time: 56 days Procedure 1. Obtain ownership history and no-lien certificate Cost: No cost Time: 1 day Comments: This procedure takes place after an opinion on the feasibility of supply- Cost: COP$11,840 ing water and sewage service has been issued. The most important requirements for this procedure are: urbanism license, link up to the geodesic grid approved Comments: This certificate provides the legal information on the property and on by Municipal Planning, urbanism and road drawings approved also by Municipal its current and previous ownership. The rate is set according to Decrees 1250 of 1970 Planning, soil mechanics survey, drawings and calculation logs and compliance with and 2280 of 2008, the latter as amended by Resolution 0035 of 2009. Any individual the parameters set forth by the territorial ordering plan (POT) and other applicable or legal entity can request the issue of an ownership history and no-lien certificate of regulations for water works. a property at the Registry Office. Procedure 7*. Request audit of electricity grids Procedure 2*. Obtain certificate of existence and legal representation of the Construction Company Time: 10 days (simultaneous with procedure 6) Cost: No cost Time: 1 day (simultaneous with procedure 1) Comments: The constructor presents a technical project with specifications for the Cost: COP$3,500 connection grid according to the standards set by Empresas Públicas de Medellín Comments: When the parties are Limited Liability Companies, the Certificate of exis- (EPM). tence and legal Representation must be requested from the Chamber of Commerce. The project’s drawings must be signed by a registered engineer. The proposal must This document certifies the existence of the legal entity, as well as other aspects such include the response to the request made for the connection and the construction as its date of incorporation, its expiration date, registered address, partners, capital, license granted by the municipality. legal representative, his or her authorization to enter into deals in the name of the company, and its line of business. The rates for public registration services are set This procedure is completed according to Resolution CREG 070 of 1998. according to what is established in Decree 393 of 2002. Procedure 8*. Obtain a telephone connection Procedure 3*. Obtain certificate of no outstanding payments on Time: 8 days (simultaneous with procedures 6 and 7) property tax and no outstanding contribution obligations on Cost: No cost property value increases due to public works Comments: This procedure is regulated by Law 142 of 1994 that regulates public Time: 1 day (simultaneous with procedures 1 and 2) utility services. Cost: COP$8,000. This rate is equivalent to 0.0139 % of the legal minimum monthly wage + 16% VAT, rounded to the nearest thousand. Procedure 9. Inspection of water and sewage grids Comments: The certificates prove that the property’s owner has no pending bal- Time: 15 days ances on payments on property tax. Cost: No cost The rate is adjusted annually according to a resolution issued by the Municipal Tax Comments: The basic requirement is to have the drawings approved by EPM. Office. For 2009, the Resolution is SH-17-003 of 2009. This procedure includes their approval of the grids. The most important documents The certificate is available immediately once the payment is made on line or at the and activities to complete this procedure are: updated drawings, insurance policies branch of the commercial bank located at the Municipal Government. for stability risks, washing-out of sewer grids, visits by EPM personnel. Procedure 4. Obtain the construction license Procedure 10*. Obtain RETIE certificate Time: 45 days Time: 5 days (from the day of the request until the inspection is completed and the Cost: COP$12,190,529. The formula for the calculation of the expenses is the follow- certificate is issued) ing: E=(Cf*i*m)+((Cv*i*j*m)*1.16.) In the case of Medellín is: E = (865,068 x 4 x 0.938) Cost: COP$3,000,000 (the costs vary between COP$2,000,000 and COP$6,000,000) + ((397,520 x 4 x 5.17 x 0.938) x 1.16) Comments: This procedure is completed pursuant to Resolution CREG 070 of 1998. Comments: The constructor must present the following documents (Article 18 of Decree 564 of 2006): Procedure 11. Request from EPM audit and calibration of 1. Copy of the ownership history and no-lien certificate, with an issue date no later measuring devices than one month prior to the date of the request Time: 15 days 2. The unified national license request form, established through Resolution 0984 of Cost: No cost 2005, issued by the Ministry of the Environment, Housing and Territorial Develop- ment Comments: The time depends on the progress of the works. The procedure includes calibration of the meters, which is the step prior to the acceptance of the works. 3. Copy of the certificate of existence and legal representation, with an issue date of less than one month prior to the date of the request Procedure 12. Obtain the certificate of approval of the works 4. Copy of the documents or tax statements proving payment of property taxes for Time: 45 days the previous five years Cost: No cost 5. Drawing of the site and identification of the property. Comments: The certificate is issued by the office for Monitoring and Control at 6. List of the addresses of neighboring properties. Municipal Planning. They verify that the construction went according to the project’s designs. The procedure is regulated by Municipal Agreement 045. Procedure 5. Pay urban boundary tax Once the certificate is recorded in the cadastre registry, the constructor can move on Time: 1 day with finishing the works and obtain their final approval. Cost: COP$8,323,840 [The rate is equivalent to 2% of the construction appraisal This is a complementary procedure to register the building in the cadastre registry’s value. The formula for calculating the urban boundary tax for projects other than database, but it does not have any incidence on initiating operations at the ware- housing (Municipal Agreement 67 of 2008) is: ID = (AD * GD) + (AM * GM); GD = K1 house. + K3 ; GM = 0.5 * GD. Where ID: urban boundary tax for uses other than housing, AD: construction area section of the construction index, GD: tax rate per square meter of LIST OF PROCE %63&4t DEALING WITH CONSTRUCTION PERMITS 95 Procedure 13. Obtain connection to electricity service Procedure 5. Pay urban boundary tax Time: 1 day Time: 1 day Cost: COP$189,680 (Rate established by the municipality and is charged in the utility Cost: COP$3,445,173 [ID = (M2*V*1%)] bill) M2: Square meters allowed Comments: This procedure is completed, according to Resolution CREG 070 of 1998. V: Price per square meter This is the final step to obtain the final approval of the construction. The require- Regulated by the Municipality according to the territorial ordering plan (POT) ments for the completion of this procedure are the following: form C-024 filled out, Comments: The urban boundary tax is established according to the Tax Statute of attaching the minutes that contain the municipality’s approval, and the RETIE. Montería, Chapter 7 – Urbanism and construction tax. This information is entered in to the EPM’s database to complete the client’s registra- The tax amount is related to the zoning status, the constructed area and type of tion process. Once this procedure is completed, the constructor gets the connection construction (Commercial - Residential). to electricity service. It is a prerequisite to obtain the construction license and is calculated according to the law [ID= (M2*V*1%)]. *This procedure is simultaneous with a previous procedure. Procedure 6. Obtain water connection service DEALING WITH CONSTRUCTION PERMITS Time: 15 days Montería, Córdoba Cost: COP$300,000 Comments: It is requested by means of a letter addressed to the company Proactiva, Procedure 1. Obtain ownership history and no-lien certificate along with attachments like the ownership history and no-lien certificate and the Time: 1 day project file number. The cost is directly proportional to the amount of work required Cost: COP$11,840 to connect the internal and external grids. Comments: This certificate provides the legal information on the property and on its current and previous ownership. The rate is set according to Decrees 1250 of 1970 Procedure 7*. Request connection to electricity service and 2280 of 2008, the latter as amended by Resolution 0035 of 2009. Any individual Time: 10 days (simultaneously with procedure 6) or legal entity can request the issue of an ownership history and no-lien certificate of Cost: COP$248,619 a property at the Registry Office. Comments: A request is made to Electricaribe, attaching the ownership history and no-lien certificate. Procedure 2*. Obtain the certificate of legal existence and representation of the Construction Company Procedure 8*. Obtain a telephone connection Time: 1 day (simultaneous with procedure 1) Time: 1 day (simultaneously with procedures 6 and 7) Cost: COP$3,500 Cost: No cost Comments: When the parties are Limited Liability Companies, the Certificate of exis- Comments: The service provider companies are: Telefónica - Telmex - Edatel - Escarsa. tence and legal Representation must be requested from the Chamber of Commerce. This document certifies the existence of the legal entity, as well as other aspects such Procedure 9. Audit of the grids as its date of incorporation, its expiration date, registered address, partners, capital, Time: 8 days legal representative, his or her authorization to enter into deals in the name of the company, and its line of business. The rates for public registration services are set Cost: No cost according to what is established in Decree 393 of 2002. Comments: The company Proactiva is in charge of inspections to ensure compliance with regulatory standards. Procedure 3*. Obtain certificate of no outstanding payments on property tax Procedure 10*. Obtain RETIE certificate Time: 1 day (simultaneous with procedures 1 and 2) Time: 5 days (simultaneous with procedure 9) Cost: No cost Cost: COP$300,000 Comments: The no pending balances status is verified in the system using the Comments: An external certifying company issues the RETIE certificate; its cost tax payment receipt from the previous year and the property license registration depends on the complexity of the works. number. Procedure 11. Final inspection by the water utility company Procedure 4. Obtain the construction license Time: 1 day Time: 45 days Cost: No cost Cost: COP$7,459,876. The formula for the calculation of the expenses is the follow- Comments: The inspection covers the external facilities. ing: E=(Cf*i*m)+((Cv*i*j*m)*1.16.) In the case of Montería is: E = (865,068 x 4 x 0.574) + ((397,520 x 4 x 5.17 x 0.574) x 1.16) Procedure 12*. Obtain connection to electricity service Comments: The constructor must present the following documents (Article 18 of Time: 1 day (simultaneous with procedure 11) Decree 564 of 2006): Cost: COP$150,000 1. Copy of the ownership history and no-lien certificate, with an issue date no later Comments: The cost includes connection and calibration to the primary grid. than one month prior to the date of the request 2. The unified national license request form, established through Resolution 0984 of Procedure 13. Final inspection by the Municipal Government 2005, issued by the Ministry of the Environment, Housing and Territorial Develop- ment Time: 1 day 3. Copy of the certificate of existence and legal representation, with an issue date of Cost: No cost less than one month prior to the date of the request Comments: The Municipal Government must conduct an inspection to verify com- 4. Copy of the documents or tax statements proving payment of property taxes for pliance with the requirements established in the construction license. the previous five years 5. Drawing of the site and identification of the property. *This procedure is simultaneous with a previous procedure. 6. List of the addresses of neighboring properties 96 DOING BUSINESS IN COLOMBIA 2010 DEALING WITH CONSTRUCTION PERMITS Procedure 7. Obtain previous authorization for water connection Neiva, Huila service Time: 30 days Procedure 1. Obtain ownership history and no-lien certificate The procedure takes 30 days because a committee must meet to issue the certificate Time: 1 day of feasibility and availability of the service connection, according to the analysis and Cost: COP$11,840 approval of the constructor’s project. Comments: This certificate provides the legal information on the property and on Cost: COP$500,000 (The amount varies depending on the project) its current and previous ownership. The rate is set according to Decrees 1250 of 1970 Comments: Prerequisites include the construction license and the approved draw- and 2280 of 2008, the latter as amended by Resolution 0035 of 2009. Any individual ings for the grids, in addition to feasibility and availability studies. or legal entity can request the issue of an ownership history and no-lien certificate of a property at the Registry Office. Procedure 8*. Request connection to electricity service Procedure 2*. Obtain certificate of existence and legal Time: 9 days (simultaneous with procedure 7) representation of the Construction Company Cost: No cost Time: 1 day (simultaneous with procedure 1) Comments: Once the construction license and designs of electricity grids are avail- able, the constructor requests the connection to electricity services from the service Cost: COP$3,500 provider company. Comments: When the parties are Limited Liability Companies, the Certificate of exis- tence and legal Representation must be requested from the Chamber of Commerce. Procedure 9*. Obtain a telephone connection This document certifies the existence of the legal entity, as well as other aspects such Time: 3 days (simultaneous with procedures 7 and 8) as its date of incorporation, its expiration date, registered address, partners, capital, legal representative, his or her authorization to enter into deals in the name of the Cost: No cost company, and its line of business. The rates for public registration services are set Comments: The connection is made with the selected company. according to what is established in Decree 393 of 2002. Procedure 10. Audit of the grids Procedure 3. Pay certificate of no outstanding payments on Time: 30 days property tax Cost: No cost Time: 1 day Comments: The company Empresas Públicas de Neiva is in charge of the audits, to Cost: COP$5,000 ensure compliance with applicable regulations. Comments: Resolution 002 of 2000 of the Municipal Council authorized the Munici- pal Tax Office to charge COP$5,000 for the certificate on property taxes. Payment is Procedure 11*. Obtain RETIE certificate made at a commercial bank located at the office of the Municipal Treasury. Time: 7 days Cost: COP$1,000,000 Procedure 4*. Obtain certificate of no outstanding payments on Comments: The audit by Electrificadora del Huila takes on average 7 days after the property tax constructor files the request. Time: 1 day (simultaneous with procedures 1 and 2) Cost: No cost Procedure 12. Final inspection by the water utility company Comments: The Municipal Treasury issues this certificate. Time: 1 day Cost: No cost Procedure 5. Obtain the construction license Comments: It consists of a visit to the construction site and a grid evaluation. Time: 40 days Cost: COP$7,901,750. The formula for the calculation of the expenses is the follow- Procedure 13*. Obtain connection to electricity service ing: E=(Cf*i*m)+((Cv*i*j*m)*1.16.) In the case of Neiva, is: E = (865,068 x 4 x 0.608) + Time: 20 days (simultaneous with procedure 12) ((397,520 x 4 x 5.17 x 0.608) x 1.16) Cost: COP$425,510 Comments: The constructor must present the following documents (Article 18 of Decree 564 of 2006): Comments: After checking the facilities, the electricity company makes the connec- tion; the cost depends on the amount of power requested, the property’s use and 1. Copy of the ownership history and no-lien certificate, with an issue date no later zoning status. than one month prior to the date of the request 2. The unified national license request form, established through Resolution 0984 of Procedure 14. Final inspection by the Municipal Government 2005, issued by the Ministry of the Environment, Housing and Territorial Develop- Time: 1 day ment Cost: No cost 3. Copy of the certificate of existence and legal representation, with an issue date of less than one month prior to the date of the request Comments: The Municipal Planning Office carries on with the inspection to ensure that the construction complies with the construction license issued by the urban 4. Copy of the documents or tax statements proving payment of property taxes for curator. the previous five years 5. Drawing of the site and identification of the property *This procedure is simultaneous with a previous procedure. 6. List of the addresses of neighboring properties Procedure 6. Pay urban boundary tax DEALING WITH CONSTRUCTION PERMITS Time: 1 day Pasto, Nariño Cost: COP$1,717,885 [The rate depends on the zoning status and is updated every year according to the consumer price index IPC of the previous year. The cost was Procedure 1. Obtain ownership history and no-lien certificate calculated based on the following values: square meters (1,300.6), urban boundary Time: 1 day tax factor (132,084: commercial property, 2009 CPI=7.67% 80% CPI). The formula is: Cost: COP$11,840 square meters*factor*10x1,000] Comments: This certificate provides the legal information on the property and on Comments: The urban boundary tax is regulated by the Municipal Tax Statute its current and previous ownership. The rate is set according to Decrees 1250 of 1970 (articles 146 through 154 of Decree 0458 of 1999 and Agreement 021 of 2005). and 2280 of 2008, the latter as amended by Resolution 0035 of 2009. Any individual or legal entity can request the issue of an ownership history and no-lien certificate of a property at the Registry Office. LIST OF PROCE %63&4t DEALING WITH CONSTRUCTION PERMITS 97 Procedure 2*. Obtain a certificate of existence and legal Procedure 10*. Obtain RETIE certificate representation of the Construction Company Time: 1 day Time: 1 day (simultaneous with procedure 1) Cost: COP$200,000 Cost: COP$3,500 Comments: Verification and certification is performed according to RETIE. Comments: When the parties are Limited Liability Companies, the Certificate of exis- tence and legal Representation must be requested from the Chamber of Commerce. Procedure 11. Request inspection and obtain final connection This document certifies the existence of the legal entity, as well as other aspects such Time: 1 day as its date of incorporation, its expiration date, registered address, partners, capital, Cost: No cost legal representative, his or her authorization to enter into deals in the name of the company, and its line of business. The rates for public registration services are set Comments: Once the final inspection is requested, the service provider takes up to according to what is established in Decree 393 of 2002. 10 days to verify external grids. Procedure 3*. Obtain certificate of no outstanding payments on Procedure 12*. Obtain connection to electricity service property tax Time: 20 days (simultaneous with procedure 6) Time: 10 days (simultaneous with procedures 1 and 2) Cost: COP$150,000 Cost: COP$8,480 Comments: The cost includes connection and calibration of the primary grid. Comments: It is requested by presenting the photocopy of the property tax pay- ment receipt, and the payment of two stamps (pro-electricity and pro-culture). The Procedure 13. Final inspection by the Municipal Government payment is made at the Municipal Treasury. Time: 1 day Cost: No cost Procedure 4. Obtain the construction license Comments: The Municipal Government does not usually perform an inspection, and Time: 60 days when it does, it is done through Municipal Planning. Cost: COP$7,901,750. The formula for the calculation of the expenses is the follow- ing: E=(Cf*i*m)+((Cv*i*j*m)*1.16.) In the case of Pasto, is: E = (865,068 x 4 x 0.608) + *This procedure is simultaneous with a previous procedure. ((397,520 x 4 x 5.17 x 0.608) x 1.16) Comments: The constructor must present the following documents (Article 18 of DEALING WITH CONSTRUCTION PERMITS Decree 564 of 2006): 1. Copy of the ownership history and no-lien certificate, with an issue date no later Pereira, Risaralda than one month prior to the date of the request Procedure 1. Obtain ownership history and no-lien certificate 2. The unified national license request form, established through Resolution 0984 of 2005, issued by the Ministry of the Environment, Housing and Territorial Develop- Time: 1 day ment Cost: COP$11,840 3. Copy of the certificate of existence and legal representation, with an issue date of Comments: This certificate provides the legal information on the property and on less than one month prior to the date of the request its current and previous ownership. The rate is set according to Decrees 1250 of 1970 4. Copy of the documents or tax statements proving payment of property taxes for and 2280 of 2008, the latter as amended by Resolution 0035 of 2009. Any individual the previous five years or legal entity can request the issue of an ownership history and no-lien certificate of a property at the Registry Office. 5. Drawing of the site and identification of the property 6. List of the addresses of neighboring properties Procedure 2*. Obtain certificate of legal existence and representation of the of the Construction Company Procedure 5. Pay construction tax Time: 1 day (simultaneous with procedure 1) Time: 20 days Cost: COP$3,500: Fixed national rate Cost: COP$5,462,520 [COP$4,200 per square meter] Comments: When the parties are Limited Liability Companies, the Certificate of exis- Comments: The construction tax is calculated by Municipal Planning and is paid at tence and legal Representation must be requested from the Chamber of Commerce. the Office of the Treasury. This document certifies the existence of the legal entity, as well as other aspects such as its date of incorporation, its expiration date, registered address, partners, capital, Procedure 6. Obtain the authorization for water connection legal representative, his or her authorization to enter into deals in the name of the services company, and its line of business. The rates for public registration services are set Time: 15 days according to what is established in Decree 393 of 2002. Cost: COP$1,362,000 Procedure 3*. Obtain certificate of no outstanding payments on Comments: The service provider CEVENAR authorizes the connection once the urban curator has approved the construction license. property tax Time: 1 day (simultaneous with procedures 1 and 2) Procedure 7*. Request connection to electricity service Cost: No cost. It is paid in the next procedure Time: 15 days (simultaneous with procedure 6) Comments: The certificates show that the solicitant is up to date with property tax Cost: No cost payments. Comments: The request for connection to the electricity grid must include the authorized drawings and construction license. Procedure 4. Pay certificate of no outstanding payments on property tax Procedure 8*. Obtain a telephone connection Time: 1 day Time: 1 day (simultaneous with procedures 6 and 7) Cost: COP$8,300 (fixed fee) Cost: No cost Comments: Under Article 26 of the Municipal Revenue Statute of Pereira, the prop- Comments: Telefónica, Telmex and ETB are the service providers. The connection erty tax bill that has been duly paid and stamped by a bank, serves as a certificate takes at most one day. of payments on property tax. However, in practice, users are still obtaining the certificate to apply for the construction license. Procedure 9. Audit of the grids Procedure 5. Obtain construction license Time: 10 days Time: 30 days Cost: No cost Cost: COP$9,877,188. The formula for the calculation of the expenses is the follow- Comments: The audit of the grids is included in the time estimated for the license ing: E=(Cf*i*m)+((Cv*i*j*m)*1.16.) In the case of Pereira, is E = (865,068 x 4 x 0.76) + request. ((397,520 x 4 x 5.17 x 0.76) x 1.16) 98 DOING BUSINESS IN COLOMBIA 2010 Comments: The constructor must present the following documents (Article 18 of Procedure 13*. Obtain a telephone connection Decree 564 of 2006): Time: 3 days (simultaneous with procedures 8 and 11) 1. Copy of the ownership history and no-lien certificate, with an issue date of less Cost: No cost than one month prior to the date of the request 2. The unified national license request form, established through Resolution 0984 of Procedure 14. Final inspection by the Municipal Government 2005, issued by the Ministry of the Environment, Housing and Territorial Develop- Time: 1 day ment Cost: No cost 3. Copy of the certificate of existence and legal representation, with an issue date of less than one month prior to the date of the request Comments: An official from the Municipal Government schedules the inspections which can take place before, during or at the completion of the work. 4. Copy of the documents or tax statements proving payment of property taxes for the previous five years 5. Drawing of the site and identification of the property *This procedure is simultaneous with a previous procedure. 6. List of the addresses of neighboring properties DEALING WITH CONSTRUCTION PERMITS Procedure 6. Pay urban boundary tax Popayán, Cauca Time: 1 day Cost: COP$6,452,276 (calculated by multiplying the total square meters of the Procedure 1. Obtain certificate of ownership history and no-lien construction by the amount set for the tax) Time: 1 day Comments: The rate is established by the Municipal Revenue Statute. Cost: COP$11,840 Comments: This certificate provides the legal information on the property and on Procedure 7. Obtain previous authorization for the connection of its current and previous ownership. The rate is set according to Decrees 1250 of 1970 water service and 2280 of 2008, the latter as amended by Resolution 0035 of 2009. Any individual Time: 15 days or legal entity can request the issue of an ownership history and no-lien certificate of a property at the Registry Office. Cost: No cost Comments: The availability of the service is not a prerequisite to obtain the Procedure 2*. Obtain a certificate of legal existence and construction license. This is stated by Decree 564 of 2006. The legal representative of representation of the of the Construction Company the construction company must request the connection from the company Aguas y Aguas de Pereira. Time: 1 day (simultaneous with procedure 1) Cost: COP$3,500 Procedure 8. Receive inspection from authorized contractor Comments: When the parties are Limited Liability Companies, the Certificate of exis- Time: 30 days tence and legal Representation must be requested from the Chamber of Commerce. Cost: No cost This document certifies the existence of the legal entity, as well as other aspects such as its date of incorporation, its expiration date, registered address, partners, capital, Comments: The water company Aguas y Aguas de Pereira supervises and evaluates legal representative, his or her authorization to enter into deals in the name of the the construction works to ensure that it complies with current regulations. company, and its line of business. The rates for public registration services are set according to what is established in Decree 393 of 2002. Procedure 9. Final inspection by the water company Time: 30 days Procedure 3*.Obtain certificate of no outstanding payments on Cost: No cost property tax Time: 1 day (simultaneous with procedures 1 and 2) Procedure 10*. Request connection to electricity service Cost: COP$12,600 Time: 30 days Comments: Decree 564 of 2006 requires constructors to prove payments on prop- Cost: No cost erty tax for the most recent years. Comments: The legal representative of the construction company must request the connection to the company Empresa de Energía de Pereira presenting the following Procedure 4. Obtain construction license documents: Time: 20 days. This is the average duration of this procedure for a simple project, 1. Copy of the deed, land title, or ownership history and no-lien certificate where all documents are in order and there are no conflicts with neighbors. 2. Approved feasibility and electricity design Cost: COP$7,901,750. The formula for the calculation of the expenses is the follow- 3. Certificate of zoning status ing: E=(Cf*i*m)+((Cv*i*j*m)*1.16.) In the case of Popayán is: E = (865,068 x 4 x 0.608) 4. Copy of purchase invoice for the meter and calibration protocols + ((397,520 x 4 x 5.17 x 0.608) x 1.16) 5. Compliance statement of technical regulation of facilities Comments: The constructor must present the following documents (Article 18 of Decree 564 of 2006): 6. Photocopy of his identity card 1. Copy of the ownership history and no-lien certificate, with an issue date no later than one month prior to the date of the request Procedure 11. Obtain RETIE certificate 2. The unified national license request form, established through Resolution 0984 of Time: 1 day 2005, issued by the Ministry of the Environment, Housing and Territorial Develop- Cost: COP$750,000 ment Comments: The information on RETIE certification was obtained by direct consulta- 3. Copy of the certificate of existence and legal representation, with an issue date of tion with the certification company Compañía Colombiana de Certificación S.A. less than one month prior to the date of the request 4. Copy of the documents or tax statements proving payment of property taxes for Procedure 12. Obtain connection to electricity service the previous five years Time: 8 days 5. Drawing of the site and identification of the property Cost: COP$499,000 (includes labor and materials) 6. List of the addresses of neighboring properties Comments: A written request is required along with the project’s drawings. With The calculation of the cost is made with a software provided by the Ministry of the these documents the feasibility and availability is evaluated. Also it is necessary to Environment Housing and Territorial Development present a copy of the payments on property tax, the description of the meter device that will be installed, the RETIE certificate, the owner’s identification and a copy of a Procedure 5. Pay urban boundary tax commercial invoice belonging to a neighbor. A chart with a table of electric charges must also be attached to the application letter. Time: 1 day Cost: COP$ 142,500 LIST OF PROCE %63&4t DEALING WITH CONSTRUCTION PERMITS 99 Comments: This is paid at one of the branches of the bank Banco de Occidente Procedure 4. Obtain construction license located on the first floor of the office of the Municipal Planning located at the CAN building. The cost is calculated by a percentage of the property tax (for non-residen- Time: 30 days tial purposes is 30% of the property tax) Cost: COP$10,000,000 [COP$2 is paid per COP$1,000 of the value of the work (the total value is determined by the evaluation of the drawings and a simulation of the Procedure 6. Obtain previous authorization for the connection of construction]. water service Comments: There are no urban curators in Riohacha. Time: 10 days After evaluating the construction’s drawings, the cost of the work is determined so Cost: COP$300,000 that the Planning Office Advisor can establish the cost of the license, which is paid at the bank Banco de Occidente. Comments: A favorable concept is obtained as a result of the decision made at the service provider’s meeting committee. Procedure 5. Pay urban boundary tax Procedure 7*. Request and obtain connection to electricity Time: 1 day service Cost: COP$16,300 (equivalent to 1 minimum legal daily wage) Time: 10 days (simultaneous with procedure 6) Procedure 6. Obtain previous authorization for the connection of Cost: No cost water service Comments: This is the time that takes the revision of the project’s drawings. Time: 5 days Procedure 8*. Obtain a telephone connection Cost: No cost Time: 3 days (simultaneous with procedures 6 and 9) Comments: Connection to water services can be requested from the company Aguas de La Guajira which will adjust their grids to the new construction at no cost. It Cost: No cost, unless a special infrastructure is required. should be made clear that Aguas de La Guajira only works on external grids. Procedure 9. Final inspection by the company Nuevo Acueducto Procedure 7*. Request connection to electricity service de Popayán S.A. Time: 3 days (simultaneous with procedure 6) Time: 1 day Cost: No cost Cost: No cost Comments: The electricity connection to an electric facility is obtained by present- ing a written request to the electricity company Electrificadora del Caribe, along with Procedure 10*. Obtain connection to electricity service a certificate of nomenclature issued by the Municipality, the certificate of ownership Time: 1 day history and no-lien certificate and identification card of the legal representative of Cost: COP$400,000. The value includes connection costs and meter device. the construction company. Comments: In Popayán it is not yet necessary to obtain the RETIE certification. Procedure 8*. Obtain a telephone connection Procedure 11. Final inspection by the Municipal Government Time: 1 day (simultaneous with procedures 6 and 7) Time: 1 day Cost: No cost Cost: No cost Comments: The company Telefónica is in charge of making the connection process Comments: This procedure has not been put into practice in Popayán. at no cost. Procedure 9. Audit of the grids *This procedure is simultaneous with a previous procedure. Time: 1 day Cost: No cost DEALING WITH CONSTRUCTION PERMITS Comments: It is obtained by submitting a written request to Aguas de La Guajira Riohacha, La Guajira Procedure 10*. Obtain RETIE certificate Procedure 1. Obtain ownership history and no-lien certificate Time: 2 days Time: 1 day Cost: COP$800,000 (RETIE’s inspection cost) Cost: COP$11,840 Comments: The cost of RETIE certificate depends on the complexity of the construc- Comments: This certificate provides the legal information on the property and on tion works. In this case the value is COP$ 800,000. its current and previous ownership. The rate is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter as amended by Resolution 0035 of 2009. Any individual Procedure 11. Final inspection by the water works company or legal entity can request the issue of an ownership history and no-lien certificate of a property at the Registry Office. Time: 1 day Cost: No cost Procedure 2*. Obtain a certificate of existence and legal Comments: The inspection is carried out by Aguas de La Guajira and is limited to the representation of the Construction Company external grids. Time: 1 day (simultaneous with procedure 1) Cost: COP$3,500 Procedure 12. Obtain Certificate of Nomenclature Comments: When the parties are Limited Liability Companies, the Certificate of exis- Time: 1 day tence and legal Representation must be requested from the Chamber of Commerce. Cost: COP$4,000 (cost of the certificate) This document certifies the existence of the legal entity, as well as other aspects such Comments: To apply for connection to the electricity service with Electricaribe, the as its date of incorporation, its expiration date, registered address, partners, capital, nomenclature certificate must be obtained at the Municipal Government. legal representative, his or her authorization to enter into deals in the name of the company, and its line of business. The rates for public registration services are set Procedure 13. Obtain connection to electricity service according to what is established in Decree 393 of 2002. Time: 3 days Procedure 3*. Obtain certificate of no outstanding payments on Cost: COP$50,000 property tax Comments: 3 days after the issuance of the RETIE certificate, the electricity provider will connect the service. The cost of the transformer is assumed by the constructor. Time: 1 day (simultaneous with procedures 1 and 2) Cost: No cost Comments: With the receipt of payment of the property tax, the Treasury and Municipal Financial Management will issue the certificate at no cost. 100 DOING BUSINESS IN COLOMBIA 2010 Procedure 14. Final inspection by the Municipal Government Procedure 5. Pay urban boundary tax Time: 1 day Time: 1 day Cost: No cost Cost: COP$4,106,963 [ID = (M2*V*1%)] Comments: The Municipal Government of Riohacha verifies compliance of the M2: Square meters licensed construction works with the documentation submitted to complete the procedure V: Value per square meter for obtaining the construction license. This verification is the responsibility of the Municipal Regulations according to the POT Municipal Planning Office. Comments: The urban delineation tax is established by the urban curator and paid in favor of the Municipal Treasury. The Municipal Department of Planning is in charge *This procedure is simultaneous with a previous procedure. to set the boundaries DEALING WITH CONSTRUCTION PERMITS Procedure 6. Obtain previous authorization for the connection of Santa Marta, Magdalena water service Time: 10 days Procedure 1. Obtain ownership history and no-lien certificate Cost: No cost Time: 1 day Comments: A request for connection to the main pipe must be presented, attaching Cost: COP$11,840 identification, copies of the public deed and construction license. After the petition Comments: This certificate provides the legal information on the property and on has been reviewed, the company Metro Agua issues a certificate confirming the its current and previous ownership. The rate is set according to Decrees 1250 of 1970 feasibility of the connection. and 2280 of 2008, the latter as amended by Resolution 0035 of 2009. Any individual or legal entity can request the issue of an ownership history and no-lien certificate of Procedure 7*. Request connection to electricity service a property at the Registry Office. Time: 1 day (simultaneous with procedure 6) Cost: No cost Procedure 2*. Obtain certificate of existence and legal Comments: It is requested in writing to the service provider company ElectriCaribe. representation of the Construction Company Time: 1 day (simultaneous with procedure 1) Procedure 8*. Obtain a telephone connection Cost: COP$3,500 Time: 1 day (simultaneous with procedures 6 and 7) When the parties are Limited Liability Companies, the Certificate of existence and Cost: No cost legal Representation must be requested from the Chamber of Commerce. This Comments: The service providers do not take more than a day for the installation of document certifies the existence of the legal entity, as well as other aspects such telephone service. as its date of incorporation, its expiration date, registered address, partners, capital, legal representative, his or her authorization to enter into deals in the name of the Procedure 9. Audit of the grids company, and its line of business. The rates for public registration services are set according to what is established in Decree 393 of 2002. Time: 1 day Cost: No cost Procedure 3*. Obtain certificate of no outstanding payments on Comments: The Municipal Planning Office issues the approval in accordance to the property tax hydraulic designs Time: 1 day (simultaneous with procedures 1 and 2) Procedure 10*. Obtain RETIE certificate Cost: COP$8,000 Time: 3 days Comments: With the information on the location of the property and the informa- tion stored on a data base, it is possible to obtain the certificate of no outstanding Cost: COP$300,000 property tax payments. Santa Marta runs a Tax Information Registry (Registro de Comments: The cost covers the internal electricity wiring installations that Electri Información Tributaria RIT) which is connected to the Treasury Department of the Caribe requires for connection to electricity services. The RETIE standard includes the Municipality (Secretaría de Hacienda del Municipio). If the taxpayer is up to date drawings and the inspection of such facilities. with tax payments, the certificate is given immediately. The certificate is good for property tax and contribution obligation on property value increase. Procedure 11. Final inspection by the water and sewage company Time: 1 day Procedure 4. Obtain construction license Cost: No cost Time: 20 days Cost: COP$8,291,639. The formula for the calculation of the expenses is the follow- Procedure 12*. Obtain connection to electricity service ing: E=(Cf*i*m)+((Cv*i*j*m)*1.16.) For Santa Marta is: E = (865,068 x 4 x 0.638) + Time: 3 days (simultaneous with procedure 11) ((397,520 x 4 x 5.17 x 0.638) x 1.16) Cost: COP$150,000 Comments: The constructor must present the following documents (Article 18 of Decree 564 of 2006): Comments: The constructor is responsible for the cost of all the conducting cables, as set by the requirements of Electri Caribe. The cost of calibration and connection is 1. Copy of the ownership history and no-lien certificate, with an issue date no later included in the consumer bills. than one month prior to the date of the request 2. The unified national license request form, established through Resolution 0984 of Procedure 13. Final inspection by the Municipal Government 2005, issued by the Ministry of the Environment, Housing and Territorial Develop- Time: 1 day ment Cost: No cost 3. Copy of the certificate of existence and legal representation, with an issue date of less than one month prior to the date of the request Comments: The certificate of occupancy issued by the Office of Municipal Planning is the document issued by the municipality that proves compliance with the specifi- 4. Copy of the documents or tax statements proving payment of property taxes for cations of the construction. . the previous five years 5. Drawing of the site and identification of the property *This procedure is simultaneous with a previous procedure. 6. List of the addresses of neighboring properties LIST OF PROCE %63&4t DEALING WITH CONSTRUCTION PERMITS 101 DEALING WITH CONSTRUCTION PERMITS Procedure 8*. Request connection to electricity service Sincelejo, Sucre Time: 5 days (simultaneous with procedure 7) Cost: No cost Procedure 1. Obtain ownership history and no-lien certificate Comments: A concept for the availability and feasibility of the connection must be Time: 1 day obtained from the company ElectriCaribe. Cost: COP$11,840. Comments: This certificate provides the legal information on the property and on Procedure 9*. Obtain a telephone connection its current and previous ownership. The rate is set according to Decrees 1250 of 1970 Time: 1 day (simultaneous with procedures 7 and 8) and 2280 of 2008, the latter as amended by Resolution 0035 of 2009. Any individual Cost: No cost or legal entity can request the issue of an ownership history and no-lien certificate of a property at the Registry Office. Comments: Phone service will be available in less than 24 hours. Service providers in Sincelejo are Edatel and Telefónica. Procedure 2*.Obtain a certificate of existence and legal representation of the Construction Company Procedure 10. Audit of the Grids Time: 1 day (simultaneously with procedure 1) Time: 15 days Cost: COP$3,500 Cost: No cost Comments: When the parties are Limited Liability companies, they must request Comments: The company Aguas de la Sabana performs the auditing. Engineers from a certificate of existence and legal representation from the Chamber of Commerce. the company verify the adequacy the proposed designs for the connection of water This document proves the existence of a corporate body and other aspects such as services. date of incorporation, termination date, domicile, partners, capital, legal representa- tive; the power the legal representative has to bind the company, and corporate Procedure 11*. Obtain RETIE certificate purpose. The rate of public registration services is established in accordance to Time: 1 day (simultaneous with procedure 10) Decree 393 of 2002. Cost: COP$700,000 Comments: The certification RETIE is a necesary requirement to prove compliance Procedure 3*. Pay certificate of no outstanding payments on with legal standards and drawings. property tax Time: 1 day Procedure 12. Final inspection by the water and sewage company Cost: COP$4,000 Time: 1 day Cost: No cost Procedure 4. Obtain certificate of no outstanding payments on Comments: Once Aguas de la Sabana makes a final inspection they sign an agree- property tax ment with the constructor to obtain final connection to the water service. Time: 1 day (simultaneous with procedures 1 and 2) Cost: No cost Procedure 13*. Obtain connection to electricity service Comments: This certificate is obtained at the Municipal Tax Office by showing a Time: 10 days (simultaneous with procedure 12) copy of the of the payment receipt. Cost: COP$1,200,000 (calibration and connection) Comments: The costs for calibration and connection are split and charged in the Procedure 5. Obtain construction license monthly bill. Time: 45 days Cost: COP$8,291,639. The formula for the calculation of the expenses is the fol- Procedure 14. Final inspection by the Municipal Government lowing: E= (Cf*i*m) + ((Cv*i*j*m)*1.16.) For Sincelejo, is E = (865,068 x 4 x 0.638) + Time: 1 day ((397,520 x 4 x 5.17 x 0.638) x 1.16) Cost: No cost Comments: The constructor must present the following documents (Article 18 of Comments: Once the construction is about to begin, the Office of Municipal Plan- Decree 564 of 2006): ning elaborates a minute and makes periodic inspections. When the construction is 1. Copy of the ownership history and no-lien certificate, with an issue date no later finished they issue a certificate of occupancy to verify compliance with the terms of than one month prior to the date of the request the construction license. 2. The unified national license request form, established through Resolution 0984 of 2005, issued by the Ministry of the Environment, Housing and Territorial Develop- *This procedure is simultaneous with a previous procedure. ment 3. Copy of the certificate of existence and legal representation, with an issue date of DEALING WITH CONSTRUCTION PERMITS less than one month prior to the date of the request 4. Copy of the documents or tax statements proving payment of property taxes for Tunja, Boyacá the previous five years 5. Drawing of the site and identification of the property. Procedure 1. Obtain ownership history and no-lien certificate 6. List of the addresses of neighboring properties. Time: 1 day Cost: COP$11,840 Procedure 6. Pay boundary tax Comments: This certificate provides the legal information on the property and on Time: 1 day its current and previous ownership. The rate is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter as amended by Resolution 0035 of 2009. Any individual Cost: COP$3,904,940 or legal entity can request the issue of an ownership history and no-lien certificate of a property at the Registry Office. Procedure 7. Obtain previous authorization for water connection services Procedure 2*. Obtain certificate of existence and legal Time: 8 days representation of the Construction Company Cost: COP$400,000 Time: 1 day (simultaneous with procedure 1) Comments: The service provider company, Aguas de la Sabana in order to connect Cost: COP$3,500 the service, requires the constructor to submit an ownership history and no-lien Comments: When the parties are Limited Liability companies, they must request certificate, the identification card of the owner and the indication of the zone. a certificate of existence and legal representation from the Chamber of Commerce. Once the application is completed, Aguas de la Sabana makes an assessment of the This document proves the existence of a corporate body and other aspects such as works necessary to obtain the connection of the service. The total value of the con- date of incorporation, termination date, domicile, partners, capital, legal representa- nection is split and charged with the monthly bill. tive; the power the legal representative has to bind the company, and corporate purpose. The rate of public registration services is established in accordance to Decree 393 of 2002. 102 DOING BUSINESS IN COLOMBIA 2010 Procedure 3*. Obtain certificate of no outstanding payments on 3. Design records property tax 4. Copy of the certificate for service availability Time: 1 day (simultaneous with procedures 1 and 2) 5. Copies of any technical information Cost: COP$8,000 (fixed value) 6. Payment receipt of the application form to request project’s inspections (its amount must be paid at the offices of Plaza Real Comments: The payment can be made at any bank . The receipt of payment is presented before the office of the Treasury which will issue the certificate of no 7. Drawings of the construction areas approved by the urban curator outstanding payments. 8. If necessary, a copy of the deed of constitution of the easement must also be furnished Procedure 4. Obtain a land use certificate Time: 8 days Procedure 8*. Request connection to electricity service Cost: COP$8,000 (fixed rate) Time: 1 day (simultaneous with procedure 7) Comments: The requirements to obtain this certificate are: Cost: COP$150,000 1. Submit a written application addressed to the Municipal Planning Office indicat- Comments: To obtain the final connection it is necessary to present the RETIE cer- ing the name of the company, its activity, address, phone number, signature and tificate issued by an authorized company. In Tunja there are already some companies ID of the applicant that issue the certificate. In order to obtain the RETIE certificate, the constructor must request a certificate that states the provider of the electricity materials complies with 2. Submit the last receipts of most recent property tax payments the established regulations. 3. A certificate of existence and legal representation. In the case of public companies an attachment with the minute containing the designation of the legal represen- Procedure 9*. Obtain a telephone connection tative must be attached as well Time: 6 days (simultaneous with procedures 7 and 8) 4. Power of attorney dully granted when acting through a representative Cost: No cost 5. Certificate of no outstanding obligations due to the Municipality of Tunja Comments: The requirements are : copy of an identification card and a copy of a 6. Property regulations if required utility bill (water or electricity). If the constructor gets multiple services or enters an 7. Written consent by the owner of the property in relation to the activities to be agreement with the company for a minimum period of one year, the connection is performed free of charge. This procedure can become very complex and lengthy if the construc- 8. Payment to obtain the certificate of land use tion is located far out from Tunja’s grids. Some constructors say that currently it is Reception and delivery of certificates are made from Monday to Friday from 8:00 am. very uncommon to request a fixed phone line. to 12:00 m. and from 2:00 pm to 6:00 pm Procedure 10. Obtain connection to water service Procedure 5. Obtain the construction license Time: 3 days (includes the review of documents and the final visit to the building to Time: 45 days set-up the connection and connect the service) Cost: COP$7,018,002. The formula for the calculation of the expenses is the follow- Cost: COP$250,000 (includes registration costs, meter, registration chamber, labor, ing: E=(Cf*i*m)+((Cv*i*j*m)*1.16.) For Tunja is : E = (865,068 x 4 x 0.54) + (397,520 materials, box and registries of user’s handling and power cut) x 4 x 5.17 x 0.54) x 1.16) Comments: Proactiva Aguas de Tunja S.A. ESP visits the construction to approve the Comments: The constructor must present the following documents (Article 18 of construction works, ascertain compliance with the terms of the license and to install Decree 564 of 2006): the water meter device. In some cases, Proactiva Aguas de Tunja S.A. makes further visits to verify that the water and sewer services were well installed. 1. Copy of the ownership history and no-lien certificate, with an issue date no later than one month prior to the date of the request Procedure 11*. Obtain RETIE certificate 2. The unified national license request form, established through Resolution 0984 of Time: 1 day (simultaneous with procedure 10) 2005, issued by the Ministry of the Environment, Housing and Territorial Develop- ment Cost: COP$94,000 3. Copy of the certificate of existence and legal representation, with an issue date of Comments: The constructor needs to file before one of the Managerial offices of less than one month prior to the date of the request EBSA the following documents: 4. Copy of the documents or tax statements proving payment of property taxes for 1. Copy of the project’s design filed and approved by EBSA the previous five years 2. Certificate FT-ES-08 of availability for electricity service 5. Drawing of the site and identification of the property 3. Receipt of payment made to EBSA to carry out an inspection. 6. List of the addresses of neighboring properties 4. Copy of the identification card of the applicant 5. Certificate of zoning Procedure 6. Pay construction and urban tax 6. Copy of the form FT-ES-07 (minutes of connections made for certain projects) Time: 1 day 7. Copy of the identification card and professional license of the electrician Cost: COP$2,692,892 [Value = value per use x m2 x 50% = 4,141 x 1,300.6 x 50% 8. Letter stating that the company is in compliance with the terms of the RETIE (there is a 50% discount if the constructor hires local workers. This assumption was certificate considered)] Comments: Payment can be made at any bank or at the Municipal Treasury. Under Procedure 12. Obtain connection to electricity service the Tax Statute of Tunja, there is an exemption of five years and for the 50% when Time: 17 days the tax payer proves that he hired workers from Tunja and that the materials used for the construction were purchased from local establishments. This agreement will be Cost: COP$520,000 [counter (300,000) + cable (12,000*10) + labor and materials in effect until 2010. (100,000)] Comments: RETIE’s regulations oblige the power company to pay visits to the Procedure 7. Obtain previous authorization for the connection to constructions at least once every two years. The first visit to grant availability and water service the second to approve the works, inspect and seal the meters and connections. Ad- ditional visits are made when needed. Time: 1 day Cost: No cost Procedure 13. Final inspection by the Municipal Government Comments: In order to connect the water and sewage service the constructor must Time: 1 day obtain a certificate issued by the Cadastre. Once the availability for the service is Cost: No cost confirmed, the constructor submits before the company Proactiva Aguas de Tunja S.A. the following documents: 1. Application form indicating an address and phone number for further contacts *This procedure is simultaneous with a previous procedure. 2. Copy of the professional license of the engineer in charge of the construction LIST OF PROCE %63&4t DEALING WITH CONSTRUCTION PERMITS 103 DEALING WITH CONSTRUCTION PERMITS Procedure 7*. Request connection to the electricity service Valledupar, Cesar Time: 1 day (simultaneous with procedure 6) Cost: No cost Procedure 1. Obtain ownership history and no-lien certificate Comments: Once the service has been requested the company Electricaribe verifies Time: 1 day its availability to make the connection. The company requires the filing of the draw- Cost: COP$11,840 ings for the electricity connection to the electricity service. Comments: This certificate provides the legal information on the property and on its current and previous ownership. The rate is set according to Decrees 1250 of 1970 Procedure 8*. Obtain a telephone connection and 2280 of 2008, the latter as amended by Resolution 0035 of 2009. Any individual Time: 1 day (simultaneous with procedures 6 and 7) or legal entity can request the issue of an ownership history and no-lien certificate of Cost: No cost a property at the Registry Office. Procedure 2*. Obtain a certificate of existence and legal Procedure 9. Audit of the grids representation the Construction Company Time: 1 day Time: 1 day (simultaneously with procedure 1) Cost: No cost Cost: COP$3,500 Comments: The technical department of ENDUPAR confirms that the construction work complies with the approved designs. Comments: When the parties are Limited Liability companies, they must request a certificate of existence and legal representation from the Chamber of Commerce. Procedure 10*. Obtain RETIE certificate This document proves the existence of a corporate body and other aspects such as age, termination date, domicile, partners, capital, legal representative; the power the Time: 1 day legal representative has to bind the company, and corporate purpose. The rate of Cost: COP$150,000 public registration services is established in accordance to Decree 393 of 2002. Comments: In some cases an inspection is needed, depending on the complexity of the contruction works. The inspection is carried out an authorized outsourcing Procedure 3*. Obtain a certificate of no outstanding payments on company. property tax Time: 2 days (simultaneous with procedures 1 and 2) Procedure 11. Final inspection by the water and sewage company Cost: COP$4,500 Time: 1 day Comments: In order to obtain this certificate it is necessary to submit the cadastral Cost: No cost file and the address and name of the owner of the construction company. Comments: Usually ENDUPAR does not perform the final inspection. Procedure 4. Obtain construction license Procedure 12*. Obtain connection to electricity service Time: 45 days Time: 30 days Cost: COP$7,901,750. The formula for the calculation of the expenses is the follow- Cost: COP$100,000 ing: E=(Cf*i*m)+((Cv*i*j*m)*1.16.) For Valledupar is : E = (865,068 x 4 x 0.608) + Comments: The constructor is responsible to get the necessary equipment for the ((397,520 x 4 x 5.17 x 0.608) x 1.16) connection to the main grid. Payments for calibration and connection are split and Comments: The constructor must present the following documents (Article 18 of charged with the monthly bill. Decree 564 of 2006): 1. Copy of the ownership history and no-lien certificate, with an issue date no later Procedure 13. Final inspection by the Municipal Government than one month prior to the date of the request Time: 1 day 2. The unified national license request form, established through Resolution 0984 of Cost: No cost 2005, issued by the Ministry of the Environment, Housing and Territorial Develop- Comments: It is common that inspectors from the Office of Municipal Planning ment follow the progress of the construction work. 3. Copy of the certificate of existence and legal representation, with an issue date of less than one month prior to the date of the request *This procedure is simultaneous with a previous procedure. 4. Copy of the documents or tax statements proving payment of property taxes for the previous five years DEALING WITH CONSTRUCTION PERMITS 5. Drawing of the site and identification of the property 6. List of the addresses of neighboring properties Villavicencio, Meta Procedure 5. Obtain certificate of urban boundary tax Procedure 1. Obtain ownership history and no-lien certificate Time: 1 day Time: 1 day Cost: No cost Cost: COP$11,840 Comments: Prior payment of this tax used to be a condition to obtain the construc- Comments: This certificate provides the legal information on the property and on tion license and its value corresponded to 20% of the property tax. Currently the its current and previous ownership. The rate is set according to Decrees 1250 of 1970 Office of Municipal Planning issues this certificate at no cost. There are plans to and 2280 of 2008, the latter as amended by Resolution 0035 of 2009. Any individual reenact this tax in 2010. or legal entity can request the issue of an ownership history and no-lien certificate of a property at the Registry Office. Procedure 6. Obtain previous authorization for connection to water services Procedure 2*. Obtain a certificate of existence and legal representation of the Construction Company Time: 5 days Time: 1 day (simultaneous with procedure 1) Cost: No cost Cost: COP$3,500 Comments: The service is requested to the service provider company ENDUPAR. It verifies the complexity of the connection to the main tube and the necessary works Comments: When the parties are Limited Liability companies, they must request to connect the service. a certificate of existence and legal representation from the Chamber of Commerce. This document proves the existence of a corporate body and other aspects such as age, termination date, domicile, partners, capital, legal representative; the power the legal representative has to bind the company, and corporate purpose. The rate of public registration services is established in accordance to Decree 393 of 2002. 104 DOING BUSINESS IN COLOMBIA 2010 Procedure 3. Obtain certificate of no outstanding property tax Procedure 10*. Obtain a telephone connection payment Time: 3 days (simultaneous con Procedures 8 y 9) Time: 1 day (simultaneous with procedures 1 and 2) Cost: COP$50,000 Cost: No cost Comments: The certificate proves payment of property taxes for the last 5 years. Can Procedure 11. Audit of the grids be obtained at the Municipal Government Time: 30 days Cost: No cost Procedure 4. Obtain certificate of paramento Time: 10 days Procedure 12. Obtain RETIE certificate Cost: No cost Time: 5 days Comments: In order to request the certificate of paramento it is necessary to submit Cost: No cost. the same documents required to obtain the contruction license. The Office of Munici- Comments: This procedure is ruled by Resolution CREG 070 de 1998. pal Planning schedules a visit to confirm that the construction works comply with the distances required. Procedure 13. Final inspection from the company EAAV Time: 1 day Procedure 5. Obtain construction license Cost: No cost Time: 60 days Cost: COP$7,018,002. The formula for the calculation of the expenses is the follow- Procedure 14. Final inspection from the company EMSA ing: E=(Cf*i*m)+((Cv*i*j*m)*1.16.) For Villavicencio is: E = (865,068 x 4 x 0.54) + ((397,520 x 4 x 5.17 x 0.54) x 1.16) Time: 1 day Comments: The constructor must present the following documents (Article 18 of Cost: No cost Decree 564 of 2006): Comments: This procedure is ruled by Resolution CREG 070 of 1998. 1. Copy of the ownership history and no-lien certificate, with an issue date no later The documents and requisites for EMSA’s inspection are: than one month prior to the date of the request 1. Copy of the approval given to the project 2. The unified national license request form, established through Resolution 0984 of 2. Copy of the certificate of availability of the service 2005, issued by the Ministry of the Environment, Housing and Territorial Develop- 3. Declaration under oath by the constructor affirming that he was responsible for ment the electric facilities and that the materials he used comply with the requirements 3. Copy of the certificate of existence and legal representation, with an issue date of set by RETIE less than one month prior to the date of the request 4. Drawings of the project showing how it is going to look after completing the 4. Copy of the documents or tax statements proving payment of property taxes for construction works the previous five years 5. Indication on where the electric equipment is going to be installed 5. Drawing of the site and identification of the property 6. Documents pertaining the origin and guarantees of the electric devices 6. List of the addresses of neighboring properties 7. Compliance with RETIE’s and EMSA’s standards Procedure 6. Payment of municipal stamp duties (Pro-Cultura and Procedure 15. Obtain electricity connection Pro-UniLlanos) Time: 8 days Time: 1 day Cost: COP 3,000,000 (corresponds to designs) Cost: COP$210,540 [Pro- Cultura stamp (2% of the construction license’s costs) + Comments: This procedure is ruled by Resolution CREG 070 de 1998. stamp Pro-UniLlanos (1% of the construction license’s costs)] Comments: Pursuant to Municipal Agreement 030 of 2008, a contribution to the Procedure 16. Final inspection by the Municipal Government municipality must be made by paying a stamp named Pro Cultura which value is Time: 1 day equivalent to 2% of the total of the total costs advanced by the constructor. Cost: No cost In addition pursuant to Ordinance 662 of 2008, a contribution in favor of the depart- ment of Meta must be made by paying a stamp named stamp Pro UniLlanos which value is equivalent to 1% of the total of costs advanced by the constructor. * This procedure is simultaneous with a previous procedure. Procedure 7. Pay urban boundary tax LIST OF PROCEDURES Time: 1 day *This procedure is simultaneous with a previous procedure Cost: COP$13,000,000 Registering property Comments: Fees are established annually by means of a Municipal agreement. For 2009, the urban boundary tax corresponds to 2% of the budget for the construction works. Armenia, Quindío Procedure 8. Obtain previous authorization for water connection Procedure 1. Obtain ownership history and no-lien certificate services Time: 1 day Time: 30 days Cost: COP$11,840 Cost: COP$4,300,000 Comments: This certificate (Certificado de Libertad y Tradición) provides the legal Comments: The service provider company EAAV sets the fees. Fees for 2009 were information on the property and on its current and previous ownership. The rate enacted by the Agreement 03 of the Board of Directors’ meeting of January 23 of is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter modified by 2009. Resolution 0035 of 2009. Any individual or legal entity can request this certificate at the Registry Office. Procedure 9*. Request and obtain connection to electricity service Procedure 2. Obtain the certificate of legal existence and Time: 1 day (simultaneous with procedure 8) representation of the buyer and the seller of the property from the Chamber of Commerce Cost: No cost Time: 1 day Comments: This procedure was enacted by means of Resolution CREG 070 of 1998. Cost: COP$3,500 LIST OF PROCE %63&4t DEALING WITH CONSTRUCTION PERMITS 105 Comments: When the parties are limited liability companies, a certificate of legal ex- Comments: Payment of the registration fee legalizes the transaction before the istence and representation must be requested from the Chamber of Commerce. This Registry Office. This payment is made at a commercial bank, which has an agreement document certifies the existence of the legal entity, indicates its legal representative with the Registry Office. and provides information on its registered address, its partners, its capital and the date of establishment. The rate is set according to Decree 393 of 2002. Procedure 10. Registration of public deed with the Registry Office Time: 6 days Procedure 3. Review of the property titles by an attorney Cost: No cost Time: 4 days Comments: Once the registration tax, the pro-development and pro-hospital stamp Cost: COP$500,000 duties and the registration tax are paid, the document is registered at the Registry Comments: An attorney reviews the previous property titles and the background of Office (Oficina de Registro de Instrumentos Públicos). the owner to verify that there are no legal constraints to the transaction. This legal review is not mandatory, but is usually done for this type of transactions. The attor- * This procedure is simultaneous with a previous procedure. ney must receive the certificates mentioned in procedures 1 and 2, as well as a copy of the company statutes that authorize the representative to act on its behalf. REGISTERING PROPERTY Procedure 4. Pay pro-development stamp duty required to Barranquilla, Atlántico obtain the certificate of no outstanding property tax payments and no outstanding contribution obligations on property value Procedure 1. Obtain ownership history and no-lien certificate increases due to public works Time: 1 day Time: 1 day Cost: COP$11,840 Cost: COP$3,000 Comments: This certificate (Certificado de Libertad y Tradición) provides the legal Comments: Two pro-development stamps are purchased for COP$1,500 each at the information on the property and on its current and previous ownership. The rate Treasury of the Government of Quindío. This is a pre-requisite for obtaining the cer- is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter modified by tificates of no outstanding property tax payments and no outstanding contribution Resolution 0035 of 2009. Any individual or legal entity can request this certificate at obligations on property value increases due to public works. the Registry Office. Procedure 5. Obtain certificate of no outstanding property Procedure 2. Obtain the Certificate of legal existence and tax payments and no outstanding contribution obligations on representation of the buyer and the seller of the property from property value increases due to public works the Chamber of Commerce Time: 1 day Time: 1 day Cost: COP$20,600 [COP$8,300 for each certificate + COP$1,500 for each pro-hospital Cost: COP$3,500 stamp + COP$500 for each pro-senior citizen stamp]. Comments: When the parties are limited liability companies, a Certificate of exis- Comments: This procedure takes place at the Municipal Treasury Office. The Pro- tence and legal Representation must be requested from the Chamber of Commerce. Hospital and Pro-Senior citizen stamps are purchased for COP$1,500 and COP$500, This document certifies the existence of the legal entity indicates its legal represen- respectively, at the same counter where the certificates of no outstanding property tative and provides information on its registered address, its partners, its capital and tax payments and no outstanding contribution obligations on property value the date of establishment. The rate is set according to Decree 393 of 2002. increases due to public works are obtained. Procedure 3. Review of the property titles by an attorney Procedure 6. The notary public prepares the public deed Time: 3 days Time: 1 day Cost: COP$994,000 Cost: COP$1,675,185 [COP$13,880 + 0.27%*(value of the property - COP$118,680) Comments: An attorney reviews the previous property titles and the background of for notary fees + COP$9,750 for the public deed + COP$29,250 for copies of the the owner to verify that there are no legal constraints to the transaction. This legal public deed + COP$3,465 for the Superintendence of Notaries + COP$3,465 for the review is not mandatory, but is usually done for this type of transactions. The attor- National Notary Fund + 16% VAT]. ney must receive the certificates mentioned in procedures 1 and 2, as well as a copy Comments: The notary public prepares the public deed based on all the documents of the company statutes that authorize the representative to act on its behalf. submitted by the parties. The notary public is required by law to prepare the public deed. The total cost of the procedure is calculated according to Resolution 9500 of Procedure 4. Obtain certificate of no outstanding contribution December of 2008. The cost per page of the public deed is COP$1,950 plus VAT. It is obligation on property value increases due to public works assumed that the public deed is 5 pages long. Time: 1 day Cost: No cost Procedure 7. Pay registration tax and pro-development stamp duty Comments: This certificate is proof that the property has no pending balances on payments of property valuation contributions. The certificate is only issued if the Time: 1 day total contribution amount has been paid at a bank. The certificate is issued at the Cost: COP$6,153,935 (1% of the price of the property for the registration tax and offices of Empresa de Desarrollo Urbano de Barranquilla y la Región Caribe (EDUBAR 0.2% of the price of the property for the pro-development stamp duty). S.A.), and at no cost, according to Decree 095 of February 8, 2008. Comments: The registration tax applies to the registration of documentary legal acts, contracts or deals in which private-sector parties are part or beneficiaries and Procedure 5. Obtain certificate of no outstanding property tax which must be registered by law at the Registry Office. Both payments are made at payments the same time at the same counter at the Government of Quindío. Time: 1 day Cost: No cost Procedure 8. Pay pro-hospital stamp duty Comments: This certificate is proof that the property has no pending balances on Time: 1 day property tax payments. The notaries have an exclusive login to access the taxpayer’s Cost: COP$2,564,140 (0.5% of the property value). account statement and print the certificate from the District’s tax information system Comments: Calculation and payment of the pro-hospital stamp duty is done at the at the website www.barranquilla.gov.co. Hospital Universitario del Quindío San Juan de Dios. Procedure 6. Obtain pro-hospital stamp duty statement Procedure 9. Payment of registration fee Time: 1 day Time: 1 day Cost: No cost Cost: COP$2,564,140 (0.5% of the property value). 106 DOING BUSINESS IN COLOMBIA 2010 Comments: The taxpayer can either get the pro-hospital stamp duty form from the REGISTERING PROPERTY municipal tax department, or download it from the department’s website. The form Bogotá, Distrito Capital should be filled out and submitted to the customer service counter, which will verify the form and calculate the tax. The taxpayer will then receive an official payment Procedure 1. Obtain ownership history and no-lien certificate statement generated by the tax information system (SITD). Payment should be made at teller window 6 of Banco Davivienda, located at the same premises of the Time: 1 day municipal government. The statement is stored in the SITD and may be later verified Cost: No cost by the public notary. This procedure is regulated by Resolution (Acuerdo) 010 of 2006 Comments: This certificate (Certificado de Libertad y Tradición) provides the legal and the District Tax Code. information on the property and on its current and previous ownership. The rate is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter modified by Procedure 7. Pay pro-hospital stamp duty Resolution 0035 of 2009. Any individual or legal entity can request this certificate at Time: 1 day the Registry Office. Cost: COP$7,692,419 (1.5% of the property value). Procedure 2. Obtain the certificate of legal existence and Comments: Payment is made at a commercial bank. representation of the buyer and the seller of the property from Procedure 8. The notary public prepares the public deed the Chamber of Commerce Time: 3 days Time: 1 day Cost: COP$1,675,185 [COP$13,880 + 0.27%*(value of the property - COP$118,680) Cost: COP$3,500 for notary fees + COP$9,750 for the public deed + COP$29,250 for copies of the Comments: When the parties are companies, a certificate of legal existence and public deed + COP$3,465 for the Superintendence of Notaries + COP$3,465 for the representation of the company must be requested at the Chamber of Commerce. National Notary Fund + 16% VAT]. This certificate does not have an expiration date for its validity, but some entities, Comments: The notary public prepares the public deed based on all the documents such banks or authorities, request for certificates issued with less than three months submitted by the parties. The notary public is required by law to prepare the public in order to obtain updated information. deed. The total cost of the procedure is calculated according to Resolution 9500 of December of 2008. The cost per page of the public deed is COP$1,950 plus VAT. It is Procedure 3. Review of the property titles by an attorney assumed that the public deed is 5 pages long. Time: 5 days Cost: COP$1,113,000 Procedure 9. Obtain statement for department tax (beneficencia) Comments: An attorney reviews the previous property titles and the background of Time: 1 day the owner to verify that there are no legal constraints to the transaction. This legal Cost: No cost review is not mandatory, but is usually done for this type of transactions. The attor- Comments: This procedure is done at the tax department of the Office of the ney must receive the certificates mentioned in procedures 1 and 2, as well as a copy Governor. of the company statutes that authorize the representative to act on its behalf. Procedure 10*. Pay pro-development departmental tax Procedure 4. Obtain certificate of no outstanding property (beneficencia) tax payments and no outstanding contribution obligations on property value increases due to public works Time: 1 day (simultaneously with procedure 10) Time: 1 day Cost: COP$2,564,140 (0.5% of the property value). Cost: No cost Comments: It is paid at a teller window of a commercial bank at the Government of Atlántico. The stamp duty is included in the Departmental Tax Code, Ordinance Comments: From the one-stop-shop website (Ventanilla Única de Registro, VUR), Decree 000823 of 2003. it is now possible to obtain online the certificate of no outstanding property tax payments, stating that municipal property taxes have been paid from Urban Devel- Procedure 11. Payment of registration fee and registration tax opment Institute (IDU) and the certificate of no outstanding contribution obligations on property value increases due to public works states taxes related to increases in Time: 1 day the value of the property due to constructions, roads, etc. Cost: COP$7,692,419 (1.5% of the property value). For properties with no liens, the certificates obtained and printed out from the inter- Comments: Payment of registration fee legalizes the transaction before the Registry net at the notary's offices can now be submitted to the Land Registry. Notaries have Office. The registration tax applies to the registration of acts, contracts or deals in a special login to access these certificates. This certificate has no cost if requested which private-sector parties are part or beneficiaries and which must be registered online and can be obtained by submitting the "chip catastral." by law at the Registry Office. The registration tax is regulated by Law 223 of 1995 and Decree 650 of 1996. This procedure is done at a commercial bank, which has an Procedure 5. The notary public prepares the public deed agreement with the Registry Office. Time: 8 days Procedure 12. Registration of public deed with the Registry Office Cost: COP$1,425,385.38 [0.27%*(property value - COP$118,680) for notary fees + COP$7,120 deed + COP$26,700 copies of the deed + COP$3,465 for the Superinten- Time: 3 days dence of the Notary + COP$3,465 for the National Fund of Notaries]. Cost: No cost Comments: The notary public will prepare the final public deed with all the docu- Comments: Once the registration fee and tax have been paid, the public deed can mentation previously obtained by the parties. The participation of a notary in the be registered at the Registry Office (Oficina de Registro de Instrumentos Públicos). preparation of the public deed is mandatory by law, and his fees are also established by law (0.27% of property value + other indicated fees). The standard preliminary Procedure 13. Inform the cadastre about the change of deed minute that can be prepared by the parties and can be obtained for free ownership in the notaries’ offices or online at http://www.registratupropiedad.com/index. Time: 1 day php?option=com_content&view=article&id=71&Itemid=76 Cost: No cost Procedure 6. Pay registration fee Comments: The interested party must go to the cadastre office at Instituto Geográ- fico Agustín Codazzi (IGAC)– to give notice of the change in ownership. Time: 1 day Cost: COP$7,692,419. (1% of property value for the registry tax and 0.5% of the property value for the registration fee). * This procedure is simultaneous with a previous procedure. Comments: Registration fee can be paid at the Registry Office, where the com- mercial bank in charge of collection of this tax has installed a branch for this purpose. Despite its name, the registration fee is a tax that goes to finance state-level programs on public health. LIST LIST OFOF t REGISTERING PROCE %63&4t PROCEDURES STARTING APROPERT Y BUSINESS 107 Procedure 7. Registration of public deed with the Registry Office Comments: This document certifies that the property has no pending tax payments on property valuation in the Metropolitan Area. This procedure is done at the Office Time: 3 days of the Bucaramanga Metropolitan Area. Cost: No cost Comments: After the registry fee and tax are paid, the public deed prepared by the Procedure 7. An attorney prepares a preliminary deed notary must be registered at the Registry Office for its validity. After registration, Time: 2 days the new public deed is automatically sent (internal procedure) to the Office of the Cost: COP$320,000 Cadastre to register the change of ownership. Comments: The same attorney who reviewed the property titles in procedure 3 prepares a preliminary deed to be submitted to the notary public. This step is not * This procedure is simultaneous with a previous procedure. mandatory but is usually done for this type of transactions. The attorney needs the ownership history and no-lien certificate and the certificates of legal existence and REGISTERING PROPERTY representation of the buyer and seller (procedures 1 and 2) as well as the certificate of no outstanding property tax payments and the certificate of no outstanding con- Bucaramanga, Santander tribution obligations on property value increases due to public works (procedures 5 and 6). Procedure 1. Obtain ownership history and no-lien certificate Time: 1 day Procedure 8. The public notary prepares the public deed Cost: COP$11,840 Time: 3 days Comments: This certificate (Certificado de Libertad y Tradición) provides the legal Cost: COP$1,675,185 [COP$13,880 + 0.27%*(value of the property - COP$118,680) information on the property and on its current and previous ownership. The rate for notary fees + COP$9,750 for the public deed + COP$29,250 for copies of the is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter modified by public deed + COP$3,465 for the Superintendence of Notaries + COP$3,465 for the Resolution 0035 of 2009. Any individual or legal entity can request this certificate at National Notary Fund + 16% VAT]. the Registry Office. Comments: The notary public prepares the public deed based on all the documents submitted by the parties. The notary public is required by law to prepare the public Procedure 2. Obtain the certificate of legal existence and deed. The total cost of the procedure is calculated according to Resolution 9500 of representation of the buyer and the seller of the property from December of 2008. The cost per page of the public deed is COP$1,950 plus VAT. It is the Chamber of Commerce assumed that the public deed is 5 pages long. Time: 1 day Cost: COP$3,500 Procedure 9. Obtain registration tax statement Comments: When the parties are limited liability companies, a certificate of legal ex- Time: 1 day istence and representation must be requested from the Chamber of Commerce. This Cost: No cost document certifies the existence of the legal entity indicates its legal representative Comments: This procedure is done at the Government of Santander, Tax Unit. and provides information on its registered address, its partners, its capital and the date of establishment. The rate is set according to Decree 393 of 2002. Procedure 10. Pay registration tax Time: 1 day Procedure 3. Review of the property titles by an attorney Cost: COP$7,382,439 [1.43% of the property value+ COP$49,000]. Time: 3 days Comments: Based on the statement received in the previous procedure, this tax is Cost: COP$250,000 paid at a commercial bank located at the Government of Santander or at Casa del Comments: An attorney reviews the previous property titles and the background of Libro Total. the owner to verify that there are no legal constraints to the transaction. This legal review is not mandatory, but is usually done for this type of transactions. The attor- Procedure 11. Pay registration fee ney must receive the certificates mentioned in procedures 1 and 2, as well as a copy Time: 1 day of the company statutes that authorize the representative to act on its behalf. Cost: COP$2,564,140 (0.5% of the property value). Procedure 4*. Pay certificate of no outstanding property tax Comments: Payment of the registration fee legalizes the transaction before the payments, certificate of no outstanding contribution obligations Registry Office. This payment is done at a commercial bank, which has an agreement on property value increases due to public works, and certificate with the Registry Office. of no outstanding contribution obligations on property value increases due to public works of the Metropolitan Area Procedure 12. Registration of public deed with the Registry Office Time: 5 days Time: 1 day (simultaneous with procedure 3) Cost: No cost Cost: COP$14,500 [This amount includes COP$3,100 for the certificate of no outstanding property tax payments + COP$3,100 for the certificate of no outstand- Comments: Once the registration tax and fee have been paid, the public deed can ing contribution obligations on property value increases due to public works + be registered at the Registry Office (Oficina de Registro de Instrumentos Públicos). COP$8,300 for the certificate of no outstanding contribution obligations on property value increases due to public works of the Metropolitan Area]. Procedure 13. Inform the cadastre about the change of Comments: Payment is made at a commercial bank. ownership Time: 1 day Procedure 5*. Obtain certificate of no outstanding property Cost: No cost tax payments and certificate of no outstanding contribution Comments: The interested party must notify the transfer of property at the cadastre obligations on property value increases due to public works office of Instituto Geográfico Agustín Codazzi (IGAC). Time: 1 day (simultaneous with procedure 3) Cost: No cost * This procedure is simultaneous with a previous procedure. Comments: This document certifies that the property has no pending property and property valuation tax. This procedure is done at the Municipal Treasury. Procedure 6*. Obtain certificate of no outstanding contribution obligation on property value increases due to public works of the Metropolitan Area Time: 1 day (simultaneously with procedure 3) Cost: No cost (paid in procedure 4) 108 DOING BUSINESS IN COLOMBIA 2010 REGISTERING PROPERTY Procedure 7. The notary public prepares the public deed Cali, Valle del Cauca Time: 4 days Cost: COP$1,675,185 [COP$13,880 + 0.27%*(value of the property - COP$118,680) Procedure 1. Obtain ownership history and no-lien certificate for notary fees + COP$9,750 for the public deed + COP$29,250 for copies of the Time: 1 day public deed + COP$3,465 for the Superintendence of Notaries + COP$3,465 for the Cost: COP$11,840 National Notary Fund + 16% VAT]. Comments: This certificate (Certificado de Libertad y Tradición) provides the legal Comments: The notary public prepares the public deed based on all the documents information on the property and on its current and previous ownership. The rate submitted by the parties. The notary public is required by law to prepare the public is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter modified by deed. The total cost of the procedure is calculated according to Resolution 9500 of Resolution 0035 of 2009. Any individual or legal entity can request this certificate at December of 2008. The cost per page of the public deed is COP$1,950 plus VAT. It is the Registry Office. assumed that the public deed is 5 pages long. Procedure 2. Obtain the certificate of legal existence and Procedure 8. Obtain registration tax invoice representation of the buyer and the seller of the property from Time: 1 day the Chamber of Commerce Cost: No cost Time: 1 day Comments: This procedure is done at the Government of Valle del Cauca. Cost: COP$3,500 Comments: When the parties are limited liability companies, a certificate of legal ex- Procedure 9. Pay registration tax istence and representation must be requested from the Chamber of Commerce. This Time: 1 day document certifies the existence of the legal entity indicates its legal representative Cost: COP$5,215,032 (1.016% of the property value+ COP$4,700 stamp duties). and provides information on its registered address, its partners, its capital and the Comments: This cost is equivalent to 1.016% of the property value, as follows: date of establishment. The rate is set according to Decree 393 of 2002. registration tax (1% of the property value), pro-hospital, pro-urban development and pro-Univalle stamps (0.002% of the property value each) and the pro-cultura Procedure 3. Review of the property titles by an attorney stamp (1% of the registration tax). Payment is made at a commercial bank located at Time: 3 days the Government of Valle del Cauca. Cost: COP$993,800 (approximately 2 legal minimum monthly wages). Comments: An attorney reviews the previous property titles and the background of Procedure 10. Pay registration fee the owner to verify that there are no legal constraints to the transaction. This legal Time: 1 day review is not mandatory, but is usually done for this type of transactions. The attor- Cost: COP$2,564,140 (0.5% of the property value). ney must receive the certificates mentioned in procedures 1 and 2, as well as a copy Comments: Payment of registration fee legalizes the transaction before the Registry of the company statutes that authorize the representative to act on its behalf. Office. This payment is done at a commercial bank, which has an agreement with the Registry Office. Procedure 4*. Pay stamp duties to obtain the certificate of no outstanding property tax payments and certificate of Procedure 11. Registration of public deed with the Registry Office no outstanding contribution obligations on property value Time: 10 days increases due to public works Cost: No cost Time: 1 day (simultaneously with procedure 3) Comments: Once the registration tax and fee have been paid, the public deed can Cost: COP$6,000 (equivalent to the cost of two sets of three stamps) be registered at the Registry Office (Oficina de Registro de Instrumentos Públicos). Comments: In order to obtain the certificate of no outstanding property tax payments and certificate of no outstanding contribution obligations on property value increases due to public works, the interested party must purchase two sets of * This procedure is simultaneous with a previous procedure. three stamps at the Municipal Treasury, one set for each certificate. Cost of the pro- development stamps (COP$1,000), pro-hospital stamp (COP$1,500) and pro-Univalle REGISTERING PROPERTY stamp (COP$500). Cartagena, Bolívar Procedure 5*. Obtain the certificate of no outstanding property Procedure 1. Obtain ownership history and no-lien certificate tax payments and certificate of no outstanding contribution Time: 1 day obligations on property value increases due to public works Cost: COP$11,840 Time: 1 day (simultaneous with procedure 3) Comments: This certificate (Certificado de Libertad y Tradición) provides the legal Cost: No cost information on the property and on its current and previous ownership. The rate Comments: The certificates are proof that the property has no pending payments is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter modified by on property tax and no outstanding contribution obligations on property value Resolution 0035 of 2009. Any individual or legal entity can request this certificate at increases due to public works. This procedure is done at Si Cali, which is located at the Registry Office. the Municipal Administrative Center (CAM). Procedure 2. Obtain the certificate of legal existence and Procedure 6. An attorney prepares a preliminary deed representation of the buyer and the seller of the property from Time: 2 days the Chamber of Commerce Cost: COP$500,000 (approximately 1 legal minimum monthly wage) Time: 1 day Comments: The same attorney who reviewed the property titles in procedure 3 Cost: COP$3,500 prepares a preliminary deed to be submitted to the notary public. This step is not Comments: When the parties are limited liability companies, a certificate of legal ex- mandatory but is usually done for this type of transactions. The attorney needs the istence and representation must be requested from the Chamber of Commerce. This ownership history and no-lien certificate and the certificates of legal existence and document certifies the existence of the legal entity, indicates its legal representative representation of the buyer and seller (procedures 1 and 2) as well as the certificate and provides information on its registered address, its partners, its capital and the of no outstanding property tax payments and the certificate of no outstanding con- date of establishment. The rate is set according to Decree 393 of 2002. tribution obligations on property value increases due to public works (procedure 5). Procedure 3. Review of the property titles by an attorney Time: 4 days Cost: COP$745,350 (between 1 and 2 legal minimum monthly wages). LIST LIST OFOF t REGISTERING PROCE %63&4t PROCEDURES STARTING APROPERT Y BUSINESS 109 Comments: An attorney reviews the previous property titles and the background of Procedure 11. Registration of public deed with the Registry Office the owner to verify that there are no legal constraints to the transaction. This legal review is not mandatory, but is usually done for this type of transactions. The attor- Time: 15 days ney must receive the certificates mentioned in procedures 1 and 2, as well as a copy Cost: No cost of the company statutes that authorize the representative to act on its behalf. Comments: Once the registration tax and fee have been paid, the public deed can be registered at the Registry Office (Oficina de Registro de Instrumentos Públicos). Procedure 4*. Pay certificate of no outstanding contribution obligations on property value increases due to public works Procedure 12. Inform the cadastre about the change of ownership Time: 1 day (simultaneous with procedure 3) Time: 1 day Cost: COP$20,000 Cost: No cost Comments: Payment is made at a commercial bank. Comments: The interested party must notify the transfer of property at the cadastre office of Instituto Geográfico Agustín Codazzi (IGAC). Procedure 5*. Obtain certificate of no outstanding contribution obligations on property value increases due to public works * This procedure is simultaneous with a previous procedure. Time: 3 days (simultaneous with procedure 3) Cost: No cost REGISTERING PROPERTY Comments: This document certifies that the property has no pending balances on Cúcuta, Norte de Santander contributions obligations on the property value increase. The procedure is done at the Oficina de Valorizacion Distrital. Also, the property tax bill, showing a paid stamp Procedure 1. Obtain ownership history and no-lien certificate by a financial institution, is valid as a certificate of no outstanding property tax. payments. According to article 76 of the District Tax Code, Municipal Resolution 41 of Time: 1 day 2006, a receipt of payment of the unified property tax can also be requested at the Cost: COP$11,840 Municipal Tax Department at no cost. Comments: This certificate (Certificado de Libertad y Tradición) provides the legal information on the property and on its current and previous ownership. The rate Procedure 6. An attorney prepares a preliminary deed is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter modified by Time: 2 days Resolution 0035 of 2009. Any individual or legal entity can request this certificate at Cost: COP$1,100,000 (the fee may vary depending on the attorney) the Registry Office. Comments: The same attorney who reviewed the property titles in procedure 3 Procedure 2. Obtain the certificate of legal existence and prepares a preliminary deed to be submitted to the notary public. This step is not mandatory but is usually done for this type of transactions. The attorney needs the representation of the buyer and the seller of the property from ownership history and no-lien certificate and the certificates of legal existence and the Chamber of Commerce representation of the buyer and seller (procedure 1 and 2) as well as proof of no out- Time: 1 day standing property tax payments and the certificate of no outstanding contribution Cost: COP$5,600 (COP$3,500 national fixed rate + COP$2,100 pro-hospital stamp). obligations on property value increases due to public works (procedure 5). Comments: When the parties are limited liability companies, a certificate of legal ex- istence and representation must be requested from the Chamber of Commerce. This Procedure 7. The notary public prepares the public deed document certifies the existence of the legal entity, indicates its legal representative Time: 5 days and provides information on its registered address, its partners, its capital and the Cost: COP$1,675,185 [COP$13,880 + 0.27%*(value of the property - COP$118,680) date of establishment. The rate is set according to Decree 393 of 2002. for notary fees + COP$9,750 for the public deed + COP$29,250 for copies of the public deed + COP$3,465 for the Superintendence of Notaries + COP$3,465 for the Procedure 3. Review of the property titles by an attorney National Notary Fund + 16% VAT]. Time: 5 days Comments: The notary public prepares the public deed based on all the documents Cost: COP$700,000 submitted by the parties. The notary public is required by law to prepare the public Comments: An attorney reviews the previous property titles and the background of deed. The total cost of the procedure is calculated according to Resolution 9500 of the owner to verify that there are no legal constraints to the transaction. This legal December of 2008. The cost per page of the public deed is COP$1,950 plus VAT. It is review is not mandatory, but is usually done for this type of transactions. The attor- assumed that the public deed is 5 pages long. ney must receive the certificates mentioned in procedures 1 and 2, as well as a copy of the company statutes that authorize the representative to act on its behalf. Procedure 8. Obtain the statement for registration tax Time: 1 day Procedure 4*. Pay and obtain the certificate of no outstanding Cost: No cost property tax payments Comments: This procedure is done at the Treasury Department of the Government Time: 3 days (simultaneous with procedure 3) of Bolívar. Cost: COP$18,400 [COP$8,300 for the no outstanding payments certificate + COP$1,700 for pro-scientific development public university stamps + COP$4,200 for Procedure 9. Pay registration tax pro-elderly stamp + COP$2,100 for pro-culture stamp + COP$2,100 for pro-hospital Time: 1 day stamp]. Cost: COP$7,692,419 (1.5% of the property value). Comments: This document is proof that the property has no pending balances on Comments: The registration tax applies to the registration of documentary legal property tax payments; the stamps and the certificate are obtained at the Municipal acts, contracts or deals in which private-sector parties are part or beneficiaries and Tax Department. which must be registered at the Registry Office. The registration tax is regulated by Law 223 of 1995 and Decree 650 of 1996. Payment is made at a commercial bank Procedure 5*. Pay certificate of no outstanding contribution located at the Government of Bolívar. obligations on property value increases due to public works Time: 1 day (simultaneous with procedure 3) Procedure 10. Pay registration fee Cost: COP$8,300 Time: 1 day Comments: Payment is made at a commercial bank. Cost: COP$2,564,140 (0.5% of the property value). Comments: Payment of registration fee legalizes the transaction before the Registry Office. This payment is done at a commercial bank, which has an agreement with the Registry Office. 110 DOING BUSINESS IN COLOMBIA 2010 REGISTERING PROPERTY Procedure 6*. Obtain certificate of no outstanding contribution obligations on property value increases due to public works Ibagué, Tolima Time: 1 day (simultaneous with procedure 3) Procedure 1. Obtain ownership history and no-lien certificate Cost: No cost Time: 1 day Comments: This document certifies that the property has no pending payments and no outstanding contribution obligations on property value increases due to Cost: COP$11,840 public works. Comments: This certificate (Certificado de Libertad y Tradición) provides the legal information on the property and on its current and previous ownership. The rate Procedure 7. An attorney prepares a preliminary deed is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter modified by Resolution 0035 of 2009. Any individual or legal entity can request this certificate at Time: 2 days the Registry Office. Cost: COP$600,000 Comments: The same attorney who reviewed the property titles in procedure 3 Procedure 2. Obtain the certificate of legal existence and prepares a preliminary deed to be submitted to the notary public. This step is not representation of the buyer and the seller of the property from mandatory but is usually done for this type of transactions. The attorney must the Chamber of Commerce receive the ownership history and no-lien certificate (procedures 1 and 2) and the certificate of no outstanding property tax payments and the certificate of no out- Time: 1 day standing contribution obligations on property value increases due to public works Cost: COP$3,500 (procedures 4 y 6). Comments: When the parties are limited liability companies, a certificate of legal ex- istence and representation must be requested from the Chamber of Commerce. This Procedure 8. The notary public prepares the public deed document certifies the existence of the legal entity, indicates its legal representative Time: 3 days and provides information on its registered address, its partners, its capital and the date of establishment. The rate is set according to Decree 393 of 2002. Cost: COP$1,675,185 [COP$13,880 + 0.27%*(value of the property - COP$118,680) for notary fees + COP$9,750 for the public deed + COP$29,250 for copies of the public deed + COP$3,465 for the Superintendence of Notaries + COP$3,465 for the Procedure 3. Review of the property titles by an attorney National Notary Fund + 16% VAT]. Time: 4 days Comments: The notary public prepares the public deed based on all the documents Cost: COP$200,000 submitted by the parties. The notary public is required by law to prepare the public Comments: An attorney reviews the previous property titles and the background of deed. The total cost of the procedure is calculated according to Resolution 9500 of the owner to verify that there are no legal constraints to the transaction. This legal December of 2008. The cost per page of the public deed is COP$1,950 plus VAT. It is review is not mandatory, but is usually done for this type of transactions. The attor- assumed that the public deed is 5 pages long. ney must receive the certificates mentioned in procedures 1 and 2, as well as a copy of the company statutes that authorize the representative to act on its behalf. Procedure 9. Obtain the registration tax statement Time: 1 day Procedure 4. Obtain unified certificate of no outstanding Cost: No cost property tax payments and of no outstanding contribution Comments: This procedure is done at the Tax Department at the Government of obligations on property value increases due to public works Norte de Santander. Time: 1 day Cost: No cost Procedure 10. Pay registration tax Comments: This certificate proves that the property’s owners have no pending bal- Time: 1 day ances on property tax payments. This procedure is regulated according to Municipal Cost: COP$5,389,193 (1.05% of the property value+ COP$4,500). Council Resolutions (Acuerdos) 02 of 1999, 43 of 2002, 26 of 2007 and 007 of 2009. If an additional copy of the certificate is required, it has a cost of COP$4,000, which is Comments: The cost is established according to Departmental Ordinance 0014 of paid at a commercial bank. The duplicate is delivered by the Municipal Treasury. December of 2008. Payment is made at a commercial bank. Procedure 5. An attorney prepares a preliminary deed Procedure 11. Pay registration fee Time: 2 days Time: 1 day Cost: COP$150,000 Cost: COP$2,564,140 (0.5% of the property value). Comments: The same attorney who reviewed the property titles in procedure 3 Comments: Payment of registration fee legalizes the transaction before the Registry prepares a preliminary deed to be submitted to the notary public. This step is not Office. This payment is done at a commercial bank, which has an agreement with the mandatory but is usually done for this type of transactions. In this case the minute Registry Office. is drafted simultaneously with the study of the property titles. The attorney requires the following documents to draft the minute: Procedure 12. Registration of public deed with the Registry Office 1. Certificate of legal existence and representation of the companies Time: 8 days 2. Contractual power of attorney to perform the procedure Cost: No cost 3. Ownership history and no-lien certificate Comments: Once the registration tax and fee have been paid, the public deed can be registered at the Registry Office (Oficina de Registro de Instrumentos Públicos). 4. Photocopies of the public deeds of the property 5. Certificate of no outstanding property tax payments Procedure 13. Inform the cadastre about the change of ownership Procedure 6. The notary public prepares the public deed Time: 1 day Time: 3 days Cost: No cost COP$1,675,185 [COP$13,880 + 0.27%*(value of the property - COP$118,680) for notary fees + COP$9,750 for the public deed + COP$29,250 for copies of the public Comments: The interested party must notify the transfer of property at the cadastre deed + COP$3,465 for the Superintendence of Notaries + COP$3,465 for the National office of Instituto Geográfico Agustín Codazzi (IGAC). Notary Fund + 16% VAT]. Comments: The notary public prepares the public deed based on all the documents * This procedure is simultaneous with a previous procedure. submitted by the parties. The notary public is required by law to prepare the public deed. The total cost of the procedure is calculated according to Resolution 9500 of December of 2008. The cost per page of the public deed is COP$1,950 plus VAT. It is assumed that the public deed is 5 pages long. LIST LIST OFOF t REGISTERING PROCE %63&4t PROCEDURES STARTING APROPERT Y BUSINESS 111 Procedure 7. Pay registration fee and registration tax Procedure 6. The notary public prepares the public deed Time: 1 day Time: 1 day Cost: COP$7,692,419 (0.5% of the property value + 1% of the property value). Cost: COP$1,675,185 [COP$13,880 + 0.27%*(value of the property - COP$118,680) Comments: Payment of registration fee legalizes the transaction before the Registry for notary fees + COP$9,750 for the public deed + COP$29,250 for copies of the Office. The registration tax applies to the registration of documentary legal acts, public deed + COP$3,465 for the Superintendence of Notaries + COP$3,465 for the contracts or deals in which private-sector parties are part or beneficiaries and which National Notary Fund + 16% VAT]. must be registered at the Registry Office. The registration tax is regulated established Comments: The notary public prepares the public deed based on all the documents in Law 223 of 1995 and Decree 650 of 1996. This payment is done at a commercial submitted by the parties. The notary public is required by law to prepare the public bank, which has an agreement with the Registry Office. deed. The total cost of the procedure is calculated according to Resolution 9500 of December of 2008. The cost per page of the public deed is COP$1,950 plus VAT. It is Procedure 8. Registration of public deed with the Registry Office assumed that the public deed is 5 pages long. Time: 3 days Procedure 7. Obtain the registration tax statement Cost: No cost Time: 1 day Comments: Once the registration tax and fees have been paid, the public deed can be registered at the Registry Office (Oficina de Registro de Instrumentos Públicos). Cost: No cost Comments: This procedure is done at the Tax Office of the Government of Caldas. * This procedure is simultaneous with a previous procedure. Procedure 8. Pay registration tax Time: 1 day REGISTERING PROPERTY Cost: COP$5,128,279 (1% of the property value). Manizales, Caldas Comments: The registration tax applies to the registration of documentary legal acts, contracts or deals in which private-sector parties are part or beneficiaries and Procedure 1. Obtain ownership history and no-lien certificate which must be registered by law at the Registry Office. The registration tax is regu- Time: 1 day lated by Law 223 of 1995 and Decree 650 of 1996. Payment is made at a commercial Cost: COP$11,840 bank. Comments: This certificate (Certificado de Libertad y Tradición) provides the legal information on the property and on its current and previous ownership. The rate Procedure 9. Pay registration fee is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter modified by Time: 1 day Resolution 0035 of 2009. Any individual or legal entity can request this certificate at Cost: COP$2,564,140 (0.5% of the property value). the Registry Office. Comments: Payment of registration fee legalizes the transaction before the Registry Office. This payment is done at a commercial bank, which has an agreement with the Procedure 2. Obtain the certificate of legal existence and Registry Office. representation of the buyer and the seller of the property from the Chamber of Commerce Procedure 10. Registration of public deed with the Registry Office Time: 1 day Time: 3 days Cost: COP$3,500 Cost: No cost Comments: When the parties are limited liability companies, a certificate of legal ex- Comments: Once the registration tax and fee have been paid, the public deed can istence and representation must be requested from the Chamber of Commerce. This be registered at the Registry Office (Oficina de Registro de Instrumentos Públicos). document certifies the existence of the legal entity, indicates its legal representative and provides information on its registered address, its partners, its capital and the date of establishment. The rate is set according to Decree 393 of 2002. * This procedure is simultaneous with a previous procedure. Procedure 3. Review of the property titles by an attorney REGISTERING PROPERTY Time: 2 days Medellín, Antioquia Cost: COP$250,000 Comments: An attorney reviews the previous property titles and the background of Procedure 1. Obtain ownership history and no-lien certificate the owner to verify that there are no legal constraints to the transaction. This legal Time: 1 day review is not mandatory, but is usually done for this type of transactions. The attor- Cost: COP$11,840 ney must receive the certificates mentioned in procedures 1 and 2, as well as a copy of the company statutes that authorize the representative to act on its behalf. Comments: This certificate (Certificado de Libertad y Tradición) provides the legal information on the property and on its current and previous ownership. The rate is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter modified by Procedure 4*. Obtain certificate of no outstanding contribution Resolution 0035 of 2009. Any individual or legal entity can request this certificate at obligations on property value increases due to public works the Registry Office. Time: 1 day (simultaneously with procedure 3) Cost: No cost (The certificate is issued at no cost by INVAMA) Procedure 2. Obtain the certificate of legal existence and Comments: The certificate is proof that the property has no outstanding contribu- representation of the buyer and the seller of the property from tion obligations on property value increases due to public works. This procedure is the Chamber of Commerce done at Instituto de Valorización de Manizales (INVAMA). The paid property tax invoice Time: 1 day is equivalent to the certificate of no property tax payments. Cost: COP$3,500 Procedure 5. An attorney prepares a preliminary deed Comments: When the parties are limited liability companies, a certificate of legal ex- istence and representation must be requested from the Chamber of Commerce. This Time: 1 day document certifies the existence of the legal entity, indicates its legal representative Cost: COP$450.000 and provides information on its registered address, its partners, its capital and the Comments: The same attorney who reviewed the property titles in procedure 3 date of establishment. The rate is set according to Decree 393 of 2002. prepares a preliminary deed to be submitted to the notary public. This step is not mandatory but is usually done for this type of transactions. The attorney needs the ownership history and no-lien certificate and the certificates of legal existence and representation of the buyer and seller (procedures 1 and 2) as well as proof no out- standing property tax payments and the certificate of no outstanding contribution obligations on property value increases due to public works (procedure 4). 112 DOING BUSINESS IN COLOMBIA 2010 REGISTERING PROPERTY Procedure 3. Review of the property titles by an attorney Time: 5 days Montería, Córdoba Cost: COP$1,250,000 Procedure 1. Obtain ownership history and no-lien certificate Comments: An attorney reviews the previous property titles and the background of the owner to verify that there are no legal constraints to the transaction. This legal Time: 1 day review is not mandatory, but is usually done for this type of transactions. The attor- Cost: COP$11,840 ney must receive the certificates mentioned in procedures 1 and 2, as well as a copy Comments: This certificate (Certificado de Libertad y Tradición) provides the legal of the company statutes that authorize the representative to act on its behalf. information on the property and on its current and previous ownership. The rate is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter modified by Procedure 4. Pay and obtain the unified certificate of no Resolution 0035 of 2009. Any individual or legal entity can request this certificate at outstanding property tax payments and no outstanding the Registry Office. contribution obligations on property value increases due to public works Procedure 2. Obtain the certificate of legal existence and Time: 1 day representation of the buyer and the seller of the property from the Chamber of Commerce Cost: COP$8,000 (1.396% of 1 legal minimum monthly wage plus VAT, rounded to the nearest thousand). Time: 1 day Comments: The unified certificate of no outstanding property tax payments and Cost: COP$3,500 no outstanding contribution obligations on property value increases due to public Comments: When the parties are limited liability companies, a certificate of legal ex- works certifies that the property has no pending balances on property taxes and istence and representation must be requested from the Chamber of Commerce. This property valuation tax payments. document certifies the existence of the legal entity, indicates its legal representative and provides information on its registered address, its partners, its capital and the Procedure 5. An attorney prepares a preliminary deed date of establishment. The rate is set according to Decree 393 of 2002. Time: 2 days Procedure 3. Review of the property titles by an attorney Cost: COP$1,060,000 Time: 2 days Comments: The same attorney who reviewed the property titles in procedure 3 prepares a preliminary deed to be submitted to the notary public. This step is not Cost: COP$496,900 (approximately 1 legal minimum monthly wages). mandatory but is usually done for this type of transactions. The attorney needs the Comments: An attorney reviews the previous property titles and the background of ownership history and no-lien certificate and the certificates of legal existence and the owner to verify that there are no legal constraints to the transaction. This legal representation of the buyer and seller (procedures 1 and 2) as well as the certificate review is not mandatory, but is usually done for this type of transactions. The attor- of no outstanding property tax payments and no outstanding contribution obliga- ney must receive the certificates mentioned in procedures 1 and 2, as well as a copy tions on property value increases due to public works (procedure 4). of the company statutes that authorize the representative to act on its behalf. Procedure 6. The notary public prepares the public deed Procedure 4*. Pay certificate of no outstanding property tax Time: 2 days payments and certificate of no outstanding contribution Cost: COP$1,675,185 [COP$13,880 + 0.27%*(value of the property - COP$118,680) obligations on property value increases due to public works for notary fees + COP$9,750 for the public deed + COP$29,250 for copies of the Time: 1 day (simultaneous with procedure 3) public deed + COP$3,465 for the Superintendence of Notaries + COP$3,465 for the Cost: COP$4,141 (rate for both certificates) National Notary Fund + 16% VAT]. Comments: They are paid at the Municipal Tax Department. Comments: The notary public prepares the public deed based on all the documents submitted by the parties. The notary public is required by law to prepare the public Procedure 5*. Obtain the certificate of no outstanding property deed. The total cost of the procedure is calculated according to Resolution 9500 of tax payments and certificate of no outstanding contribution December of 2008. The cost per page of the public deed is COP$1,950 plus VAT. It is obligations on property value increases due to public works assumed that the public deed is 5 pages long. Time: 2 days (simultaneous with procedure 3) Procedure 7. Obtain registration tax invoice Cost: No cost Time: 1 day Comments: The certificates are proof that the property has no pending property tax Cost: No cost payments and no outstanding contribution obligations on property value increases due to public works. The payment receipt and property registration number must be Comments: This procedure is done at the Tax Department of the Government of presented to the Municipal Tax Department. Antioquia. Procedure 6. An attorney prepares a preliminary deed Procedure 8. Pay registration tax Time: 2 days Time: 1 day Cost: COP$496,900 (approximately 1 legal minimum monthly wage). Cost: COP$5,384,693 (1.05% of the property value). Comments: The same attorney who reviewed the property titles in procedure 3 Comments: Based on the statement obtained in the previous procedure, this tax is prepares a preliminary deed to be submitted to the notary public. This step is not paid at a commercial bank located at the premises of the Tax Office. mandatory but is usually done for this type of transactions. The attorney needs the ownership history and no-lien certificate and the certificates of legal existence and Procedure 9. Pay registration fee representation of the buyer and seller (procedures 1 and 2) as well as the certificate Time: 1 day of no outstanding property tax payments and the certificate of no outstanding con- Cost: COP$2,564,140 (0.5% of the property value). tribution obligations on property value increases due to public works (procedure 5). Comments: Payment of registration fee legalizes the transaction before the Registry Office. This payment is done at a commercial bank, which has an agreement with the Procedure 7. The notary public prepares the public deed Registry Office. Time: 5 days Cost: COP$1,675,185 [COP$13,880 + 0.27%*(value of the property - COP$118,680) Procedure 10. Registration of public deed with the Registry Office for notary fees + COP$9,750 for the public deed + COP$29,250 for copies of the Time: 8 days public deed + COP$3,465 for the Superintendence of Notaries + COP$3,465 for the Cost: No cost National Notary Fund + 16% VAT]. Comments: Once the registration tax and fee are paid, the public deed is registered Comments: The notary public prepares the public deed based on all the documents at the Registry Office (Oficina de Registro de Instrumentos Públicos). submitted by the parties. The notary public is required by law to prepare the public deed. The total cost of the procedure is calculated according to Resolution 9500 of December of 2008. The cost per page of the public deed is COP$1,950 plus VAT. It is * This procedure is simultaneous with a previous procedure. assumed that the public deed is 5 pages long. LIST LIST OFOF t REGISTERING PROCE %63&4t PROCEDURES STARTING APROPERT Y BUSINESS 113 Procedure 8. Obtain the registration tax statement Procedure 4*. Pay certificate of no outstanding property tax Time: 1 day payments and certificate of no outstanding contribution Cost: No cost obligations on property value increases due to public works Comments: This procedure is done at the Treasury of the Government of Córdoba. Time: 1 day (simultaneous with procedure 3) Cost: COP$10,000 (each certificate costs COP$5,000) Procedure 9. Pay registration tax Comments: The Municipal Council authorized the Municipal Tax Department to Time: 1 day charge COP$5,000 for each property and property valuation tax certificates by Cost: COP$5,128,279 (1% of the property value). means of Resolution 002 of 2000. Payment is made at a commercial bank located in the Municipal Treasury. Comments: The registration tax applies to the registration of documentary legal acts, contracts or deals in which private-sector parties are part or beneficiaries and Procedure 5*. Obtain certificate of no outstanding property which must be registered by law at the Registry Office. The registration tax is regu- lated by Law 223 of 1995 and Decree 650 of 1996. Payment is made at a commercial tax payments and certificate of no outstanding contribution bank located at the Government of Córdoba. obligations on property value increases due to public works Time: 1 day (simultaneous with procedure 3 and 4) Procedure 10. Pay registration fee Cost: No cost Time: 1 day Comments: The certificates are proof that the property has no pending payments Cost: COP$2,564,140 (0.5% of the property value). on property tax and on no outstanding contribution obligations on property value Comments: Payment of registration fee legalizes the transaction before the Registry increases due to public works. Office. This payment is done at a commercial bank, which has an agreement with the Registry Office. Procedure 6. An attorney prepares a preliminary deed Time: 2 days Procedure 11. Registration of public deed with the Registry Office Cost: COP$250,000 Time: 10 days Comments: The same attorney who reviewed the property titles in procedure 3 Cost: No cost prepares a preliminary deed to be submitted to the notary public. This step is not Comments: Once the registration tax and fee have been paid, the public deed can mandatory but is usually done for this type of transactions. The attorney must be registered at the Registry Office (Oficina de Registro de Instrumentos Públicos). receive the ownership history and no-lien certificate (procedures 1 and 2) as well as the certificate of no outstanding property tax payments and the certificate of Procedure 12. Inform the cadastre about the change of no outstanding contribution obligations on property value increases due to public works (procedure 5). ownership Time: 1 day Procedure 7. The notary public prepares the public deed Cost: No cost Time: 3 days Comments: The interested party must notify the transfer of property at the cadastre Cost: COP$1,675,185 [COP$ $13,880 + 0.27%*(price of the property - COP$118,680) office of Instituto Geográfico Agustín Codazzi (IGAC). for notary fees + COP$9,750 for the public deed + COP$29,250 for copies of the pub- lic deed + COP$ 3,465 for the Notary Superintendence + COP$ 3,465 for the National * This procedure is simultaneous with a previous procedure. Notary Fund + 16% VAT]. Comments: The notary public prepares the public deed based on all the documents REGISTERING PROPERTY submitted by the parties. The notary public is required by law to prepare the public deed. The total cost of the procedure is calculated according to Resolution 9500 of Neiva, Huila December of 2008. The cost per page of the public deed is COP$1,950 plus VAT. It is assumed that the public deed is 5 pages long. Procedure 1. Obtain ownership history and no-lien certificate Time: 1 day Procedure 8. Obtain the registration tax and stamp duty Cost: COP$11,840 statement Comments: This certificate (Certificado de Libertad y Tradición) provides the legal Time: 1 day information on the property and on its current and previous ownership. The rate Cost: COP$10,100 (this amount is for the tax payment receipt and the stamps). is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter modified by Comments: The registration tax applies to the registration of documentary legal Resolution 0035 of 2009. Any individual or legal entity can request this certificate at acts, contracts or deals in which private-sector parties are part or beneficiaries the Registry Office. and which must be registered by law at the Registry Office. The registration tax is regulated by Law 223 of 1995 and Decree 650 of 1996. Stamp duties are regulated Procedure 2. Obtain the certificate of legal existence and by Ordinances 035 of 2009, 024 of 2008, 031 of 2008, 034 of 2008, 035 of 2009 of the representation of the buyer and the seller of the property from Departmental Assembly of Huila. This statement is obtained at the Treasury of the the Chamber of Commerce Government of Huila. Time: 1 day Cost: COP$3,500 Procedure 9. Pay registration and stamp duties Comments: When the parties are limited liability companies, a certificate of legal ex- Time: 1 day istence and representation must be requested from the Chamber of Commerce. This Cost: COP$12,820,698 [1% of the property value+ 0.5% pro-Usco stamp (pro-rural document certifies the existence of the legal entity, indicates its legal representative electricity) + 0.5% pro-culture stamp + 0.25% pro-university stamp + 0.25% pro- and provides information on its registered address, its partners, its capital and the departmental development stamp.]. date of establishment. The rate is set according to Decree 393 of 2002. Comments: Payment is made at a commercial bank. Procedure 3. Review of the property titles by an attorney Procedure 10. Pay registration fee Time: 2 days Time: 1 day Cost: COP$150,000 (the fee varies depending on the attorney) Cost: COP$2,564,140 (0.5% of the property value). Comments: An attorney reviews the previous property titles and the background of Comments: Payment of registration fee legalizes the transaction before the Registry the owner to verify that there are no legal constraints to the transaction. This legal Office. This payment is done at a commercial bank, which has an agreement with the review is not mandatory, but is usually done for this type of transactions. The attor- Registry Office. ney must receive the certificates mentioned in procedures 1 and 2, as well as a copy of the company statutes that authorize the representative to act on its behalf. 114 DOING BUSINESS IN COLOMBIA 2010 Procedure 11. Registration of public deed with the Registry Office Procedure 7. The notary public prepares the public deed Time: 4 days Time: 5 days Cost: No cost Cost: COP$1,675,185 [COP$13,880 + 0.27%*(value of the property - COP$118,680) Comments: Once the registration tax and fee have been paid, the public deed can for notary fees + COP$9,750 for the public deed + COP$29,250 for copies of the be registered at the Registry Office (Oficina de Registro de Instrumentos Públicos). public deed + COP$3,465 for the Superintendence of Notaries + COP$3,465 for the National Notary Fund + 16% VAT]. Comments: The notary public prepares the public deed based on all the documents * This procedure is simultaneous with a previous procedure. submitted by the parties. The notary public is required by law to prepare the public deed. The total cost of the procedure is calculated according to Resolution 9500 of REGISTERING PROPERTY December of 2008. The cost per page of the public deed is COP$1,950 plus VAT. It is Pasto, Nariño assumed that the public deed is 5 pages long. Procedure 1. Obtain ownership history and no-lien certificate Procedure 8. Obtain the registration tax statement Time: 1 day Time: 1 day Cost: COP$11,840 Cost: COP$11,200 Comments: This certificate (Certificado de Libertad y Tradición) provides the legal Comments: This procedure is done at the Tax Office of the Government of Nariño. information on the property and on its current and previous ownership. The rate is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter modified by Procedure 9. Pay registration tax Resolution 0035 of 2009. Any individual or legal entity can request this certificate at Time: 1 day the Registry Office. Cost: COP$5,128,279 (1% of the property value). Comments: The registration tax applies to the registration of documentary legal Procedure 2. Obtain the certificate of legal existence and acts, contracts or deals in which private-sector parties are part or beneficiaries and representation of the buyer and the seller of the property from which must be registered by law at the Registry Office. The registration tax is regu- the Chamber of Commerce lated by Law 223 of 1995 and Decree 650 of 1996. Payment is made at a commercial Time: 1 day bank. Cost: COP$3,500 Comments: When the parties are limited liability companies, a certificate of legal ex- Procedure 10. Pay registration fee istence and representation must be requested from the Chamber of Commerce. This Time: 1 day document certifies the existence of the legal entity, indicates its legal representative Cost: COP$2,564,140 (0.5% of the property value). and provides information on its registered address, its partners, its capital and the Comments: Payment of registration fee legalizes the transaction before the Registry date of establishment. The rate is set according to Decree 393 of 2002. Office. This payment is done at a commercial bank, which has an agreement with the Registry Office. Procedure 3. Review of the property titles by an attorney Time: 3 days Procedure 11. Registration of public deed with the Registry Office Cost: COP$490,000 Time: 21 days Comments: An attorney reviews the previous property titles and the background of Cost: No cost the owner to verify that there are no legal constraints to the transaction. This legal Comments: Once the registration tax and fee have been paid, the public deed can review is not mandatory, but is usually done for this type of transactions. The attor- be registered at the Registry Office (Oficina de Registro de Instrumentos Públicos). ney must receive the certificates mentioned in procedures 1 and 2, as well as a copy of the company statutes that authorize the representative to act on its behalf. * This procedure is simultaneous with a previous procedure. Procedure 4. Pay and obtain certificate of no outstanding contribution obligations on property value increases due to REGISTERING PROPERTY public works Pereira, Risaralda Time: 1 day Cost: COP$4,700 Procedure 1. Obtain ownership history and no-lien certificate Comments: This document certifies that the property has no pending balances on Time: 1 day contributions obligations on the property value increase. The procedure is done at Cost: COP$11,840 the Oficina de Valorizacion Distrital. This cost includes pro-development, pro-electric- Comments: This certificate (Certificado de Libertad y Tradición) provides the legal ity and culture stamp duties. information on the property and on its current and previous ownership. The rate is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter modified by Procedure 5*. Pay and obtain the certificate of no outstanding Resolution 0035 of 2009. Any individual or legal entity can request this certificate at property tax payments the Registry Office. Time: 1 day (simultaneous with procedure 4) Cost: COP$8,400 Procedure 2. Obtain the certificate of legal existence and Comments: The certificate is proof that the property has no pending property tax representation of the buyer and the seller of the property from payments. It is paid at the Municipal Treasury, at a different counter than the one the Chamber of Commerce indicated in procedure 4. Time: 1 day Cost: COP$3,500 Procedure 6. An attorney prepares a preliminary deed Comments: When the parties are limited liability companies, a certificate of legal ex- Time: 2 days istence and representation must be requested from the Chamber of Commerce. This Cost: COP$200,000 document certifies the existence of the legal entity, indicates its legal representative Comments: The same attorney who reviewed the property titles in procedure 3 and provides information on its registered address, its partners, its capital and the prepares a preliminary deed to be submitted to the notary public. This step is not date of establishment. The rate is set according to Decree 393 of 2002. mandatory but is usually done for this type of transactions. The attorney needs the ownership history and no-lien certificate and the certificates of legal existence and Procedure 3. Review of the property titles by an attorney representation of the buyer and seller (procedures 1 and 2) as well as the certificate Time: 2 days of no outstanding property tax payments and the certificate of no outstanding con- Cost: COP$576,400 tribution obligations on property value increases due to public works (procedures 4 and 5). LIST LIST OFOF t REGISTERING PROCE %63&4t PROCEDURES STARTING APROPERT Y BUSINESS 115 Comments: An attorney reviews the previous property titles and the background of Procedure 11. Inform the cadastre about the change of the owner to verify that there are no legal constraints to the transaction. This legal review is not mandatory, but is usually done for this type of transactions. The attor- ownership ney must receive the certificates mentioned in procedures 1 and 2, as well as a copy Time: 1 day of the company statutes that authorize the representative to act on its behalf. Cost: No cost Comments: The interested party must notify the transfer of property at the cadastre Procedure 4*. Pay certificate of no outstanding contribution office of Instituto Geográfico Agustín Codazzi (IGAC). obligations on property value increases due to public works Time: 1 day (simultaneously with procedure 3) * This procedure is simultaneous with a previous procedure. Cost: COP$8,300 Comments: This document certifies that the property has no pending balances on REGISTERING PROPERTY contributions obligations on the property value increase. The certificate of no out- standing property tax payments is no longer required. Article 23 of the Municipal Tax Popayán, Cauca Code of Pereira, updated in 2009, accepts a property tax invoice with a paid stamp from the bank in lieu of a certificate of no outstanding property tax payments. Procedure 1. Obtain ownership history and no-lien certificate Time: 1 day Procedure 5*. Obtain the certificate of no outstanding Cost: COP$11,840 contribution obligations on property value increases due to Comments: This certificate (Certificado de Libertad y Tradición) provides the legal public works information on the property and on its current and previous ownership. The rate Time: 1 day (simultaneously with procedure 3) is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter modified by Cost: No cost Resolution 0035 of 2009. Any individual or legal entity can request this certificate at the Registry Office. Comments: This certificate is proof that the property has no pending balances on property valuation tax payments. The procedure is done at the Municipal Treasury. Procedure 2. Obtain the certificate of legal existence and The deposit slip and the property’s registration license must be presented. representation of the buyer and the seller of the property from Procedure 6. The notary public prepares the public deed the Chamber of Commerce Time: 2 days Time: 1 day Cost: COP$1,675,185 [COP$13,880 + 0.27%*(value of the property - COP$118,680) Cost: COP$3,500 for notary fees + COP$9,750 for the public deed + COP$29,250 for copies of the Comments: When the parties are limited liability companies, a certificate of legal ex- public deed + COP$3,465 for the Superintendence of Notaries + COP$3,465 for the istence and representation must be requested from the Chamber of Commerce. This National Notary Fund + 16% VAT]. document certifies the existence of the legal entity, indicates its legal representative Comments: The notary public prepares the public deed based on all the documents and provides information on its registered address, its partners, its capital and the submitted by the parties. The notary public is required by law to prepare the public date of establishment. The rate is set according to Decree 393 of 2002. deed. The total cost of the procedure is calculated according to Resolution 9500 of December of 2008. The cost per page of the public deed is COP$1,950 plus VAT. It is Procedure 3. Review of the property titles by an attorney assumed that the public deed is 5 pages long. Time: 3 days Cost: COP$497,000 Procedure 7. Obtain registration tax statement Comments: An attorney reviews the previous property titles and the background of Time: 1 day the owner to verify that there are no legal constraints to the transaction. This legal Cost: No cost review is not mandatory, but is usually done for this type of transactions. The attor- Comments: This procedure is done at the Tax Department of the Government of ney must receive the certificates mentioned in procedures 1 and 2, as well as a copy Risaralda. of the company statutes that authorize the representative to act on its behalf. Procedure 8. Pay registration tax Procedure 4*. Pay certificate of no outstanding property tax payments and certificate of no outstanding contribution Time: 1 day obligations on property value increases due to public works Cost: COP$5,128,279 (1% of the property value). Time: 1 day (simultaneous with procedure 3) Comments: The registration tax applies to the registration of documentary legal acts, contracts or deals in which private-sector parties are part or beneficiaries and Cost: COP$14,600 which must be registered by law at the Registry Office. The registration tax is regu- Comments: A deposit is made to the municipality at a commercial bank. In many lated by Law 223 of 1995 and Decree 650 of 1996. Payment is made at a commercial cases the latest payment receipts are submitted also as proof of no pending balances bank. on public utility services. Procedure 9. Pay registration fee Procedure 5*. Obtain certificate of no outstanding property Time: 1 day tax payments and certificate of no outstanding contribution Cost: COP$2,564,140 (0.5% of the property value). obligations on property value increases due to public works Comments: Payment of registration fee legalizes the transaction before the Registry Time: 1 day (simultaneous with procedure 3) Office. This payment is done at a commercial bank, which has an agreement with the Cost: No cost Registry Office. Comments: The certificates are proof that the property has no pending property tax payments and no outstanding contribution obligations on property value increases Procedure 10. Registration of public deed with the Registry Office due to public works. The deposit slip and property number must be submitted to the Time: 8 days Municipal Tax Office to obtain the certificates. Cost: No cost Procedure 6. An attorney prepares a preliminary deed Comments: Once the registration tax and fee have been paid, the public deed can be registered at the Registry Office (Oficina de Registro de Instrumentos Públicos). Time: 2 days Cost: COP$497,000 (approximately 1 legal minimum monthly wage). Comments: The same attorney who reviewed the property titles in procedure 3 prepares a preliminary deed to be submitted to the notary public. This step is not mandatory but is usually done for this type of transactions. The attorney needs the ownership history and no-lien certificate and the certificates of legal existence and representation of the buyer and seller (procedures 1 and 2) as well as the certificate of no outstanding property tax payments and the certificate of no outstanding con- tribution obligations on property value increases due to public works (procedure 5). 116 DOING BUSINESS IN COLOMBIA 2010 Procedure 7. The notary public prepares the public deed Procedure 3. Review of the property titles by an attorney Time: 3 days Time: 5 days Cost: COP$1,675,185 [COP$13,880 + 0.27%*(value of the property - COP$118,680) Cost: COP$500,000 for notary fees + COP$9,750 for the public deed + COP$29,250 for copies of the Comments: An attorney reviews the previous property titles and the background of public deed + COP$3,465 for the Superintendence of Notaries + COP$3,465 for the the owner to verify that there are no legal constraints to the transaction. This legal National Notary Fund + 16% VAT]. review is not mandatory, but is usually done for this type of transactions. The attor- Comments: The notary public prepares the public deed based on all the documents ney must receive the certificates mentioned in procedures 1 and 2, as well as a copy submitted by the parties. The notary public is required by law to prepare the public of the company statutes that authorize the representative to act on its behalf. deed. The total cost of the procedure is calculated according to Resolution 9500 of December of 2008. The cost per page of the public deed is COP$1,950 plus VAT. It is Procedure 4*. Obtain the certificates on property taxes and assumed that the public deed is 5 pages long. of no outstanding contribution obligations on property value increases due to public works Procedure 8. Obtain the registration tax statement Time: 3 days (simultaneously with procedure 3) Time: 1 day Cost: No cost Cost: No cost Comments: The certificates are proof that the property has no pending property tax Comments: This procedure is done at the Departmental Treasury at the Government payments and no outstanding contribution obligations on property value increases of Cauca. due to public works. The Municipal Tax Office issues the certificates at no cost the first time, but duplicates cost COP$4,500 each. Procedure 9. Pay registration tax Time: 1 day Procedure 5. An attorney prepares a preliminary deed Cost: COP$5,128,279 (1% of the property value). Time: 4 days Comments: The registration tax applies to the registration of documentary legal Cost: COP$250,000 acts, contracts or deals in which private-sector parties are part or beneficiaries and Comments: The same attorney who reviewed the property titles in procedure 3 which must be registered by law at the Registry Office. The registration tax is regu- prepares a preliminary deed to be submitted to the notary public. This step is not lated by Law 223 of 1995 and Decree 650 of 1996. Payment is made at a commercial mandatory but is usually done for this type of transactions. In this case the minute bank located at the Government of Cauca. is drafted simultaneously with the study of the property titles. The attorney requires the following documents to draft the minute: Procedure 10. Pay registration fee 1. Certificate of legal existence and representation of the companies Time: 1 day 2. Contractual power of attorney to perform the procedure Cost: COP$2,564,140 (0.5% of the property value). 3. Ownership history and no-lien certificate Comments: Payment of registration fee legalizes the transaction before the Registry 4. Photocopies of the public deeds of the property being negotiated Office. This payment is done at a commercial bank, which has an agreement with the Registry Office. 5. Certificates of no outstanding property taxes Procedure 11. Registration of public deed with the Registry Office Procedure 6. The notary public prepares the public deed Time: 15 days Time: 4 days Cost: No cost Cost: COP$1,675,185 [COP$13,880 + 0.27%*(value of the property - COP$118,680) for notary fees + COP$9,750 for the public deed + COP$29,250 for copies of the Comments: Once the registration tax and fee have been paid, the public deed can public deed + COP$3,465 for the Superintendence of Notaries + COP$3,465 for the be registered at the Registry Office (Oficina de Registro de Instrumentos Públicos). National Notary Fund + 16% VAT]. Comments: The notary public prepares the public deed based on all the documents * This procedure is simultaneous with a previous procedure. submitted by the parties. The notary public is required by law to prepare the public deed. The total cost of the procedure is calculated according to Resolution 9500 of REGISTERING PROPERTY December of 2008. The cost per page of the public deed is COP$1,950 plus VAT. It is assumed that the public deed is 5 pages long. Riohacha, La Guajira Procedure 7. Obtain statement and pay the registration tax Procedure 1. Obtain ownership history and no-lien certificate Time: 1 day Time: 1 day Cost: COP$5,128,279 (1% of the property value). Cost: COP$11,840 Comments: The registration tax applies to the registration of documentary legal Comments: This certificate (Certificado de Libertad y Tradición) provides the legal acts, contracts or deals in which private-sector parties are part or beneficiaries information on the property and on its current and previous ownership. The rate and which must be registered by law at the Registry Office. The registration tax is is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter modified by regulated by Law 223 of 1995 and Decree 650 of 1996. The tax is calculated and paid Resolution 0035 of 2009. Any individual or legal entity can request this certificate at at the Chamber of Commerce by means of an inter-institutional agreement with the the Registry Office. Government of La Guajira for the simplification of procedures subscribed in April 2009. Procedure 2. Obtain the certificate of legal existence and representation of the buyer and the seller of the property from Procedure 8. Pay registration fee the Chamber of Commerce Time: 1 day Time: 1 day Cost: COP$2,564,140 (0.5% of the property value). Cost: COP$3,500 Comments: Payment of registration fee legalizes the transaction before the Registry Comments: When the parties are limited liability companies, a certificate of legal ex- Office. This payment is done at a commercial bank, which has an agreement with the istence and representation must be requested from the Chamber of Commerce. This Registry Office. document certifies the existence of the legal entity, indicates its legal representative and provides information on its registered address, its partners, its capital and the Procedure 9. Registration of public deed with the Registry Office date of establishment. The rate is set according to Decree 393 of 2002. Time: 9 days Cost: No cost Comments: Once the registration tax and fee have been paid, the public deed can be registered at the Registry Office (Oficina de Registro de Instrumentos Públicos). * This procedure is simultaneous with a previous procedure. LIST LIST OFOF t REGISTERING PROCE %63&4t PROCEDURES STARTING APROPERT Y BUSINESS 117 REGISTERING PROPERTY Procedure 8. Pay pro-hospital stamp Santa Marta, Magdalena Time: 1 day Procedure 1. Obtain ownership history and no-lien certificate Cost: COP$1,799,036 (0.35% of the property value+ COP$4,138 for pro-hospital stamp). Time: 1 day Comments: Payment is made at a commercial bank. Cost: COP$11,840 Comments: This certificate (Certificado de Libertad y Tradición) provides the legal Procedure 9. Pay registration fee and registration tax information on the property and on its current and previous ownership. The rate Time: 1 day is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter modified by Resolution 0035 of 2009. Any individual or legal entity can request this certificate at Cost: COP$7,692,419 (0.5% of the property value+ 1% of the property value). the Registry Office. Comments: Payment of registration fee legalizes the transaction before the Registry Office. The registration tax applies to the registration of documentary legal acts, Procedure 2. Obtain the certificate of legal existence and contracts or deals in which private-sector parties are part or beneficiaries and which representation of the buyer and the seller of the property from must be registered by law at the Registry Office. The registration tax is regulated the Chamber of Commerce by Law 223 of 1995 and Decree 650 of 1996. This payment is done at a commercial bank, which has an agreement with the Registry Office. Time: 1 day Cost: COP$3,500 Procedure 10. Registration of public deed with the Registry Office Comments: When the parties are limited liability companies, a certificate of legal ex- Time: 3 days istence and representation must be requested from the Chamber of Commerce. This Cost: No cost document certifies the existence of the legal entity, indicates its legal representative and provides information on its registered address, its partners, its capital and the Comments: Once the registration tax and fee have been paid, the public deed can date of establishment. The rate is set according to Decree 393 of 2002. be registered at the Registry Office (Oficina de Registro de Instrumentos Públicos). Procedure 3. Review of the property titles by an attorney Procedure 11. Inform the cadastre about the change of ownership Time: 2 days Time: 1 day Cost: COP$ 1,500,000 Cost: No cost Comments: An attorney reviews the previous property titles and the background of Comments: The interested party must notify the transfer of property at the cadastre the owner to verify that there are no legal constraints to the transaction. This legal office of Instituto Geográfico Agustín Codazzi (IGAC). review is not mandatory, but is usually done for this type of transactions. The attor- ney must receive the certificates mentioned in procedures 1 and 2, as well as a copy * This procedure is simultaneous with a previous procedure. of the company statutes that authorize the representative to act on its behalf. REGISTERING PROPERTY Procedure 4*. Pay and obtain the certificate of no outstanding property tax payments and the certificate of no outstanding Sincelejo, Sucre contribution obligations on property value increases due to public works Procedure 1. Obtain ownership history and no-lien certificate Time: 1 day Time: 1 day (simultaneous with procedure 3) Cost: COP$11,840 Cost: COP$33,000 Comments: This certificate (Certificado de Libertad y Tradición) provides the legal Comments: This document certifies that the property has no pending balances on information on the property and on its current and previous ownership. The rate contributions obligations on the property value increase. This procedure is done at is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter modified by the Office of Taxes and Collections of Santa Marta. Resolution 0035 of 2009. Any individual or legal entity can request this certificate at the Registry Office. Procedure 5. An attorney prepares a preliminary deed Time: 1 day Procedure 2. Obtain the certificate of legal existence and Cost: COP$1,000,000 representation of the buyer and the seller of the property from Comments: The same attorney who reviewed the property titles in procedure 3 the Chamber of Commerce prepares a preliminary deed to be submitted to the notary public. This step is not Time: 1 day mandatory but is usually done for this type of transactions. The attorney needs the Cost: COP$3,500 ownership history and no-lien certificate and the certificates of legal existence and representation of the buyer and seller (procedures 1 and 2) and the certificates of no Comments: When the parties are limited liability companies, a certificate of legal ex- outstanding property tax payments and of no outstanding contribution obligations istence and representation must be requested from the Chamber of Commerce. This on property value due to public works (procedure 4). document certifies the existence of the legal entity, indicates its legal representative and provides information on its registered address, its partners, its capital and the Procedure 6. The notary public prepares the public deed date of establishment. The rate is set according to Decree 393 of 2002. Time: 5 days Procedure 3. Review of the property titles by an attorney Cost: COP$1,675,185 [COP$13,880 + 0.27%*(value of the property - COP$118,680) Time: 3 days for notary fees + COP$9,750 for the public deed + COP$29,250 for copies of the public deed + COP$3,465 for the Superintendence of Notaries + COP$3,465 for the Cost: COP$496,900 (approximately 1 legal minimum monthly wage) National Notary Fund + 16% VAT]. Comments: An attorney reviews the previous property titles and the background of Comments: The notary public prepares the public deed based on all the documents the owner to verify that there are no legal constraints to the transaction. This legal submitted by the parties. The notary public is required by law to prepare the public review is not mandatory, but is usually done for this type of transactions. The attor- deed. The total cost of the procedure is calculated according to Resolution 9500 of ney must receive the certificates mentioned in procedures 1 and 2, as well as a copy December of 2008. The cost per page of the public deed is COP$1,950 plus VAT. It is of the company statutes that authorize the representative to act on its behalf. assumed that the public deed is 5 pages long. Procedure 4*. Pay certificate of no outstanding property tax Procedure 7. Obtain the statement for stamp duty payment payments and certificate of no outstanding contribution Time: 1 day obligations on property value increases due to public works Cost: No cost Time: 1 day (simultaneous with procedure 3) Comments: The calculation is done at the Government of Magdalena. Cost: COP$3,300 (fixed rate per certificate) Comments: The payment is made to the municipality at a commercial bank. 118 DOING BUSINESS IN COLOMBIA 2010 REGISTERING PROPERTY Procedure 5*. Obtain certificate of no outstanding property tax payments and certificate of no outstanding contribution Tunja, Boyacá obligations on property value increases due to public works Time: 1 day (simultaneously with procedure 3) Procedure 1. Obtain ownership history and no-lien certificate Cost: No cost (paid in procedure 4) Time: 1 day Comments: The certificates are proof that the property has no pending property tax Cost: COP$11,840 payments and no outstanding contribution obligations on property value increases Comments: This certificate (Certificado de Libertad y Tradición) provides the legal due to public works. The deposit slip and property number must be submitted to the information on the property and on its current and previous ownership. The rate Municipal Tax Office for it to issue the certificates. This procedure is done according is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter modified by to Municipal Resolution 41 of December, 2008. Resolution 0035 of 2009. Any individual or legal entity can request this certificate at the Registry Office. Procedure 6. An attorney prepares a preliminary deed Time: 2 days Procedure 2. Obtain the certificate of legal existence and representation of the buyer and the seller of the property from Cost: COP$248,450 (approximately half a legal minimum monthly wage) the Chamber of Commerce Comments: The same attorney who reviewed the property titles in procedure 3 prepares a preliminary deed to be submitted to the notary public. This step is not Time: 1 day mandatory but is usually done for this type of transactions. The attorney needs the Cost: COP$3,500 ownership history and no-lien certificate and the certificates of legal existence and Comments: When the parties are limited liability companies, a certificate of legal ex- representation of the buyer and seller (procedures 1 and 2) as well as the certificate istence and representation must be requested from the Chamber of Commerce. This of no outstanding property tax payments and the certificate of no outstanding con- document certifies the existence of the legal entity, indicates its legal representative tribution obligations on property value increases due to public works (procedure 5). and provides information on its registered address, its partners, its capital and the date of establishment. The rate is set according to Decree 393 of 2002. Procedure 7. The notary public prepares the public deed Time: 1 day Procedure 3. Review of the property titles by an attorney Cost: COP$1,675,185 [COP$13,880 + 0.27%*(value of the property - COP$118,680) Time: 2 days for notary fees + COP$9,750 for the public deed + COP$29,250 for copies of the Cost: COP$250,000 public deed + COP$3,465 for the Superintendence of Notaries + COP$3,465 for the Comments: An attorney reviews the previous property titles and the background of National Notary Fund + 16% VAT]. the owner to verify that there are no legal constraints to the transaction. This legal Comments: The notary public prepares the public deed based on all the documents review is not mandatory, but is usually done for this type of transactions. The attor- submitted by the parties. The notary public is required by law to prepare the public ney must receive the certificates mentioned in procedures 1 and 2, as well as a copy deed. The total cost of the procedure is calculated according to Resolution 9500 of of the company statutes that authorize the representative to act on its behalf. December of 2008. The cost per page of the public deed is COP$1,950 plus VAT. It is assumed that the public deed is 5 pages long. Procedure 4*. Obtain receipt of payment of the unified certificate of no outstanding property tax payments Procedure 8. Calculation and payment of the departmental Time: 1 day (simultaneous with procedure 3) registration tax Cost: No cost Time: 1 day Comments: The certificate is proof that the property has no pending payments on Cost: COP$5,128,279 (1% of the property value). property taxes and on no outstanding contribution obligations on property value Comments: The registration tax applies to the registration of documentary legal increases due to public works. acts, contracts or deals in which private-sector parties are part or beneficiaries and which must be registered by law at the Registry Office. The registration tax is Procedure 5*. Pay certificate of no outstanding property tax regulated by Law 223 of 1995 and Decree 650 of 1996. The registration tax is paid at payments a commercial bank. Time: 1 day (simultaneous with procedure 3) Procedure 9. Pay registration fee Cost: COP$8,000 Time: 1 day Comments: With the receipt issued by the Municipal Tax Office, the cost of the certificate must be paid at a bank located at the premises. Cost: COP$2,564,140 (0.5% of the property value). Comments: Payment of registration fee legalizes the transaction before the Registry Procedure 6*. Obtain unified certificates of no outstanding Office. This payment is done at a commercial bank, which has an agreement with the property taxes Registry Office. Time: 1 day (simultaneous with procedure 3) Procedure 10. Registration of public deed with the Registry Office Cost: No cost Time: 3 days Comments: The payment receipt and the property registration license must be submitted to the Municipal Tax Department. Cost: No cost Comments: Once the registration tax and fee have been paid, the public deed can Procedure 7. An attorney prepares a preliminary deed be registered at the Registry Office (Oficina de Registro de Instrumentos Públicos). Time: 2 days Procedure 11. Inform the cadastre about the change of Cost: COP$250,000 (the fee varies depending on the attorney). ownership Comments: The same attorney who reviewed the property titles in procedure 3 Time: 1 day prepares a preliminary deed to be submitted to the notary public. This step is not mandatory but is usually done for this type of transactions. The attorney must Cost: No cost receive the ownership history and no-lien certificate (procedures 1 and 2) as well as Comments: The interested party must notify the transfer of property at the cadastre the certificate of no outstanding property tax payments (procedure 6). office of Instituto Geográfico Agustín Codazzi (IGAC). Procedure 8. The notary public prepares the public deed * This procedure is simultaneous with a previous procedure. Time: 2 days Cost: COP$1,675,185 [COP$ $13,880 + 0.27%*(price of the property - COP$ 118,680) for notary fees + COP$9,750 for the public deed + COP$29,250 for copies of the pub- lic deed + COP$ 3465 for the Notary Superintendence + COP$3,465 for the National Notary Fund + 16% VAT]. LIST LIST OFOF t REGISTERING PROCE %63&4t PROCEDURES STARTING APROPERT Y BUSINESS 119 Comments: The notary public prepares the public deed based on all the documents Procedure 5*. Obtain certificate of no outstanding property submitted by the parties. The notary public is required by law to prepare the public deed. The total cost of the procedure is calculated according to Resolution 9500 of tax payments and certificate of no outstanding contribution December of 2008. The cost per page of the public deed is COP$1,950 plus VAT. It is obligations on property value increases due to public works assumed that the public deed is 5 pages long. Time: 1 day (simultaneous with procedure 3) Cost: No cost Procedure 9. Obtain statement and pay registration tax Comments: The certificates are proof that the property has no pending property Time: 1 day taxes payments and no outstanding contribution obligations on property value Cost: COP$5,128,279 (1% of the property value). increases due to public works. The payment receipt and property license registration Comments: The registration tax applies to the registration of documentary legal number must be submitted to the Municipal Tax Department. acts, contracts or deals in which private-sector parties are part or beneficiaries and which must be registered by law at the Registry Office. The registration tax is regu- Procedure 6. An attorney prepares a preliminary deed lated by Law 223 of 1995 and Decree 650 of 1996. Payment is made at a commercial Time: 2 days bank. Cost: COP$ 496,900 (approximately 1 legal minimum monthly wage) Comments: The same attorney who reviewed the property titles in procedure 3 Procedure 10. Pay registration fee prepares a preliminary deed to be submitted to the notary public. This step is not Time: 1 day mandatory but is usually done for this type of transactions. The attorney needs the Cost: COP$2,564,140 (0.5% of the property value). ownership history and no-lien certificate and the certificates of legal existence and Comments: Payment of registration fee legalizes the transaction before the Registry representation of the buyer and seller (procedures 1 and 2) as well as the certificate Office. This payment is done at a commercial bank, which has an agreement with the of no outstanding property taxes payments and no outstanding contribution obliga- Registry Office. tions on property value increases due to public works (procedure 5). Procedure 11. Registration of public deed with the Registry Office Procedure 7. The notary public prepares the public deed Time: 9 days Time: 2 days Cost: No cost Cost: COP$1,675,185 [COP$13,880 + 0.27%*(value of the property - COP$118,680) for notary fees + COP$9,750 for the public deed + COP$29,250 for copies of the Comments: Once the registration tax and fee have been paid, the public deed can public deed + COP$3,465 for the Superintendence of Notaries + COP$3,465 for the be registered at the Registry Office (Oficina de Registro de Instrumentos Públicos). National Notary Fund + 16% VAT]. Comments: The notary public prepares the public deed based on all the documents * This procedure is simultaneous with a previous procedure. submitted by the parties. The notary public is required by law to prepare the public deed. The total cost of the procedure is calculated according to Resolution 9500 of REGISTERING PROPERTY December of 2008. The cost per page of the public deed is COP$1,950 plus VAT. It is assumed that the public deed is 5 pages long. Valledupar, Cesar Procedure 8. Obtain the registration tax statement Procedure 1. Obtain ownership history and no-lien certificate Time: 1 day Time: 1 day Cost: No cost Cost: COP$11,840 Comments: This procedure is done at the Treasury of the Government of Cesar. Comments: This certificate (Certificado de Libertad y Tradición) provides the legal information on the property and on its current and previous ownership. The rate Procedure 9. Pay registration tax is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter modified by Resolution 0035 of 2009. Any individual or legal entity can request this certificate at Time: 1 day the Registry Office. Cost: COP$5,128,279 (1% of the property value). Comments: The registration tax applies to the registration of documentary legal Procedure 2. Obtain the certificate of legal existence and acts, contracts or deals in which private-sector parties are part or beneficiaries and representation of the buyer and the seller of the property from which must be registered by law at the Registry Office. The registration tax is estab- the Chamber of Commerce lished by Law 223 of 1995 and Decree 650 of 1996. Payment is made at a commercial Time: 1 day bank located at the Government of Cesar. Cost: COP$3,500 Procedure 10. Pay registration fee Comments: When the parties are limited liability companies, a certificate of legal ex- Time: 1 day istence and representation must be requested from the Chamber of Commerce. This document certifies the existence of the legal entity, indicates its legal representative Cost: COP$2,564,140 (0.5% of the property value). and provides information on its registered address, its partners, its capital and the Comments: Payment of registration fee legalizes the transaction before the Registry date of establishment. The rate is set according to Decree 393 of 2002. Office. This payment is done at a commercial bank, which has an agreement with the Registry Office. Procedure 3. Review of the property titles by an attorney Time: 3 days Procedure 11. Registration of public deed with the Registry Office Cost: COP$248,450 (approximately half a legal minimum monthly wage) Time: 3 days Comments: An attorney reviews the previous property titles and the background of Cost: No cost the owner to verify that there are no legal constraints to the transaction. This legal Comments: Once the registration tax and fee have been paid, the public deed can review is not mandatory, but is usually done for this type of transactions. The attor- be registered at the Registry Office (Oficina de Registro de Instrumentos Públicos). ney must receive the certificates mentioned in procedures 1 and 2, as well as a copy of the company statutes that authorize the representative to act on its behalf. * This procedure is simultaneous with a previous procedure. Procedure 4*. Pay certificate of no outstanding property tax payments and certificate of no outstanding contribution obligations on property value increases due to public works Time: 1 day (simultaneous with procedure 3) Cost: COP$4,100 (rate for both certificates) Comments: Paid at the Municipal Tax Department. 120 DOING BUSINESS IN COLOMBIA 2010 REGISTERING PROPERTY Procedure 7. An attorney prepares a preliminary deed Villavicencio, Meta Time: 3 days Cost: COP$900,000 Procedure 1. Obtain ownership history and no-lien certificate Comments: The same attorney who reviewed the property titles in procedure 3 pre- Time: 1 day pares a preliminary deed to be submitted to the notary public. This step is not man- Cost: COP$11,840 datory but is usually done for this type of transactions. The attorney must receive Comments: This certificate (Certificado de Libertad y Tradición) provides the legal the ownership history and no-lien certificate (procedure 1) and the certificates of no information on the property and on its current and previous ownership. The rate outstanding property tax payments and no outstanding contribution obligations on is set according to Decrees 1250 of 1970 and 2280 of 2008, the latter modified by property value increases due to public works (procedures 4, 5 and 6). Resolution 0035 of 2009. Any individual or legal entity can request this certificate at the Registry Office. Procedure 8. The notary public prepares the public deed Time: 3 days Procedure 2. Obtain the certificate of legal existence and Cost: COP$1,675,185 [COP$13,880 + 0.27%*(value of the property - COP$118,680) representation of the buyer and the seller of the property from for notary fees + COP$9,750 for the public deed + COP$29,250 for copies of the the Chamber of Commerce public deed + COP$3,465 for the Superintendence of Notaries + COP$3,465 for the Time: 1 day National Notary Fund + 16% VAT]. Cost: COP$3,500 Comments: The notary public prepares the public deed based on all the documents Comments: When the parties are limited liability companies, a certificate of legal ex- submitted by the parties. The notary public is required by law to prepare the public istence and representation must be requested from the Chamber of Commerce. This deed. The total cost of the procedure is calculated according to Resolution 9500 of document certifies the existence of the legal entity, indicates its legal representative December of 2008. The cost per page of the public deed is COP$1,950 plus VAT. It is and provides information on its registered address, its partners, its capital and the assumed that the public deed is 5 pages long. date of establishment. The rate is set according to Decree 393 of 2002. Procedure 9. Pay registration fee and registration tax Procedure 3. Review of the property titles by an attorney Time: 1 day Time: 3 days Cost: COP$9,230,903 (1.3% of the property value for registration tax and 0.5% of the Cost: COP$980,000 property value). Comments: An attorney reviews the previous property titles and the background of Comments: Payment of registration fee legalizes the transaction before the Registry the owner to verify that there are no legal constraints to the transaction. This legal Office. The registration tax applies to the registration of documentary legal acts, review is not mandatory, but is usually done for this type of transactions. The attor- contracts or deals in which private-sector parties are part or beneficiaries and which ney must receive the certificates mentioned in procedures 1 and 2, as well as a copy must be registered by law at the Registry Office. The registration tax is regulated of the company statutes that authorize the representative to act on its behalf. by Law 223 of 1995 and Decree 650 of 1996. This payment is done at a commercial bank, which has an agreement with the Registry Office. Procedure 4*. Obtain certificate of no outstanding property tax payments Procedure 10. Registration of public deed with the Registry Office Time: 1 day (simultaneous with procedure 3) Time: 15 days Cost: No cost Cost: No cost (paid in procedure 9) Comments: Since January 2009 the Municipality no longer charges for this proce- Comments: Once the registration tax and fee have been paid, the public deed can dure, which is done at the property tax counter of the Municipal Treasury. be registered at the Registry Office (Oficina de Registro de Instrumentos Públicos). Procedure 5*. Obtain certificate of no outstanding contribution Procedure 11. Inform the cadastre about the change of obligations on property value increases due to public works ownership Time: 1 day (simultaneous with procedure 3) Time: 1 day Cost: No cost Cost: No cost Comments: The certificate is proof that the property has no pending balances in Comments: The interested party must notify the transfer of property at the cadastre terms of property valuation tax contributions. Since January 2009 the Municipality office of Instituto Geográfico Agustín Codazzi (IGAC). no longer charges for this procedure, which is done at the property valuation tax counter of the Municipality. * This procedure is simultaneous with a previous procedure. Procedure 6*. Obtain certificate of no outstanding contribution obligations on property value increases due to public works from the Government of the Department Time: 1 day (simultaneous with procedure 3) Cost: COP$10,000 Comments: This procedure is done at the Government of Meta. Doing Business in Colombia 2010 was pro- Trade, Industry and Tourism (MCIT), for duced by the Investment Climate Depart- their valuable support. The United States ment of the World Bank group in col- Agency for International Development laboration with the Center for Strategy (USAID), especially Francisco González, and Competitiveness of Universidad de also provided support. los Andes, under the direction of Zenaida The project was funded by the Na- Acknowledgments Hernandez, Mierta Capaul, Martha Cecilia tional Planning Department, the Ministry Rodriguez and Angela María Londoño, of Trade, Industry and Tourism, the Co- with the support of the Private Competi- lombian Confederation of Chambers of tiveness Council (CPC) led by Hernando Commerce (Confecámaras), the United José Gómez and Javier Gamboa. The team States Agency for International Develop- Contact details for local partners comprised William Camilo Arana Contre- ment, the Swiss State Secretariat for Eco- are available on the ras, Claudia Contreras, Luis Díaz Mata- nomic Affairs (SECO) and the Investment jira, Gabriela Enrigue, Alejandro Espinosa Climate Department of the World Bank Doing Business website at Wang, Laura Higuera, Kusisami Horn- Group. http://subnational.doingbusiness.org berger, Rafael Isidro Parra-Peña Somoza, More than 130 accountants, archi- Diana Margarita Pérez Camacho, Daniel tects, business consultants, custom bro- Mitchell, Maria Camila Roberts Arcinie- kers, engineers, freight forwarders, law- gas, and Massimiliano Santini. yers, property experts and utility providers Thomas Haven, Kristian Rada, Jose contributed to Doing Business in Colombia Guilherme Reis and David Rosenblatt re- 2010. Data collection for the starting a viewed the full text. Peer-review comments business, registering property and enforc- were also received from Rajul Awasti, Do- ing contracts topics was coordinated by bromir Christow, Andrea Feldman, Pe- Gabriela Mancero, María Nella Márquez, nelope Fidas, Thomas Moullier and David Germán Marín and Sandra García, from Varela. Diego Borrero, Karim Belayachi, the law firm Cavelier Abogados. Juan Frederic Bustelo, Sarah Cuttaree, Allen Bernardo Duque and Viviana Hernández Dennis, Jacqueline Den Otter, Manuel from the Colombian Chamber of Con- Enrique Garcia Huitron, Dahlia Khalifa, struction (CAMACOL) coordinated the Aikaterini Leris, Trimor Mici, Caroline dealing with construction permits ques- Otonglo, Madalina Papahagi, Brice Rich- tionnaires. Santiago López and Diego ard and Luis Aldo Sanchez Ortega pro- Rengifo from the National Association of vided valuable assistance at various stages Foreign Trade (ANALDEX) coordinated of the project. The website (http://www. the trading across borders questionnaires. doingbusiness.org/Colombia) was devel- Juan Guillermo Becerra and Alejandro oped by Graeme Littler, Felipe Iturralde, Sanabria, under the supervision from Eli- Hashim Zia and Preeti Endlaw. The report ana Bernal, from PriceWaterHouseCoo- was edited by Cintra Scott and designed by pers Colombia coordinated the paying G. Quinn Information Design. The lists of taxes questionnaires. The team wants to procedures were translated from Spanish extend its special gratitude to more than by LasTraducciones.com. 210 national, department and municipal Special thanks go to Alvaro Balcazar government officials, representatives of the Acero, Gisela Cruz, Fernando José Estupi- chambers of commerce, urban curators ñán and Lilian Urueta from the Directorate and notaries, as well as members of the of Entrepreneurial Development at the Na- judiciary who participated in the project tional Planning Department (DNP-DEE) and who made valuable comments during for their leadership and outstanding work the consultation and data review period. coordinating all aspects of the project; The names of those participants wishing and to Yetliza Cárdenas, Luz Deicy Florez to be acknowledged individually are listed and Liliana Rojas from the Ministry of on the following pages. 122 DOING BUSINESS IN COLOMBIA 2010 PUBLIC OFFICIALS, REPRESENTATIVES OF THE CHAMBERS OF COMMERCE, URBAN CURATORS AND NOTARIES A R M E N IA Juan Guillermo Londoño María Leonor Cabal Silvana Giaimo Chávez Luisa Victoria Reyes Ingeniero de Proyectos, Directora Corporativa y Directora Ejecutiva, Asesora, Cámara de José Ignacio Rojas Sepúlveda Alcaldía de Bucaramanga Empresarial, Cámara de Cámara de Comercio de Comercio de Ibagué Secretario de Planeación, Comercio de Cali Cartagena Alcaldía de Armenia Lina María Manrique Duarte Elvia Maria Garzón Pacheco Secretaría de Hacienda Julián Domínguez Rivera Hector Manuel Olier Castillo Secretaria de Planeación, Nora Elsy Molina Municipal, Alcaldía de Presidente Ejecutivo, Coordinador Desarrollo Gobernación de Tolima Asistente Administrativa Bucaramanga Cámara de Comercio de Territorial, Gobernación Hacienda Municipal, Cali de Bolívar Tiberia Florez Ramirez Alcaldía de Armenia Horacio Cáceres Profesional, Gobernación Director del Observatorio Norberto Herrera Laguna Carmen Lucia Román de Tolima Wilmer Grajales Puentes de Competitividad, Subdirector de Registros, Asesora Departamento de Tesorero Municipal, Cámara de Comercio de Cámara de Comercio de Planeación, Gobernación Luz Marina Diaz Parra Alcaldía de Armenia Bucaramanga Cali de Bolívar Juez, Juzgado 6 Civil del Circuito Armando Rodríguez Jaramillo Juan Camilo Montoya Bozzi Jorge Gutierrez María Claudia Páez Asesor, Cámara de Presidente Ejecutivo, Cajero, Gobernación del Secretaria de Planeación, MANIZALES Comercio de Armenia Cámara de Comercio de Valle del Cauca Gobernación de Bolívar Rodrigo Estrada Reveiz Bucaramanga Angelo Quintero Luis Humberto Castrillón Rosiris María Llerena Secretario de Presidente Ejecutivo, Jorge Gabriel Mantilla Secretario de Planeación, Juez, Juzgado 8 Civil del Competitividad y Cámara de Comercio de Director Unidad Gobernación del Valle del Circuito Desarrollo Empresarial, Armenia de Registros e Cauca Alcaldía de Manizales Beatriz Carrasquilla B. Informediación, Cámara de C Ú C U TA Comercio de Bucaramanga Carlos Humberto Ruiz Jaime Paola Andrea Sanchez Giraldo Directora Jurídica, Profesional Mauricio Lizcano Jefe Unidad Fomento Cámara de Comercio de María José Oróstegui Univesitario Planeación Secretario de Planeación, Empresarial, Alcaldía de Armenia Abogada de Registro, Departamental, Alcaldía de Cúcuta Manizales Javier Ramirez Mejía Cámara de Comercio de Gobernación del Valle del Bucaramanga Cauca José Edgar Caicedo Olga Lucía Ramírez Director Planeación Planeación Municipal, Jefe Unidad de Rentas de Departamental, Miryam Yanneth Bohórquez María Yamileth Diaz Alcaldía de Cúcuta la Secretaría de Hacienda, Gobernación del Quindio Coordinador del CAE, Profesional Alcaldía de Manizales Olga Lucía Hoyos Sepúlveda Cámara de Comercio de Univesitario Planeación Pedro Sayago Rojas Bucaramanga Departamental, Director Ejecutivo, Ismael Henao Juez, Juzgado 1 Civil del Gobernación del Valle del Cámara de Comercio de Director de Unidad de Circuito Consuelo Ordoñez de Rincón Cauca Cúcuta Desarrollo Empresarial, Javier Ocampo Cano Secretaria de Planeación, Cámara de Comercio de Gobernación de Santander Julian Alberto Álvarez Gustavo Hernández Manizales Notario, Notaría Primera Subdirectos de Estudios Director de Registro, de Armenia Abelardo Bernal Jimenez Economicos, Gobernación Cámara de Comercio de Gildardo Armel Arenas Juez, Juzgado 8 Civil del Valle del Cauca Cúcuta Presidente Ejecutivo, BA R R A NQU I L L A Municipal Cámara de Comercio de Nestor Raúl Gironza Martha Liliana Nieto Estévez Manizales Jaime Pumarejo Heins Profesional Curadora Urbana, CALI Asesor de Competitividad, Univesitario Planeación Curaduría Urbana No 1 Sandra María Salazar Alcaldía de Barranquilla Johannio Marulanda Arbeláez Departamental, Directora Registros CAE, Director Planeación Gobernación del Valle del Sergio Enrique Tarazona Cámara de Comercio de Fidel Castaño Profesional Municipal, Alcaldía de Cauca Manizales Gerente de Impuestos Cali Administrativo, Curaduría Distritales, Alcaldía de Gloria del Socorro Victoria Urbana No 1 Gustavo Guzmán Rojas Barranquilla Amanda Mera Juez, Juzgado 8 Civil Arquitecto Asesor, Subdirector de Municipal Hernando Angarita Angarita Curarduría Urbana Gustavo Pacheco Castro Asesor Consejería Ordenamiento Territorial, Secretario de Alcaldía de Cali Shirley Cárdenas de Competitividad, Isabel Cristina González Competitividad, Cámara de Oficial de Liquidaciones, Productividad y Comercio Secretaria de Planeación, Comercio de Barranquilla William Gonzalez Notaría Quinta de Cali Exterior, Gobernación de Gobernación de Caldas Maribel Reyes Economista, Oficina de Norte de Santander Fomento y Competitividad, Luis Eduardo Bedoya Libreros Luz Mila García Bocanegra Jefe de Registro Mercantil, Alcaldía de Cali Asistente de Operaciones, Carlos Armando Barón Registradora Principal, Cámara de Comercio de Oficina de Registro de Juez, Juzgado 1 Civil Oficina de Registro de Barranquilla David Andrade Instrumentos Públicos Municipal Instrumentos Públicos Milton Serrano Asesor de Fomento Económico y Rodrigo Uribe I BAG U É Liliana María Montes Coordinador, Cámara de Competitividad Muinicipal, Asistente, Oficina de Juez Comercio de Barranquilla Alcaldía de Cali Registro de Instrumentos Martha Mirella Peña Torres Grace Tejera Públicos Secretaria de Apoyo a M E DE L L Í N Alonso Velasco Gestión Institucional, Asistente Director de Oficina de Fomento y Impuestos, Dirección C A RTAG E NA Alcaldía de Ibagué Carlos H. Jaramillo Competitividad, Alcaldía Director de Planeación, Nacional de Impuestos y de Cali Sibila Carreño Nestor Raúl Falla Quiroga Alcaldía de Medellín Aduanas Nacionales Asesora de Competitividad, Asesor, Alcaldía de Ibagué Jorge Medina Alcaldía de Cartagena William German Zapata Jaime Blanco Oficina de Fomento y Angel Maria Gómez Sanchez Subsecretario de Gestión Competitividad, Alcaldía Gustavo García Cediel Secretario de Hacienda, Departamento Empresarial, Gobernación de Cali Jefe de Unidad de Alcaldía de Ibagué Administrativo de del Atlántico Desarrollo Económico, Planeación, Alcaldía de Fernando Escrucería Alcaldía de Cartagena Manuel Antonio Medina Medellín Rocío Acosta Manotas Oficina de Fomento y Secretario de Planeación, Juez, Juzgado 4 Civil Competitividad, Alcaldía Aarón Espinosa Alcaldía de Ibagué Piedad Elena Gonzalez Municipal de Cali Subsecretario de Hacienda, Economista, Alcaldía de Alcaldía de Cartagena María del Carmen Osorio Medellín Carlos Puche Mogollón Rebeca Puente Asesora, Secretaría de Notario, Notaría Primera Subdirectora Técnica, Jorge Campos Hacienda, Alcaldía de Teresita Usuga Muñoz de Barranquilla Alcaldía de Santiago de Asesor de Desarrollo Ibagué Jefe Actualización y Yojairo García Mozo Cali Económico, Alcaldía de Conservación, Alcaldía de Cartagena Sandra Ligia Pinzón Medellín Registrador Principal, María Fernanda Sancho Directora de Desarrollo Oficina de Registro de García Federico Barraza Ucrós y Apoyo Empresarial, Olga María Ospina Trejos Instrumentos públicos Subdirectora Jurídica, Director de División de Cámara de Comercio de Jefe de Investigaciones Cámara de Comercio de Impuestos, Alcaldía de Ibagué Económicas, Cámara de BU C A R A M A NG A Cali Cartagena Comercio de Medellín Cesar Augusto Vargas Ortiz Germán Orduz Cabrera Harold Hincapié Eduardo Barrera Presidente Ejecutivo, Edison Alirio Aguilar Osorio Asesor de Proyectos, Delegado, Cámara de Secretario Técnico Cámara de Comercio de Coordinador de Registros, Alcaldía de Bucaramanga Comercio de Cali Comisión de Ibagué Cámara de Comercio de Competitividad, Cámara de Medellín Comercio de Cartagena ACKNOWLEDGMENTS 123 Nelson Fernando Sierra Jorge Enrique Cabrera Jaime Augusto Burbano Alfredo Diaz-Granados C. T U N JA Jefe de Formalización, Economista Jefe, Oficina de Coordinador Sector Presidente Ejecutivo, Cámara de Comercio de Competitividad MIPYME, Gobernación del Cámara de Comercio de Héctor Angarita Niño Medellín Cauca Santa Marta Secretario de hacienda Claudia Gabanzo Municipal, Alcaldía de Carolina Roldán Escobar Directora, Oficina de Eliana Andrea Plaza Vasquez Patricia Isabel Morón López Tunja Jefe de Mejoramiento Registro de Instrumentos Profesional de Planeación Asesor en Comercio y Logística, Cámara de Públicos Departamental, Exterior, Cámara de Carlos Eduardo Rodriguez Comercio de Medellín Gobernación del Cauca Comercio de Santa Marta Martinez PASTO Secretario de Planeación, Juan David Echeverri Rendón Diana Patricia Trujillo Solarte Carlos Alberto Manjarrez Alcaldía de Tunja Subdirector de Relaciones Luis Humberto Paz Juez, Juzgado 3 Civil Arquitecto, Curaduría con Entes Territoriales, Secretario de Desarrollo Municipal Urbana No 1 Olga Judith Rodríguez Empresas Públicas de Económico, Alcaldía de Profesional Universitario Medellín EPM Pasto María del Pilar Suárez García Carmen Enamorado Planeación Municipal, Secretaria Juzgado, Rama Arquitecto, Curaduría Alcaldía Mayor de Tunja Maximiliano Valderrama Rosa María Sotelo Judicial Urbana No 1 Secretario Productividad Secretaria de Hacienda, María Parra y Competitividad, Alcaldía de Pasto R IOHAC HA Claudio O. Dercuri Técnico Operativo, Gobernación de Antioquia Secretaría de Planeación, Alcaldía Mayor de Tunja Gerardo Mesias Mendez Marlon Brugés Gobernación de Magdalena Luis Fernando Giraldo Director, Cámara de Coordinador de Redes, Elsa Molano Subdirector de Rentas, Comercio de Pasto Aguas de Guajira Carlos Francisco Diaz- Jefe de Oficina de Gobernación de Antioquia Granados Impuestos Municipales, Germán Vela Luna Hilda Lubo Secretario de Planeación, Alcaldía Mayor de Tunja M ON T E R ÍA Curador Urbano, Jefe Oficina de Planeación, Gobernación de Magdalena Curaduría Urbana No 2 Alcaldía de Riohacha Jorge Luis Ospina Cuervo Monica Severiche Núñez SI NC E L E JO Jefe de Crédito y Cartera, Secretaria de Planeación, Nelson Leytón Portillo Keytin Rosado Caja Compensación Alcaldía de Montería Secretario de Planeación, Contadora, Secretaría Sonia Muñoz Familiar COMFABOY Gobernación de Nariño de Hacienda, Alcaldía de Jefe Area de Planeación Sandra Liliana Cely Andrade Mara Vergara Sanchez Riohacha Socioeconómica, Alcaldía Coordinadora, Cámara de Daira Elvira Erazo de Sincelejo Director de Planeación, Comercio de Montería Juez, Juzgado 4 Civil Omar Brito Cámara de Comercio de Municipal Director Administrativo Nayibe Padilla Tunja Elba Barrios Hoyos y Financiero, Cámara de Jefe de la Oficina de Carmenza Tobos Palencia Secretaria de Planeación, PEREIRA Comercio de La Guajira Impuestos Municipales, Gobernación de Córdoba Alcaldía de Sincelejo Curadora, Curaduría Claudio Olivella Subsecretario Joel Alfonso Manjarres Cuesta Urbana No 2 Patricia Lucía Sejín Subsecretario Planeación, Jefe de Registro Mercantil, Jorge Luis García Roman Venegas Juez, Juzgado 2 Penal Alcaldía de Pereira Cámara de Comercio de La Jefe de Planificación Municipal Guajira Territorial, Alcaldía de Gestor, Dirección Luz Adriana Ríos Quintero Sincelejo Nacional de Impuestos y N E I VA Subsecretaría de Asuntos Eliana Melo Brito Aduanas Nacionales Tributarios, Alcaldía de Directora de Promoción Arnulfo García Rivera José Dagoberto Chaparro Maria Amelia Monroy Pereira y Desarrollo, Cámara de Asesor Planeación Mondragón Comercio de Riohacha Municipal, Alcaldía de Montaña Directora de Planeación, Daniel Arango Sincelejo Secretaría de Desarrollo Alcaldía de Neiva Director de Promoción Beatriz Rivera Económico, Gobernación y Desarrollo, Cámara de Afiliaciones, Comfamiliar Germán García Amador de Boyacá Claudia Marcel Medina Comercio de Pereira de La Guajira Director Ejecutivo, Cámara de Comercio de Mauricio Giraldo García Directora Promoción y Albenis Cotis Curbelo Secretario de Desarrollo Desarrollo, Cámara de Luz Enid Briceño Quintana Sincelejo Comercio de Neiva Directora de Registros, Profesional Universitario, Económico, Gobernación Cámara de Comercio de Insitituto de Seguro Social María Claudia Merlano de Boyacá Oscar Mauricio Perdomo Pereira Patricia Gutiérrez Marino Juan Pablo Sanabria Director jurídico, Cámara Jefe Departamento de de Comercio de Neiva Luis Fernando Montes Posada Registradora Principal, Servicios Empresariales, Ingeniero de Planeación y Curador Urbano, Oficina de Instrumentos Cámara de Comercio de Construcciones, Proactiva Andrea Paola Rueda Curaduria Urbana No 1 Públicos Sincelejo Aguas de Tunja S.A. E.S.P. Abogada, Cámara de Mónica Pareja Claudia Astrid Gómez López Comercio de Neiva Jesús Saldarriaga Michel Juan Valdelamar Secretario Desarrollo Auxiliar/Asesora, Porvenir Villega Juez, Juzgado 5 Civil Mauricio Vargas Cuellar Económico, Gobernación Asesor Empresarial, Municipal de Risaralda Javier Vargas Curador Urbano, Cámara de Comercio de Curaduría Urbana No 1 Administrador, Salud Coop VA L L E D U PA R Patricia Lopez Granados Sincelejo Isabel Díaz Secretaria de Hacienda, S A N TA M A RTA Adriana Milena Martínez William Rincón Curadora Urbana, Gobernación de Risaralda Centanaro Asesor del Alcalde, Curaduría urbana No 2 Gilberto Chacín Jefe Departamento Jurídico Alcaldía de Valledupar Luisa Marina Correa Gonzalez Curador urbano, Alcaldía y De Registro, Cámara de Fanny Osorio Juez, Juzgado 5 Civil de Santa Marta Comercio de Sincelejo Adalgiza Ovalle Felizzola Economista, Departamento Municipal Profesional Especializado, Administrativo de Marina Guerra De La Aris Lucas Castellanos Secretaría de Planeación, Planeación Oficina de Registro de Espriella Alcaldía de Valledupar Instrumentos Públicos de Curador, Curaduría Secretaria de Hacienda, Urbana No 1 Jesús Mendez Artunduaga Pereira Alcaldía de Santa Marta Mercy Luz Camargo Director de Planeación, Eduardo Cabarcas Meriño Jefe de Impuestos Gobernación del Huila P OPAYÁ N Zully David Hoyos Curador, Curaduría Municipales, Alcaldía de Secretaria de Planeación, Urbana No 2 Valledupar Angelica María Bahamón Ing. Maria Antonia Otero Alcaldía de Santa Marta Abogada, Infihuila Ararát Máximo Vergara Ruiz José del Carmen Horlandy Jefe Oficina Asesora de Martha Marjorie Gongora Secretario de Planeación, Castro Gladys Castrillón Quintero Planeación, Alcaldía de Líder del Programa Gobernación de Sucre Presidente Ejecutivo, Juez, Juzgado 1 Civil Popayán Prospectiva Humana, Cámara de Comercio de Municipal Alcaldía de Santa Marta José Ricardo Fierro Manriquez Valledupar José Vicente Galvis Juez, Juzgado 5 Civil Hernando Trujillo Secretario de Hacienda, Carlos Laborde Municipal José Martín Romero Notario, Notaría primera Alcaldía de Popayán Arquitecto, Alcaldía de Coordinador de la oficina de Neiva Santa Marta Ramiro Tobías Angulo de atención al cliente, Maria Fernanda Moreno Notario, Notaría Primera Cámara de Comercio de Sandra Jimenez Presidenta Ejecutiva, Ana Concepción David Valledupar Liquidadora, Notaría Cámara de Comercio de Directora de Planeación Napoleón Alvarez López Primera de Neiva Popayán y Desarrollo, Cámara de Registrador, Oficina de Martina del Socorro Mendoza Comercio de Santa Marta Registro de Instrumentos Maestre Hilda Alvira Oriana Mendoza Jefe de Desarrollo Públicos Notaria, Notaría Quinta Presidenta Ejecutiva, Javier Jimenez Salgar Empresarial, Cámara de de Neiva Cámara de Comercio del Comisión de Comercio de Valledupar Cauca Competitividad, Cámara de Comercio de Santa Marta 124 DOING BUSINESS IN COLOMBIA 2010 PUBLIC OFFICIALS, REPRESENTATIVES OF THE CHAMBERS OF COMMERCE, URBAN CURATORS AND NOTARIES Carlos Ariel Sierra Avendaño V I L L AV IC E NC IO Miryam Yaneth Barbosa Ana Milena Suarez Daza María Rosario Sanabria Coordinador de Programas Directora Desarrollo Asesora Especializada CAE, Dueñas Especiales, Cámara de Ing. Orlando Barbosa Villalba Empresarial, Cámara de Cámara de Comercio de Directora de Desarrollo Comercio de Valledupar Secretario de Planeación, Comercio de Villavicencio Villavicencio Territorial, Gobernación Alcaldía de Villavicencio de Meta Nazli Maria Bolaño Idarraga Sonia Cristina Preciado Juan Carlos Sánchez Turriago Contratista, Contraloría Zully Alejandra Neuta Orjuela Carrero Curador Urbano, Narda Juliana Torres Departamental del Cesar Directora Técnica de Directora Jurídica, Curaduría Urbana Segunda Hernández Impuestos, Alcaldía de Cámara de Comercio de Registradora Principal, Rubén Darío Carrillo Villavicencio Villavicencio Carlos Arturo Pardo Oficina de Registro de Secretario de Gobierno, Jefe Oficina Planeación Instrumentos Públicos Gobernación de Cesar departamental, Gobernación de Meta Luis Carlos González Ortega Juez, Rama Jurisdiccional P R I VAT E P ROF E S SI ONA L S Agencia de Aduanas Inversiones La Pradera SIA Interlogística S.A. Claudio Enrique Carrascal Aurelio Calderón Marulanda ASERCOL, S.A. Nivel 1 Vicente Azula Cajal Marelsy Ester Ballestero Abogado Abogado Claribel Paternina Martínez Isaac y Asociados Siderúrgica del Norte Enrique Carvajales Carolina Moncaleano Agencia de Aduanas Carlos Jairo Isaac SIDUNOR S.A. Experto en logística Abogada E. Campuzano, S.A. Nivel 1 Miguel Alberto Mancipe Máximo Torres Perozo Jaime Ramirez Albadán y Alis Yohanna Guerrero Castro Miguel Romero Moreno Asociados, LTDA. Spazio Constructora Abogada Abogado ALTEC Proyectos de Jaime Ramírez Albaran Rafael Abondano Urbanismo, LTDA. Gustavo Cadena Pedro Alberto Castro Castro Jaime Andres Velasco Muñoz David Simmonds Jaramillo & Asociados Asesor Jurídico Abogado Abogados Tello, Silva Abogados Angulo Construcciones Hugo Jaramillo Gutierrez Lina Cortabarría Gutierrez Diana Aurora Eslava Chiquillo Jaime Augusto Osorio Francisco García Angulo Abogada Abogado JAS Forwarding de Jaime Tello Silva Baquero y García, S.A. Colombia, S.A. Uniboyaca Esperanza Marina Corvacho Victor Manuel Moreno Pérez Alvaro Baquero Rico María Paula Eslava Dávila Abogada Abogado Hector Jhon Ortegón Saenz Bufete Legal La Macuira Universidad Autónoma de Elmer Enrique Daza Daza Oscar Ricardo Corredor Abogado Quintero Mauricio Zuluaga Escobar Darío Barrios Bucaramanga Contratista Manuel Osorio Urrea Larry Sierra Camilo Euclides Quiñonez Juan Felipe Lenis Echeverry Carlos Arturo Cobo Lamk Abogados Abogado Juan Omar Rivero Universidad Cooperativa Abogado Garcia - Abogados Asesores Navi Guillermo Lamk Castro de Colombia Mauricio Eraso Carlos Arturo Cobo García Macdaniel Hernandez, LTDA. Hernando Ignacio Vives Ingeniero Bertha Rodriguez Comercio Exterior Franco Abogada Delay Macdaniel José Germán de León Espina Asesores, LTDA. Universidad de Medellín Abogado Gustavo Rodriguez Nicolás Pareja & Asociados Martha Visbal - Abogados Rodolfo Andrés Correa Abogado Elvia Lucía Bernal García Construcciones Nicolás Diaz Hoyos Universidad del Cauca Abogada Rubén Mercado Rodríguez Casapropia, S.A. Abogado Obras Civiles y Hugo Armando Polanco Pedro Rico Rico Manuel José Bernal Garcia Consultorías Limitadas López Abogado Nohelia Romero Constructora Barajas Jorge Hernández Universidad ICESI de Asistente litigante Alberto Cepeda Faciolince Operadora Logística Cinco Colombia Zulay Gaviria Ejecutiva empresa Ana Milena Lopera Rozo Constructora Camu Punto Cinco, S.A. Diana Patricia Paz Acosta logística Abogada Juan Sebastían Urrea Gellen Gil Universidad ICESI de Constructora Los Mayales Ivan Gutiérrez Noguera Colombia Adriana Vergara Gómez Said Alberto Rubiano Juan Puente Jorge Andrés Illera Cajiao Abogada Abogado William Zárate Constructora Vásquez y Parque Empresarial Uribe & Largacha Alberto Gómez Carolina Obregón Silva Metropolitano BOCONO Asociados Profesional Independiente Abogada Vásquez Tibaldo del Carmen Vázquez Carlos Balaguera Rodrigo Uribe Largacha Leonor Consuelo Gómez Fredy Sotelo Parque Empresarial Angela Gonzalez Rosado Abogada Director Logístico Diseño y Espacio LTDA. Metropolitano BOCONO Velez Benedetti Abogados Sandra Liliana Gómez Diego Hernández Sabogal July Suárez Víctor Berbes y Consultores Abogada Abogada Distrilaura EBSA Melvin Hurtado Ricardo Velez Benedetti Hugo Emiro Vega Angulo Juan Fernando Riascos Diana Mercedes González Juan Guillermo Torres Velez Uribe Ingeniería Asistente judicial Experto en logística Emdupar S.A. E.S.P. PriceWaterhouseCoopers David Leonardo Giraldo Omar Alfredo Ditta Raza Colombia Olga Patricia Giraldo Samuel Mosquera Guerra Mauricio Unigarro Eliana Bernal Castro Ingeniero mecánico Arquitecto Expertos Abogados Jorge Alberto Vélez Jaramillo Paula Andrea Bedoya Adriana Fernández Karen Lorena Bermudez Kelly Johana Idrobo Uribe Jhonny Martínez Helene Elizabeth Arboleda Guillen Abogada Sergio Alfredo Martínez Abogada Productos Alquin Abogada Ferco LTDA. Fabián Marcelo Silva Valbuena Diego Adolfo Restrepo Yenni Arcos Saray Peniche Hernández Ingeniero Juan Fernando Botero Gallego Ingeniera Prohuila LTDA. Abogada Grupo NOVA Iván Guillermo Valdez Jorge Eliécer Ninco Angela Arteaga Jairo Hernando Ibarra Hurtado Abogado Eduardo García Herreros Experta en construcción Diego Darío Ospina Abogado Guardela & Trujillo Hernando Andrés Vicuña Asociados LTDA. Carlos Mauricio Perez Ledy Torcoroma Bonett Lorenzo Calderón Jaramillo Abogado Proyecont LTDA. Abogada Abogado Luis Magin Guardela Iván Hernandez Villegas HMM, S.A. Jaime Vanegas Silvas Germán Mejía Botero Sergio Antonio Karagumechian Abogado Santa Marta International Abogado Gerente comercial Julio García Terminal Company S.A. Adrian Paul Mengual Zabaleta Horacio Francisco Mendoza Juan José Botero Luisa Marina Lora Abogado Martínez SMITCO Abogado Javier Abello Rodríguez Abogada I.C. Prefabricados S.A. Armando Gonzalez Calao Santa Marta International José Hilario Gómez Lubo Ricardo Antonio Celis Abogado Abogado Méndez Terminal Company S.A. SMITCO Juan Camilo Cardenal Inmobiliaria la 7 Luis Alejandro Corzo Mantilla Jaime Sasso Experto en logística Abogado Orlando Vidaljoiro PRODUCED BY: Investment Climate Advisory Services of the World Bank Group THE WORLD BANK WITH SUPPORT FROM: MINISTERIO DE COMERCIO INDUSTRIA Y TURISMO República de Colombia Libertad y Orden HT TP: //SUBNATIONAL.DOINGBUSINESS.ORG