How to pay the Industry and Commerce Tax (ICA) for independent workers in Colombia

Many independent professionals and freelancers in Colombia focus solely on their annual income tax return (declaración de renta) with the DIAN. However, there is a municipal tax that frequently triggers requirements and late filing penalties when overlooked: the Industry and Commerce Tax (ICA). Whether you are a designer, doctor, lawyer, consultant, or small business owner, if you provide services or sell goods independently, local Treasuries (Secretarías de Hacienda) expect your registration and tax liquidation.

1. What is the Industry and Commerce Tax (ICA) and who is obligated?

ICA is a territorial tax collected by city halls to fund local infrastructure and public services. Unlike national taxes administered by the DIAN, ICA is collected directly by the Treasury of each municipality (such as the District Treasury in Bogotá or the Revenue Sub-secretariats in Medellín and Cali).

All individuals or legal entities engaged in industrial, commercial, or service-related activities are required to register and pay ICA, with or without a commercial establishment open to the public. This includes independent service contractors and those exercising liberal professions without a dependent employment relationship.

Income from salaries of employees under an employment contract and pension income are not subject to ICA. If you issue payment requests or electronic invoices to clients for fees or independent services, you must check the obligations of the municipality where you perform the activity.

2. The principle of territoriality: which municipality should you pay in?

A constant dilemma for independent and remote workers is knowing which city hall they must pay taxes to if they live in one city but their client is based in another. Article 343 of Law 1819 of 2016 established the rules of territoriality to avoid double municipal taxation:

• Physical and intellectual services: ICA is triggered in the municipality where the work is physically performed or the contracted service is provided.
• Consulting and remote work: If you work from your home or private workshop, the activity is understood to be exercised in your municipality of residence or work office, regardless of where your client's offices are located.

When you formalize contracts with institutional clients, they often request tax documents. To keep your billing in order and avoid excessive withholdings, we recommend checking our guide on the DIAN supporting document for those not required to invoice.

3. How to calculate ICA: mileage rates and practical examples

The ICA calculation is not performed via a direct percentage like VAT or income tax, but through a per-thousand rate (expressed in units per every $1,000 of gross taxable income). The rates are set by the municipal council of each city within the ranges authorized by national law (between 2x1,000 and 14x1,000; for services and consulting, they are usually between 4.14 and 9.66 per thousand, depending on the municipal CIIU code).

To understand the calculation with the official 2026 Tax Value Unit (UVT) set at $52,374 COP by the DIAN, let's look at an example: if you provide consulting services in Bogotá and earned $50,000,000 COP gross in the year, you apply the service rate (9.66 x 1,000). You multiply $50,000,000 by 0.00966, which results in a gross tax of $483,000 COP. From this amount, you subtract the ReteICA withholdings that your clients have practiced on you during the year.

4. ReteICA in major cities: Bogotá, Medellín, and Cali

ReteICA is the source withholding mechanism for ICA that your clients deduct when paying you an invoice or payment request. These withheld amounts are not a lost expense: they function as a credit balance that you deduct directly from your final tax return.

Rules vary significantly in each capital:

• Bogotá D.C.: The District Treasury requires registration in the Tax Information Registry (RIT). The minimum base for ReteICA application on services is 4 UVT ($209,496 COP in 2026), and for purchases of goods it is 27 UVT ($1,414,098 COP in 2026). If you belong to the preferential regime with income below 1,933 UVT ($101,238,942 COP in 2026), your withheld taxes are considered the definitive tax payment.
• Medellín: The minimum base for ICA source withholding for services provided in the Antioquian capital is set at 15 UVT ($785,610 COP in 2026). You must keep your data updated with the Revenue Sub-secretariat.
• Cali: The Municipal Treasury Administrative Department sets one of the lowest withholding bases for service provision, starting from 3 UVT ($157,122 COP in 2026).

If, in addition to providing services, you are evaluating opening a physical location or store, check the legal details in our guide for leasing a commercial space or office in Bogotá and Medellín. Likewise, if you are moving from freelance work to forming a company, learn about the procedures in our article on how to register a SME or business at the Chamber of Commerce.

According to active ads on Colombia Move (August 2026), the services section had 107 active ads and accumulated 14,553 views. This is a snapshot of supply and demand within the platform, not an estimate of the Colombian labor market.

5. The Simple Taxation Regime (RST) and payment step-by-step

An alternative increasingly used by small businesses and independent contractors is to enroll in the DIAN's Simplified Tax Regime (RST). Under this model, the consolidated ICA is calculated bimonthly using DIAN Form 2593. The main advantage is that the DIAN collects the municipal tax and distributes it to each mayor's office, saving you from filing multiple forms with different local Treasury Secretariats.

If you choose the ordinary territorial regime, follow this procedure to pay online:

1. Registration in the local registry: Register on your municipality's Treasury Secretariat website within the deadline established by the local tax statute.
2. Collect your ReteICA certificates: Ask your clients for the withholding tax certificates showing the amounts withheld during the taxable year.
3. Complete the virtual form: Access your city's Virtual Treasury Office (for example, the SHD Virtual Office in Bogotá).
4. Calculate the amount to pay: Apply the rate according to your CIIU code, subtract the withholdings, and calculate the net balance.
5. Pay via PSE or bank: Generate the official receipt with a barcode or make the electronic payment through the PSE button.

Frequently Asked Questions

❓ What happens if I provide services as an independent contractor and have never registered for ICA?

Your municipality's Treasury Secretariat can issue summons and impose sanctions for non-registration or late filing. It is advisable to perform a voluntary registration in the local registry and review pending declarations before receiving a formal requirement; the effects and sanctions depend on the municipal statute and it is recommended to confirm them with an accountant.

❓ If I work 100% remotely from my home for a company in another city, where do I pay ICA?

You must pay taxes in the municipality where you physically perform the work. According to Article 343 of Law 1819 of 2016, if your workplace is your home in Medellín or Cali, the tax is incurred there, regardless of whether your client's main office or NIT is registered in Bogotá or abroad.

❓ What is the minimum income amount required to be obligated to file ICA in Bogotá in 2026?

In Bogotá, natural persons in the preferential regime whose taxable income from the previous year is less than 1,933 UVT ($101,238,942 COP in 2026) are not formally obligated to file an ICA declaration, provided that the ReteICA withholdings made by their clients have covered the full tax.

❓ How do I recover the money that companies withhold from me for ReteICA?

ReteICA is deducted as an advance payment on your annual or bimonthly ICA declaration. You must attach and keep the withholding certificates issued by your contractors to subtract that balance from the total calculated tax; if a credit balance remains, check the applicable municipal procedure.

❓ If I am in the Simplified Tax Regime (RST), do I have to pay ICA to my mayor's office?

You do not have to file individual declarations with the local Treasury Secretariat for consolidated ICA. By belonging to the RST, you integrate the ICA into your bimonthly advance payments to the DIAN via Form 2593, and the national entity distributes the funds to the corresponding municipalities.

❓ Do income from wages under an employment contract pay ICA?

No. Income obtained from wages and social benefits derived from an employment or legal and regulatory relationship does not constitute a taxable event for the Industry and Commerce Tax.