Doingbusiness COL2012

Economy Profile:
Colombia
© 2012 The International Bank for Reconstruction and Development /
The World Bank
1818 H Street NW
Washington, DC 20433
Telephone 202-473-1000
Internet www.worldbank.org
All rights reserved.

1 2 3 4 08 07 06 05
A copublication 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 does not guarantee the accuracy
of the data included in this work.
Rights and Permissions
The material in this publication is copyrighted. Copying and/or transmitting
portions or all of this work without permission may be a violation of applicable
law. The World Bank encourages dissemination of its work and will normally
grant permission to reproduce portions of the work promptly.
For permission to photocopy or reprint any part of this work, please send a
request with complete information to the Copyright Clearance Center, Inc.,
222 Rosewood Drive, Danvers, MA 01923, USA; telephone 978-750-8400;
fax 978-750-4470; Internet www.copyright.com.
All other queries on rights and licenses, including subsidiary rights, should be
addressed to the Office of the Publisher, The World Bank, 1818 H Street NW,
Washington, DC 20433, USA; fax 202-522-2422; e-mail
pubrights@worldbank.org.
Copies of Doing Business 2012: Doing Business in a More Transparent World,
Doing Business 2011: Making a Difference for Entrepreneurs, Doing Business
2010: Reforming through Difficult Times, Doing Business 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 downloaded at
www.doingbusiness.org.
ISBN: 978-0-8213-8833-4
E-ISBN: 978-0-8213-8834-1
DOI: 10.1596/978-0-8213-8833-4
ISSN: 1729-2638
Printed in the United States

Doing Business 2012 Colombia 3
CONTENTS
Introduction .................................................................................................................................. 4
The business environment .......................................................................................................... 5
Starting a business ..................................................................................................................... 14
Dealing with construction permits ........................................................................................... 24
Getting electricity ....................................................................................................................... 35
Registering property .................................................................................................................. 42
Getting credit .............................................................................................................................. 52
Protecting investors ................................................................................................................... 59
Paying taxes ................................................................................................................................ 69
Trading across borders .............................................................................................................. 77
Enforcing contracts .................................................................................................................... 86
Resolving insolvency .................................................................................................................. 93
Data notes ................................................................................................................................... 99
Resources on the Doing Business website ............................................................................ 104
INTRODUCTION
Doing Business sheds light on how easy or difficult it is the paying taxes indicators, which cover the period
for a local entrepreneur to open and run a small to January–December 2010).
medium-size business when complying with relevant
The Doing Business methodology has limitations. Other
regulations. It measures and tracks changes in
areas important to business—such as an economy’s
regulations affecting 10 areas in the life cycle of a
proximity to large markets, the quality of its
business: starting a business, dealing with construction
infrastructure services (other than those related to
permits, getting electricity, registering property,
trading across borders and getting electricity), the
getting credit, protecting investors, paying taxes,
security of property from theft and looting, the
trading across borders, enforcing contracts and
transparency of government procurement,
resolving insolvency.
macroeconomic conditions or the underlying strength
In a series of annual reports Doing Business presents of institutions—are not directly studied by Doing
quantitative indicators on business regulations and the Business. The indicators refer to a specific type of
protection of property rights that can be compared business, generally a local limited liability company
across 183 economies, from Afghanistan to Zimbabwe, operating in the largest business city. Because
over time. The data set covers 46 economies in Sub- standard assumptions are used in the data collection,
Saharan Africa, 32 in Latin America and the Caribbean, comparisons and benchmarks are valid across
24 in East Asia and the Pacific, 24 in Eastern Europe economies. The data not only highlight the extent of
and Central Asia, 18 in the Middle East and North obstacles to doing business; they also help identify the
Africa and 8 in South Asia, as well as 31 OECD high- source of those obstacles, supporting policy makers in
income economies. The indicators are used to analyze designing regulatory reform.
economic outcomes and identify what reforms have
More information is available in the full report. Doing
worked, where and why.
Business 2012 presents the indicators, analyzes their
This economy profile presents the Doing Business relationship with economic outcomes and
indicators for Colombia. To allow useful comparison, it recommends regulatory reforms. The data, along with
also provides data for other selected economies information on ordering Doing Business 2012, are
(comparator economies) for each indicator. The data in available on the Doing Business website at
this report are current as of June 1, 2011 (except for http://www.doingbusiness.org.
THE BUSINESS ENVIRONMENT
For policy makers trying to improve their economy’s

regulatory environment for business, a good place to ECONOMY OVERVIEW
start is to find out how it compares with the regulatory
environment in other economies. Doing Business
provides an aggregate ranking on the ease of doing
Region: Latin America & Caribbean
business based on indicator sets that measure and
benchmark regulations applying to domestic small to Income category: Upper middle income
medium-size businesses through their life cycle.
Economies are ranked from 1 to 183 by the ease of Population: 46,300,196
doing business index. For each economy the index is
calculated as the ranking on the simple average of its GNI per capita (US$): 5,510.00
percentile rankings on each of the 10 topics included in
the index in Doing Business 2012: starting a business, DB2012 rank: 42
dealing with construction permits, getting electricity,
registering property, getting credit, protecting DB2011 rank: 47
investors, paying taxes, trading across borders,
Change in rank: 5
enforcing contracts and resolving insolvency. The
ranking on each topic is the simple average of the
percentile rankings on its component indicators (see Note: See the data notes for sources and
the data notes for more details).
1 definitions.
The aggregate ranking on the ease of doing business

benchmarks each economy’s performance on the
indicators against that of all other economies in the
Doing Business sample (figure 1.1). While this ranking
tells much about the business environment in an
economy, it does not tell the whole story. The ranking on
the ease of doing business, and the underlying
indicators, do not measure all aspects of the business
environment that matter to firms and investors or that
affect the competitiveness of the economy. Still, a high
ranking does mean that the government has created a
regulatory environment conducive to operating a
business.
1
Except for the ease of getting credit, for which the percentile rankings on its component indicators are weighted, the depth of credit
information index at 37.5% and the strength of legal rights index at 62.5%.
Figure 1.1 Where economies stand in the global ranking on the ease of doing business
Source: Doing Business database.


For policy makers, knowing where their economy the regional average (figure 1.2). The economy’s
stands in the aggregate ranking on the ease of doing rankings on the topics included in the ease of doing
business is useful. Also useful is to know how it ranks business index provide another perspective (figure
compared with other economies and compared with 1.3).
Figure 1.2 How Colombia and comparator economies rank on the ease of doing business

Figure 1.3 How Colombia ranks on Doing Business topics


Just as the overall ranking on the ease of doing This measure shows the distance of each economy to
business tells only part of the story, so do changes in the ―frontier,‖ a synthetic measure based on the most
that ranking. Yearly movements in rankings can efficient practice or highest score observed for each
provide some indication of changes in an economy’s Doing Business indicator across all economies and
regulatory environment for firms, but they are always years included in the Doing Business sample since
relative. An economy’s ranking might change because 2005. Nine areas of business regulation are covered.
of developments in other economies. An economy that
Comparing the measure for an economy at 2 points in
implemented business regulation reforms may fail to
time allows users to assess how much the economy’s
rise in the rankings (or may even drop) if it is passed
regulatory environment as measured by Doing
by others whose business regulation reforms had a
Business has changed over time—how far it has moved
more significant impact as measured by Doing
toward (or away from) the most efficient practices and
Business.
strongest regulations in areas covered by Doing
Moreover, year-to-year changes in the overall rankings Business (figure 1.4). The results may show that the
do not reflect how the business regulatory pace of change varies widely across the areas
environment in an economy has changed over time— measured. They also may show that an economy is
or how it has changed in different areas. To aid in relatively close to the frontier in some areas and
assessing such changes, Doing Business 2012 relatively far from it in others.
introduces the distance to frontier measure.
Figure 1.4 How far has Colombia come in the areas measured by Doing Business?
Distance to frontier, 2005 and 2011
Note: For economies added to the Doing Business sample after 2005, the starting point is the year in which they were added: 2006 for
Montenegro; 2007 for Brunei Darussalam, Liberia and Luxembourg; 2008 for The Bahamas, Bahrain and Qatar; and 2009 for Cyprus and
Kosovo. See the data notes for more details on the distance to frontier measure.

The absolute values of the indicators tell another part business regulation—such as a regulatory process that
of the story (table 1.1). The indicators, on their own or can be completed with a small number of procedures
in comparison with the indicators of a good practice in a few days and at a low cost. Comparison of the
economy or those of comparator economies in the economy’s indicators today with those in the previous
region, may reveal bottlenecks reflected in large year may show where substantial bottlenecks persist—
numbers of procedures, long delays or high costs. Or and where they are diminishing.
they may reveal unexpected strengths in an area of
Table 1.1 Summary of Doing Business indicators for Colombia
Best performer globally

Argentina DB2012
Colombia DB2012
Colombia DB2011
Ecuador DB2012
Mexico DB2012
Indicator
Bolivia DB2012
Brazil DB2012
Peru DB2012
DB2012
Starting a Business
65 73 146 169 120 164 75 55 New Zealand (1)
(rank)
Procedures (number) 9 9 14 15 13 13 6 5 Canada (1)*
Time (days) 14 14 26 50 119 56 9 26 New Zealand (1)
Cost (% of income per

8.0 14.7 11.9 90.4 5.4 28.8 11.2 11.9 Denmark (0.0)*
capita)
Paid-in Min. Capital (%

0.0 0.0 2.2 2.3 0.0 4.3 8.4 0.0 82 Economies (0.0)*
of income per capita)
Dealing with
Hong Kong SAR,
Construction Permits 29 29 169 107 127 91 43 101
China (1)
(rank)
Procedures (number) 8 8 25 14 17 16 10 16 Denmark (5)
Time (days) 46 46 365 249 469 128 81 188 Singapore (26)*

338.9 351.8 107.7 77.5 40.2 184.0 333.1 76.3 Qatar (1.1)
capita)

Argentina DB2012
Colombia DB2012
Colombia DB2011
Ecuador DB2012
Mexico DB2012
Indicator
Bolivia DB2012
Brazil DB2012
Peru DB2012
DB2012
Getting Electricity (rank) 134 131 58 124 51 128 142 82 Iceland (1)
Procedures (number) 5 5 6 8 6 6 7 5 Germany (3)*
Time (days) 165 165 67 42 34 89 114 100 Germany (17)

1081.3 1182.7 20.4 1181.2 130.3 785.3 395.5 441.6 Japan (0.0)
capita)
Registering Property
51 54 139 138 114 75 140 22 New Zealand (3)
(rank)
Procedures (number) 7 7 7 7 13 9 7 4 Portugal (1)*
Time (days) 15 20 53 92 39 16 74 7 Portugal (1)
Cost (% of property
2.0 2.0 7.0 4.8 2.3 2.1 5.3 3.3 Slovak Republic (0.0)
value)
Getting Credit (rank) 67 64 67 126 98 78 40 24 United Kingdom (1)*
Strength of legal rights

5 5 4 1 3 3 6 7 New Zealand (10)*
index (0-10)
Depth of credit
5 5 6 6 5 6 6 6 Japan (6)*
information index (0-6)
Public registry coverage

0.0 0.0 35.9 11.8 36.1 0.0 0.0 28.5 Portugal (86.2)
(% of adults)
Private bureau coverage

71.2 63.1 100.0 35.9 61.5 57.9 98.1 36.0 New Zealand (100.0)*
(% of adults)
Protecting Investors
5 5 111 133 79 133 46 17 New Zealand (1)
(rank)
Extent of disclosure
8 8 6 1 6 1 8 8 France (10)*
index (0-10)

Argentina DB2012
Colombia DB2012
Colombia DB2011
Ecuador DB2012
Mexico DB2012
Indicator
Bolivia DB2012
Brazil DB2012
Peru DB2012
DB2012
Extent of director
8 8 2 5 7 5 5 5 Singapore (9)*
liability index (0-10)
Ease of shareholder suits

9 9 6 6 3 6 5 8 New Zealand (10)*
index (0-10)
Strength of investor
8.3 8.3 4.7 4.0 5.3 4.0 6.0 7.0 New Zealand (9.7)
protection index (0-10)
Paying Taxes (rank) 95 120 144 179 150 88 109 85 Canada (8)
Payments (number per

9 20 9 42 9 8 6 9 Norway (4)
year)
Time (hours per year) 193 208 415 1080 2600 654 347 309 Luxembourg (59)
Trading Across Borders

87 83 102 126 121 123 59 56 Singapore (1)
(rank)
Documents to export
5 5 7 8 7 8 5 6 France (2)
(number)
Hong Kong SAR,

Time to export (days) 14 14 13 19 13 20 12 12
China (5)*
Cost to export (US$ per

2270 1770 1480 1425 2215 1455 1450 860 Malaysia (450)
container)
Documents to import
6 6 7 7 8 7 4 8 France (2)
(number)
Time to import (days) 13 13 16 23 17 25 12 17 Singapore (4)
Cost to import (US$ per

2830 1700 1810 1747 2275 1432 1780 880 Malaysia (435)
container)
Enforcing Contracts
149 149 45 135 118 100 81 111 Luxembourg (1)
(rank)

Argentina DB2012
Colombia DB2012
Colombia DB2011
Ecuador DB2012
Mexico DB2012
Indicator
Bolivia DB2012
Brazil DB2012
Peru DB2012
DB2012
Time (days) 1346 1346 590 591 731 588 415 428 Singapore (150)
Cost (% of claim) 47.9 47.9 16.5 33.2 16.5 27.2 32.0 35.7 Bhutan (0.1)
Procedures (number) 34 34 36 40 45 39 38 41 Ireland (21)*
Resolving Insolvency
12 29 85 65 136 139 24 100 Japan (1)
(rank)
Time (years) 1.3 3.0 2.8 1.8 4.0 5.3 1.8 3.1 Ireland (0.4)
Cost (% of estate) 1 1 12 15 12 18 18 7 Singapore (1)*
Recovery rate (cents on

82.8 62.4 32.9 39.3 17.9 17.2 67.1 28.0 Japan (92.7)
the dollar)
Note: The methodology for the paying taxes indicators changed in Doing Business 2012; see the data notes for details. For these
indicators, the best performer globally is the economy that has implemented the most efficient practices in its tax system and is
not necessarily the one with the highest ranking. For more information on “no practice” marks, see the data notes for details.
* Two or more economies share the top ranking on this indicator. A number shown in place of an economy’s name indicates the
number of economies that share the top ranking on the indicator. For a list of these economies, see the Doing Business website
(http://www.doingbusiness.org).
STARTING A BUSINESS
Formal registration of companies has many WHAT THE STARTING A BUSINESS
immediate benefits for the companies and for
business owners and employees. Legal entities can INDICATORS MEASURE
outlive their founders. Resources are pooled as
several shareholders join forces to start a company. Procedures to legally start and operate a
Formally registered companies have access to company (number)
services and institutions from courts to banks as
Preregistration (for example, name
well as to new markets. And their employees can
verification or reservation, notarization)
benefit from protections provided by the law. An
additional benefit comes with limited liability Registration in the economy’s largest
companies. These limit the financial liability of business city
company owners to their investments, so personal
Postregistration (for example, social security
assets of the owners are not put at risk. Where
registration, company seal)
governments make registration easy, more
entrepreneurs start businesses in the formal sector, Time required to complete each procedure
creating more good jobs and generating more (calendar days)
revenue for the government.
Does not include time spent gathering
What do the indicators cover? information
Doing Business measures the ease of starting a Each procedure starts on a separate day
business in an economy by recording all
Procedure completed once final document is
procedures that are officially required or commonly received
done in practice by an entrepreneur to start up and
formally operate an industrial or commercial No prior contact with officials
business—as well as the time and cost required to Cost required to complete each procedure
complete these procedures. It also records the (% of income per capita)
paid-in minimum capital that companies must
deposit before registration (or within 3 months). Official costs only, no bribes
The ranking on the ease of starting a business is No professional fees unless services required
the simple average of the percentile rankings on by law
the 4 component indicators: procedures, time, cost
and paid-in minimum capital requirement. Paid-in minimum capital (% of income
per capita)
To make the data comparable across economies,
Doing Business uses several assumptions about the Deposited in a bank or with a notary before
business and the procedures. It assumes that all registration (or within 3 months)
information is readily available to the entrepreneur  Has a start-up capital of 10 times income per
and that there has been no prior contact with capita.
officials. It also assumes that all government and
nongovernment entities involved in the process  Has a turnover of at least 100 times income per
capita.
function without corruption. And it assumes that
the business:  Does not qualify for any special benefits.
 Is a limited liability company, located in the  Does not own real estate.
largest business city.
 Is 100% domestically owned.
 Conducts general commercial or industrial
activities.
STARTING A BUSINESS
Where does the economy stand today?

What does it take to start a business in Colombia? costs 8.0% of income per capita and requires paid-in
According to data collected by Doing Business, starting minimum capital of 0.0% of income per capita (figure
a business there requires 9 procedures, takes 14 days, 2.1).
Figure 2.1 What it takes to start a business in Colombia

Paid-in minimum capital (% of income per capita): 0.0
Note: For details on the procedures reflected here, see the summary at the end of this chapter.
STARTING A BUSINESS
Globally, Colombia stands at 65 in the ranking of 183 regional average ranking provide other useful
economies on the ease of starting a business (figure information for assessing how easy it is for an
2.2). The rankings for comparator economies and the entrepreneur in Colombia to start a business.
Figure 2.2 How Colombia and comparator economies rank on the ease of starting a business

STARTING A BUSINESS
What are the changes over time?

While the most recent Doing Business data reflect how process have changed—and which have not (table 2.1).
easy (or difficult) it is to start a business in Colombia That can help identify where the potential for
today, data over time show which aspects of the improvement is greatest.
Table 2.1 The ease of starting a business in Colombia over time

By Doing Business report year
Indicator DB2004 DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012
Rank .. .. .. .. .. .. .. 73 65
Procedures (number) 19 11 11 12 11 9 9 9 9
Time (days) 60 42 42 43 42 36 20 14 14

28.0 25.6 24.7 19.1 18.6 14.9 13.1 14.7 8.0
capita)
Paid-in Min. Capital (%
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
of income per capita)
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings reflect changes to
the methodology.
STARTING A BUSINESS
Equally helpful may be the benchmarks provided by Colombia on ways to improve the ease of starting a
the economies that today have the best performance business. And changes in regional averages can show
regionally or globally on the procedures, time, cost or where Colombia is keeping up—and where it is falling
paid-in minimum capital required to start a business behind.
(figure 2.3). These economies may provide a model for
Figure 2.3 Has starting a business become easier over time?
Procedures (number)
Time (days)
STARTING A BUSINESS
Cost (% of income per capita)
Paid-in minimum capital (% of income per capita)
Note: The economy with the best performance regionally on each indicator, and the economy with the best performance
globally, are included as benchmarks. In some cases 2 or more economies share the top regional or global ranking on an
indicator. In the case of paid-in minimum capital, 82 economies globally and economies in Latin America & Caribbean
have no paid-in minimum capital.
STARTING A BUSINESS
Economies around the world have taken steps making greater firm satisfaction and savings and more
it easier to start a business—streamlining procedures registered businesses, financial resources and job
by setting up a one-stop shop, making procedures opportunities.
simpler or faster by introducing technology and
What business registration reforms has Doing Business
reducing or eliminating minimum capital requirements.
recorded in Colombia (table 2.2)?
Many have undertaken business registration reforms in
stages—and they often are part of a larger regulatory
reform program. Among the benefits have been
Table 2.2 How has Colombia made starting a business easier—or not?
DB Year Reform
Colombia reduced the costs associated with starting a

DB2012 business, by no longer requiring upfront payment of the
commercial license fee.
DB2011 No reform.
Business start-up was made easier by creating a public-

private health provider that enables faster affiliation of
DB2010
employees and through a tool that allows online pre-
enrollment with the social security office.
The time and cost to start a business were reduced by
simplifying registration formalities, including speeding up
DB2009
processes at the registry and eliminating the need to obtain
a certificate of compliance with zoning regulations.
Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports
for these years, available at http://www.doingbusiness.org.
STARTING A BUSINESS
What are the details?

Underlying the indicators shown in this chapter for
STANDARDIZED COMPANY
Colombia is a set of specific procedures—the
bureaucratic and legal steps that an entrepreneur
must complete to incorporate and register a new City: Bogota
firm. These are identified by Doing Business
through collaboration with relevant local Legal Form: Sociedad por Acciones Simplificada (SAS)
professionals and the study of laws, regulations and Start-up capital: 10 times GNI per capita
publicly available information on business entry in
that economy. Following is a detailed summary of Paid-in minimum capital (% of income per
those procedures, along with the associated time capita): 0.0
and cost. These procedures are those that apply to
a company matching the standard assumptions
(the ―standardized company‖) used by Doing
Business in collecting the data (see the section in
this chapter on what the indicators measure).
Summary of procedures for starting a business in Colombia—and the time and cost
Time to
No. Procedure Cost to complete
complete
Purchase corporate and accounting books
COP 40,000 (5 books
The applicant can select the corporate and accounting book format and 1 day for COP 8000 to
1
the store location. Although the books can also be obtained or ordered
purchase each book)
from the Chamber of Commerce via the Internet, the general practice is
to acquire them before visiting the Chamber of Commerce.
Register with the Registry of Commerce, obtain the "certificate of
existence and legal representation"; register the company books
and register with the National Tax Office (DIAN) at the Chamber of
Commerce
The new Law 1429 of 2010 and decree 545 of 2011 introduced a new
0.7% of capital
progressive fee schedule in which new companies are exempted from
registration tax + COP
paying certain fees during their first years in operation. For example,
the "matricula comercial" is no longer payable at registration. 27.000 fix fee + COP
3.600 for the
2 Ley 1258 of 2009 introduced a new type of company - the SAS 2 days registration form +
(Sociedad por Acciones Simplificada ). An SAS is incorpoarted by the COP 45.000
parties through a private document (or by attorney, if that is the case) registration books fee
that is submitted to the Chamber of Commerce. There is no need for a
public deed. As an exception for this rule, if the procedure supposes the
transference of real property, it is mandatory to set up the company by
public deed (Notary Public).
Since May 2008, applicants can go on-line to register all the above at
portal www.crearempresa.com.co
The portal provides access to information and speeds up business start
Time to
complete
up.
Open a bank account and deposit the nominal capital
To open an account at a branch of a commercial bank, the owner

encloses the certificate of existence and legal representation, the TIN
document, and a photocopy of the certificate of citizenship of the legal
3 representative. A savings account may be opened in minutes, but a 1 day no charge
checking account could take 3 or more business days for the bank to
verify the company information, due to the compliance and revision
requirements stemming from money-laundering prevention laws and
regulations. Depending on the bank, a minimum initial deposit of about
COP 500,000 is required.
Register company with the Family Compensation Fund (Caja de
Compensación Familiar), the Governmental Learning Service
(Servicio Nacional de Aprendizaje, SENA) and the Colombian
Family Institute (Instituto Colombiano de Bienestar Familiar, ICBF)
Decree 3667 of 2004 created a unified form to self-assess and pay

social security and payroll contribution. And be advised that the unified
form can be submitted electronically but not in person to the
Governmental Learning Service (Servicio Nacional de Aprendizaje, or
SENA), the Colombian Family Institute (Instituto Colombiano de 10 days no charge
4
Bienestar Familiar, or ICBF), the Family Compensation Fund (Caja de
Compensación Familiar), and the school of public administration
(Escuela Superior de Administración Pública, ESAP). This unified form
may be submitted electronically or in person. The time to register varies
from 2 days to 3 weeks, depending on the family compensation fund
chosen.
The term for payment of the monthly contributions to the Family
Compensation Fund expires within the first thirteen business days of
each month depending on the last number of the Tax Identification
Number (TIN) of the company.
* Register company with the Administrator of Professional Risks
(ARP)
The company must submit a form listing its affiliation and its employees
to an administrator of professional risks (ARP), private or public
(Instituto de Seguros Sociales, ISS), which covers workplace injury and 1 day, simultaneous
5 no charge
professional illness. The employer chooses the ARP to which it affiliates with procedure 4
all employees and pays the monthly contributions. Coverage begins 24
hours after submitting the form. Before affiliating employees, some
administrators of professional risks request that they attend a short
course.
* Register employer and employees for pension with the Social

Security System – ISS 1-3 days,
6 simultaneous with no charge
The company must affiliate itself with with the pension system. The procedure 5
company must then submit a form that indicates employee affiliation to
Time to
complete
the pension system (affiliation either to the public pension fund
through the Social Security System (ISS) or to a private pension and
compensation fund). The employer cannot choose the pension fund on
behalf of the employee. Each employee has the right to choose
between the public or private pension fund, and the company must
complete the respective submissions to the pension funds.
Recently, the creation of a new tool allows online pre-enrollment,

which is accessed through the ISS webpage, http://www.iss.gov.co/.
* Register employees with a private pension fund
The process to register an employee with a private pension fund is the 1 day, simultaneous
7 no charge
same as with the public pension fund (the ISS), but a private fund with procedure 6
representative visits the company and completes the registration
quickly.
* Register employees for health coverage (public)
To register employees for health coverage, the company must submit a

form that indicates the affiliation of its employees to the national health
system (Plan Obligatorio de Salud, POS), be it through the public entity
(EPS-ISS) or through a private "promoter of health" (EPS). Each
employee has the right to choose a provider , and the company is
obliged to submit the respective form to the provider designated by
the employee. Normally, each company must make its submissions to
at least one provider. 6 days, simultaneous
8 no charge
with procedure 6
In practice, it usually takes longer than assumed here, because the
providers normally do not accept affiliations immediately. The process
of acceptance varies depending on the provider and the history of the
employee. The employer is obligated to complete and present different
forms, enclosing the documents requested by each entity (which may
vary), including evidence of affiliation to the pension fund and the
administrator of professional risks, as well as a deposition before a
notary public for the affiliation of beneficiaries (some entities request
these documents).
* Register employees with a severance fund
The company is required to present a form that indicates employee

affiliation to the severance fund. Each employee has the right to freely
choose the severance fund. Consequently, the company is obliged to 1 day, simultaneous
9 complete the respective submission to the severance fund requested by no charge
with procedure 6
the employee. Although 1 day is typically required to affiliate an
employee to a severance fund, the time frame may vary depending on
the number of entities chosen by the employees. The employer must
deposit the employee’s severance payment annually before February
15th.
* Takes place simultaneously with another procedure.
DEALING WITH CONSTRUCTION PERMITS
Regulation of construction is critical to protect the WHAT THE DEALING WITH CONSTRUCTION
public. But it needs to be efficient, to avoid
PERMITS INDICATORS MEASURE
excessive constraints on a sector that plays an
important part in every economy. Where complying
with building regulations is excessively costly in Procedures to legally build a warehouse
time and money, many builders opt out. They may (number)
pay bribes to pass inspections or simply build Submitting all relevant documents and
illegally, leading to hazardous construction that obtaining all necessary clearances, licenses,
puts public safety at risk. Where compliance is permits and certificates
simple, straightforward and inexpensive, everyone Completing all required notifications and
is better off. receiving all necessary inspections
What do the indicators cover? Obtaining utility connections for water,
Doing Business records the procedures, time and sewerage and a fixed telephone line
cost for a business to obtain all the necessary Registering the warehouse after its
approvals to build a simple commercial warehouse completion (if required for use as collateral or
in the economy’s largest business city, connect it to for transfer of the warehouse)
basic utilities and register the property so that it Time required to complete each procedure
can be used as collateral or transferred to another (calendar days)
entity.
The ranking on the ease of dealing with information
construction permits is the simple average of the
Each procedure starts on a separate day
percentile rankings on its component indicators:
procedures, time and cost. Procedure completed once final document is
received
Doing Business uses several assumptions about the No prior contact with officials
business and the warehouse, including the utility Cost required to complete each procedure (%
connections. of income per capita)
The business: Official costs only, no bribes
 Is a limited liability company operating in
 Will be connected to water, sewerage
the construction business and located in
(sewage system, septic tank or their
the largest business city.
equivalent) and a fixed telephone line. The
 Is domestically owned and operated. connection to each utility network will be 10
meters (32 feet, 10 inches) long.
 Has 60 builders and other employees.
 Will be used for general storage, such as of
The warehouse:
books or stationery (not for goods requiring
 Is a new construction (there was no special conditions).
previous construction on the land).
 Will take 30 weeks to construct (excluding all
 Has complete architectural and technical delays due to administrative and regulatory
plans prepared by a licensed architect. requirements).

What does it take to comply with the formalities to permits there requires 8 procedures, takes 46 days and
build a warehouse in Colombia? According to data costs 338.9% of income per capita (figure 3.1).
collected by Doing Business, dealing with construction
Figure 3.1 What it takes to comply with formalities to build a warehouse in Colombia

Globally, Colombia stands at 29 in the ranking of 183 other useful information for assessing how easy it is for
economies on the ease of dealing with construction an entrepreneur in Colombia to legally build a
permits (figure 3.2). The rankings for comparator warehouse.
economies and the regional average ranking provide
Figure 3.2 How Colombia and comparator economies rank on the ease of dealing with construction
permits


While the most recent Doing Business data reflect how of the process have changed—and which have not
easy (or difficult) it is to deal with construction permits (table 3.1). That can help identify where the potential
in Colombia today, data over time show which aspects for improvement is greatest.
Table 3.1 The ease of dealing with construction permits in Colombia over time
Indicator DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012
Rank .. .. .. .. .. 29 29
Procedures (number) 11 11 11 10 9 8 8
Time (days) 110 110 110 79 47 46 46

478.1 435.3 399.5 483.7 354.0 351.8 338.9
capita)
the methodology. For more information on “no practice” marks, see the data notes for details.

Equally helpful may be the benchmarks provided by on ways to improve the ease of dealing with
the economies that today have the best performance construction permits. And changes in regional
regionally or globally on the procedures, time or cost averages can show where Colombia is keeping up—
required to deal with construction permits (figure 3.3). and where it is falling behind.
These economies may provide a model for Colombia
Figure 3.3 Has dealing with construction permits become easier over time?
Procedures (number)
Time (days)

Cost (% of income per capita)
indicator. In cases where no data are displayed above for the economy, this indicates that the economy has received a
“no practice” mark; see the data notes for details.

Smart regulation ensures that standards are met while building safety while keeping compliance costs
making compliance easy and accessible to all. reasonable, governments around the world have
Coherent and transparent rules, efficient processes and worked on consolidating permitting requirements.
adequate allocation of resources are especially What construction permitting reforms has Doing
important in sectors where safety is at stake. Business recorded in Colombia (table 3.2)?
Construction is one of them. In an effort to ensure
Table 3.2 How has Colombia made dealing with construction permits easier—or not?
DB Year Reform
DB2012
No reform.
DB2011 Colombia eased construction permitting by improving the

electronic verification of prebuilding certificates.
The government eased the construction permit process with

DB2010 a new construction decree that categorizes building projects
based on risk and allows electronic verification for certain
documents.
A silence-is-consent principle for building permits is now

DB2009
applied, reducing the total time for dealing with construction
permits. A new unified application form was introduced.

The indicators reported here for Colombia are
BUILDING A WAREHOUSE
based on a set of specific procedures—the steps
that a company must complete to legally build a
warehouse—identified by Doing Business through City : Bogota
information collected from experts in construction
licensing, including architects, construction
Estimated
lawyers, construction firms, utility service providers COP 2,636,885,731
Warehouse Value :
and public officials who deal with building
regulations. These procedures are those that apply The procedures, along with the associated time and
to a company and structure matching the standard cost, are summarized below.
assumptions used by Doing Business in collecting
the data (see the section in this chapter on what
the indicators cover).
Summary of procedures for dealing with construction permits in Colombia —and the time
and cost
Time to
complete
File for and obtain construction license (licencia de construcción)
The previous Decree 1600 (2005) was revoked and replaced by Decree
564 (2006) and further updated with Decree 1272 (2009). All those
regulations were finally compiled into Decree 1469 of 2010. Any license
application must be accompanied by the following documents:
1. Certificate of free transferability (copy). The certificate’s date of
issuance cannot be older than a month before the date of application.
2.Unique national format of application for a license (completed). This
format was adopted by Resolution 0984, 2005, of the Ministry of
Environment, Housing, and Territorial Development.
3. When the applicant for a license is a corporation, the existence and
representation must be certified through the proper legal document.
The certificate’s date of issuance cannot be older than a month before
the date of application. 33 days COP 9,115,415
1
4. Power of attorney, when needed.
5. Payment receipt for real property tax of the plot for the past 5 years,
stating the plot’s alphanumeric nomenclature or its identification.
Whenever there is a payment agreement, the interested party will have
to bring a certificate of fulfillment, issued by the Secretariat of Finance.
6. Plot location and identification plan.
7. List of the adjoining plots (the real property contiguous to the
project).
8. Manifestation whether the project under consideration will be
assigned as a social interest dwelling. Such evidence must be recorded
within the act that resolves the license.
Article 21 of Decree 564 also establishes these additional documents

for construction license applications:
- Copy of (a) the report of the structural calculations and the structural
Time to
complete
designs; and of (b) the reports of other nonstructural designs and of
geotechnical and soil studies 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 authorized for
such purpose. These persons will be legally responsible for the designs
and the information in them.
- Heliographic and magnetic copy of the architectural project,
elaborated according to the architectural and urban planning norms in
force at the moment of application, duly signed and labeled by a
registered architect who will be legally responsible for the design and
the information contained therein.
- If the application is presented to a different authority than issued the
original license, the interested party will present the previous licenses.
Decree 1272 (2009) introduces risk based categories to determined the

time to complete this process. The case study analyzed by Doing
Business will be Category III (Medium complex between 500 sq meters
and 2,000 sq meters) and should be approved by the Curator within 33
days (25 calendar days). However, if it requests additional
documentation, such requests suspend the 33-day term until the
requesting party presents the additional documents. In addition to the
suspension of the terms explained above, the urban curator may extend
the original 35-day term -only if correctly justified by written
resolution- to up to 90 calendar days. If process has no delays the
"silent is consent" rule will apply and license will be issued in 45
calendar days.
The cost to complete COP 13,146,493
The license cost is calculated by the formula below, defined in Article

118 of Decree 1469, 2010:
E = (Cf*i*m) + (Cv*i*j*m)
Where
Cf = fixed charge: COP 214,240 (40% of minimum salary)
Cv = variable charge, according to the use and area: COP 428,480 (80%
of minimum salary).
i = use and socioeconomic stratification index, 4 (defined by Article
118).
m = town factor, according to market, 0.938 (for Bogotá, according to
Article 119).
j = Ratio between expenses and square meters, given by the formula
assigned in Paragraph 3, Article 118 . The variable j is calculated as
3.8/[0.12+(800/Q)], where Q is the total area in sq. m. Applying this
formula, the "j" ratio is equal to 5.17.
Then, applying the formula to the aforementioned values, the cost of

the license (E) would be the following:
E = (214,240 x 4 x 0.938) + (428,480 x 4 x 5.17 x 0.938) - No VAT

included.
E = 803,828 + 8,311,586 = 9,115,414
Time to
complete
Article 118 of Decree No. 1469, 2010, specifies that licenses may not be
granted by the urban curator without the previous payment of any
taxes caused by the license procedure. BuildCo must also pay the urban
delimitation and occupation tax (impuesto de delineación urbana y
ocupación) at the local bank. The fees and taxes must 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 as tools and so forth. Indirect costs relate to fees charged by the
architects and the engineers and to ancillary payments related to such
honoraria. It does not include costs for taxes, land acquisition, project
financing, or utility surcharges.
According to Decrees 1272 of 2009 and 1469 of 2010, in cities with

more than 500,000 inhabitants, the presentation of documents by a
license applicant which contain information available through virtual or
remote inquiry is no longer necessary. Urban curators must check by
these means the information at the time of filing of the application.
This is why the following documents are no longer required to be
obtain by the entreperneur:
-Legal representation certificate (Certificado de Exsitencia y
Representación Legal)
- Certificate of free transferability (Certificado de libertad y tradición)
- Proof of municipal tax payment (Paz y salvo de impuesto predial)
* Pay variable charges and tax on Urban Delineation (Impuesto de

Delineación Urbana) at the bank
The fees and taxes must be deposited at a designated account held by

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 direct completion costs).
Minimum building direct completion costs (MBDCC)* - estimated by

DANE (National Statistics Department): COP 804,212/sq. m. (only direct
costs) x 1300.6 sq. m. = COP 828,482,200 x 2.6%=COP 27,194,911
* MBDCC in 2009 was 637,000 but it was updated by DANE in January 1 day COP 27,194,911
2
2011 to 804,212 (details in Resolucion 0087 Jan 31 2011)
This 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 the architects and engineers and to ancillary
payments for such honoraria. It does not include costs for taxes, land
acquisition, project financing, and utility surcharges.
The fees and taxes must be deposited at a designated account held by

the district authorities at any bank in Bogotá. This tax is payable once
the license has been approved, and it is a precondition for the delivery
of the approved license. If at the end of the construction the actual
costs surpass the estimated ones, BuildCo must pay an additional 3%
Time to
complete
on the difference.
Request water connection approval from EAAB
The owner of the plot (or A representative) must request a water

connection by providing Bogotá’s public water utility (Empresa de
Acueducto y Alcantarillado de Bogotá, EAAB) with copies of the
following documents:
- Nomenclature certificate (boletín de nomenclatura) of the plot where
the warehouse will be located.
- Certificate of free transferability of the plot.
3 - Authorization of the plot owner for the installation service request, if 10 days COP 1,845,300
the owner is not requesting the service directly.
- Description of the warehouse purpose (whether commercial or
industrial).
According to Resolution 1281 from August 2008 the cost is: COP
1,123,520 for 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 local government has established
throughout Bogotá.
* Receive water inspection from EAAB
4 EAAB undertakes supervision, control, and evaluation of construction 1 day no charge

according to regulations. It takes place during the whole construction
process.
* Obtain water connection from EAAB
5 10 days no charge
EAAB undertakes the final inspection.
* Receive inspection from authorized contractor
6 No later than 20 days after requesting the connection, Codensa must 1 day no charge
send a service agent that will review the construction and estimate the
connection costs.
* Request and obtain telephone connection
The line may be requested by phone or in person at any of the points

7 of service. In both cases, the party requesting the installation must 4 days COP 200,000
provide its citizen's identification number (número de cédula), the
information on the exact plot location, and the stratus of the place
where the plot is located.
Receive final inspection by Mayor’s office
Through its agents, the mayor’s office (Alcaldía Distrital) is the entity in
charge of monitoring and controlling construction projects in Bogotá. 1 day no charge
8
This is true also of municipal major's offices nationwide for construction
projects developed within their jurisdictions. The inspections are carried
out to confirm that the construction is being completed according to
the construction license.
GETTING ELECTRICITY
Access to reliable and affordable electricity is vital WHAT THE GETTING ELECTRICITY
for businesses. To counter weak electricity supply,
many firms in developing economies have to rely INDICATORS MEASURE
on self-supply, often at a prohibitively high cost.
Whether electricity is reliably available or not, the Procedures to obtain an electricity
first step for a customer is always to gain access by connection (number)
obtaining a connection.
Submitting all relevant documents and
What do the indicators cover? obtaining all necessary clearances and permits
Doing Business records all procedures required for Completing all required notifications and
a local business to obtain a permanent electricity receiving all necessary inspections
connection and supply for a standardized
warehouse, as well as the time and cost to Obtaining external installation works and
complete them. These procedures include possibly purchasing material for these works
applications and contracts with electricity utilities, Concluding any necessary supply contract and
clearances from other agencies and the external obtaining final supply
and final connection works. The ranking on the
ease of getting electricity is the simple average of Time required to complete each procedure
the percentile rankings on its component (calendar days)
indicators: procedures, time and cost. To make the Is at least 1 calendar day
data comparable across economies, several
assumptions are used. Each procedure starts on a separate day
The warehouse: Does not include time spent gathering

information
 Is located in the economy’s largest
business city, in an area where other Reflects the time spent in practice, with little
warehouses are located. follow-up and no prior contact with officials
 Is not in a special economic zone where Cost required to complete each procedure
the connection would be eligible for (% of income per capita)
subsidization or faster service. Official costs only, no bribes
 Has road access. The connection works Excludes value added tax
involve the crossing of a road or roads but
are carried out on public land.
 Is 150 meters long.
 Is a new construction being connected to
 Is to either the low-voltage or the medium-
electricity for the first time.
voltage distribution network and either overhead
 Has 2 stories, both above ground, with a or underground, whichever is more common in
total surface of about 1,300.6 square the economy and in the area where the
meters (14,000 square feet), and is built on warehouse is located. The length of any
a plot of 929 square meters (10,000 square connection in the customer’s private domain is
feet). negligible.
The electricity connection:  Involves installing one electricity meter. The
monthly electricity consumption will be 0.07
 Is a 3-phase, 4-wire Y, 140-kilovolt-ampere
gigawatt-hour (GWh). The internal electrical
(kVA) (subscribed capacity) connection.
wiring has been completed.
GETTING ELECTRICITY

What does it take to obtain a new electricity procedures, takes 165 days and costs 1081.3% of
connection in Colombia? According to data collected income per capita (figure 4.1).
by Doing Business, getting electricity there requires 5
Figure 4.1 What it takes to obtain an electricity connection in Colombia
GETTING ELECTRICITY
Globally, Colombia stands at 134 in the ranking of 183 regional average ranking provide another perspective
economies on the ease of getting electricity (figure in assessing how easy it is for an entrepreneur in
4.2). The rankings for comparator economies and the Colombia to connect a warehouse to electricity.
Figure 4.2 How Colombia and comparator economies rank on the ease of getting electricity

GETTING ELECTRICITY
Even more helpful than rankings for other economies economies, the practices of their utilities may provide a
may be the indicators underlying those rankings (table model for Colombia on ways to improve the ease of
4.1). If obtaining a new electricity connection requires getting electricity. Regional and global averages on
fewer procedures, less time or less cost in other these indicators may provide useful benchmarks.
Table 4.1 The ease of getting electricity in Colombia and comparator economies
Latin America &
Global average
Caribbean
Argentina
Colombia
Ecuador
average
Mexico
Bolivia
Brazil
Peru
Indicator
Rank 134 58 124 51 128 142 82 72 ..
Time (days) 165 67 42 34 89 114 100 65 111

capita) 1081.3 20.4 1181.2 130.3 785.3 395.5 441.6 593.7 1,942.3

GETTING ELECTRICITY

The indicators reported here for Colombia are based
OBTAINING AN ELECTRICITY CONNECTION
on a set of specific procedures—the steps that an
entrepreneur must complete to get a warehouse
connected to electricity by the local distribution City: Bogota
utility—identified by Doing Business. Data are collected
from the distribution utility, then completed and
Name of Utility: CODENSA
verified by electricity regulatory agencies and
independent professionals such as electrical engineers, The procedures are those that apply to a warehouse
electrical contractors and construction companies. The and electricity connection matching the standard
electricity distribution utility surveyed is the one assumptions used by Doing Business in collecting the
serving the area (or areas) in which warehouses are data (see the section in this chapter on what the
located. If there is a choice of distribution utilities, the indicators cover). The procedures, along with the
one serving the largest number of customers is associated time and cost, are summarized below.
selected.
Summary of procedures for getting electricity in Colombia—and the time and cost
Time to
complete
The customer submits a service application to Codensa and awaits
the preparation of a feasibility study and cost estimate
The customer submits his service application in person in one of the

offices of Codensa. The application has to indicate the electricity load
required and include a number of supporting documents. Codensa will
conduct an internal study to assess whether the new connection is
feasible or not. In simple cases, Codensa will just authorize the 30 calendar days no charge
1
connection. In more complicated cases, the utility will request a design of
the works necessary to do the connection first. This second case is more
likely for a load of 140kVA. The client will receive a letter summarizing
the availability of electricity in the area in question and the works that
will be required for the connection. The approved application has a
validity of one year, which means that the customer has one year from
the moment of approval to finalize the relevant procedures needed to
obtain an electricity connection from Codensa.
* Codensa inspects the premise in order to prepare the feasability
study
2 In order to inform the technical appraisal of the feasibility o the 7 calendar days no charge
connection, Codensa will conduct a site inspection. A representative of
the customer should be present during the inspection to answer
questions.
The customer contracts a construction firm or an approved design
engineer to prepare a design of the external connection works and
3 to carry out the connection works 105 calendar days COP 109,000,000.0
If the customer choose a private company to do the external connection

Time to
complete
work the firm will have to prepare a design of the planned works.
Codensa's engineers will then review the design that was prepared.
During this period, Codensa also obtains the relevant right of
ways/excavation permits from the Instituto de Desarollo Urbano (IDU).
Once the design is approved, the sub-contractor can carry out the need
connection works.
According to the regulations, only an electrical engineer (ingeniero

electricista) is allowed to prepare the design for the external connection
works. The actual works can be later carried out by an electrician with
just a technical formation (un técnico con matricula). In the majority of
the cases, the construction firm that constructed the building will also do
the connection works of installing a dedicated distribution transformer
or a small sub-station. The actual works take only a few days.
* The customer has to obtain a certification of the internal wiring

installations from a firm registered with the Superintendencia de
Industria y Comercio (SIC)
Once the internal wiring installations have been finalized, the customer
has to request an inspection from a firm registered with the ONAC
(Organismo Nacional De Acreditación) or the Superintendencia de
Industria y Comercio (SIC). The firm will assess whether the internal 7 calendar days COP 1,600,000.0
4
wiring installations comply with the standards of the RETIE (Reglamento
Técnico de Instalaciones Eléctricas) and issue an inspection certificate to
the customer. The inspection certificate has to be submitted to Codensa
before the electricity supply is turned on. A list of firms accredited to
conduce inspection can be found at
http://www.sic.gov.co/Informacion_Interes/Entidades%20acreditadas/Dir
ectorio%20-%20Area2.php.
After the customer signs the supply contract, Codensa inspects the
external works, installs the meter and energizes the project
The supply contract is signed after the external connection works have
been inspected by Codensa. Codensa will then energize the project.
In order to energize the new connection Codensa has to inform other
customers that are connected in the same area that their electricity will
be cut to connect a new client. Codensa does this usually through the
press and the last bill before the disconnection is made. This means they 30 calendar days COP 11,770,264.8
5
have to give their clients at least two weeks of advance notice. In most of
the cases, this time frame is enough to connect the new customer. The
meter is installed and the electricity is flowing from that point in time.
Codensa provides the meter.
The customer also has to pay a security deposit equivalent to one month
of consumption. The deposit is returned to the client without interest at
the end of the contract.

REGISTERING PROPERTY
Ensuring formal property rights is fundamental. WHAT THE REGISTERING PROPERTY

Effective administration of land is part of that. If
INDICATORS MEASURE
formal property transfer is too costly or
complicated, formal titles might go informal
again. And where property is informal or poorly Procedures to legally transfer title on
administered, it has little chance of being immovable property (number)
accepted as collateral for loans—limiting access to Preregistration (for example, checking for liens,
finance. notarizing sales agreement, paying property
transfer taxes)
What do the indicators cover?
Registration in the economy’s largest business
Doing Business records the full sequence of city
procedures necessary for a business to purchase
property from another business and transfer the Postregistration (for example, filing title with
the municipality)
property title to the buyer’s name. The transaction
is considered complete when it is opposable to Time required to complete each procedure
third parties and when the buyer can use the (calendar days)
property, use it as collateral for a bank loan or
resell it. The ranking on the ease of registering information
property is the simple average of the percentile
rankings on its component indicators: procedures, Each procedure starts on a separate day
time and cost. Procedure completed once final document is
received
several assumptions about the parties to the No prior contact with officials
transaction, the property and the procedures are
Cost required to complete each procedure
used.
(% of property value)
The parties (buyer and seller):
Official costs only, no bribes
 Are limited liability companies, 100% No value added or capital gains taxes included
domestically and privately owned.
 Are located in the periurban area of the
economy’s largest business city.  Has no mortgages attached and has been
under the same ownership for the past 10
 Have 50 employees each, all of whom are
years.
nationals.
 Consists of 557.4 square meters (6,000 square
 Perform general commercial activities.
feet) of land and a 10-year-old, 2-story
The property (fully owned by the seller): warehouse of 929 square meters (10,000
 Has a value of 50 times income per capita. square feet). The warehouse is in good
The sale price equals the value. condition and complies with all safety
standards, building codes and legal
 Is registered in the land registry or requirements. The property will be transferred
cadastre, or both, and is free of title in its entirety.
disputes.
 Is located in a periurban commercial zone,
and no rezoning is required.

What does it take to complete a property transfer in procedures, takes 15 days and costs 2.0% of the
Colombia? According to data collected by Doing property value (figure 5.1).
Business, registering property there requires 7
Figure 5.1 What it takes to register property in Colombia
Globally, Colombia stands at 51 in the ranking of 183 regional average ranking provide other useful
economies on the ease of registering property (figure information for assessing how easy it is for an
5.2). The rankings for comparator economies and the entrepreneur in Colombia to transfer property.
Figure 5.2 How Colombia and comparator economies rank on the ease of registering property


easy (or difficult) it is to register property in Colombia That can help identify where the potential for
Table 5.1 The ease of registering property in Colombia over time

Indicator DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012
Rank .. .. .. .. .. .. 54 51
Procedures (number) 9 9 9 9 9 7 7 7
Time (days) 23 23 23 23 23 20 20 15
Cost (% of property
value) 2.5 2.5 2.5 2.5 2.4 2.0 2.0 2.0
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings reflect changes
to the methodology. For more information on “no practice” marks, see the data notes for details.
Equally helpful may be the benchmarks provided by on ways to improve the ease of registering property.
the economies that today have the best performance And changes in regional averages can show where
regionally or globally on the procedures, time or cost Colombia is keeping up—and where it is falling
required to complete a property transfer (figure 5.3). behind.
Figure 5.3 Has registering property become easier over time?
Procedures (number)
Time (days)
Cost (% of property value)
Economies worldwide have been making it easier for have cut the time required substantially—enabling
entrepreneurs to register and transfer property—such buyers to use or mortgage their property earlier. What
as by computerizing land registries, introducing time property registration reforms has Doing Business
limits for procedures and setting low fixed fees. Many recorded in Colombia (table 5.2)?
Table 5.2 How has Colombia made registering property easier—or not?
DB Year Reform
DB2012 No reform.
DB2011 No reform.
Property registration was made easier by making it possible

to obtain required certificates online and by making
DB2010
standard preliminary sale agreements available free of
charge.
DB2009 No reform.

The indicators reported here are based on a set of
STANDARD PROPERTY TRANSFER
specific procedures—the steps that a buyer and
seller must complete to transfer the property to the
buyer’s name—identified by Doing Business City: Bogota
through information collected from local property Property Value: 565,865,551.6
lawyers, notaries and property registries. These
procedures are those that apply to a transaction The procedures, along with the associated time and
matching the standard assumptions used by Doing cost, are summarized below.
Business in collecting the data (see the section in
this chapter on what the indicators cover).
Summary of procedures for registering property in Colombia—and the time and cost
Time to
complete
* Obtain certificate about history of the property ("Libertad y
tradicion")
Ownership and non-encumbrance certificates can be obtained online at No cost for notaries
no cost. The certificate with the ownership history of the property for the accessing this
1 last 20 years (―Certificado de Tradición‖) can also be obtained at the 1 day information on the
corresponding registry office. Fees are set by Resolution No. 0069 of Ventanilla Unica de
2011 of the Superintendencia de Notariado y Registro. For properties Registro (VUR)
with no liens, the certificates obtained from the internet at the notary's
offices can be submitted to the Land Registry.
* A certificate of good standing ("Existencia y Representacion

legal") of the company must be obtained at the Chamber of
Commerce
When the parties are companies, a certificate of good standing

(―Certificado de Existencia y Representación legal de la Compañia‖) of
the company must be requested at the Chamber of Commerce. This
certificate does not have an expiration date for its validity, but some 1 day COP 3,700
2
entities, such banks or authorities, request for certificates issued with less
than three months in order to obtain updated information.
Electronic Certificates of Existence and Legal Representation can also be

obtained online since 2010. The certificate can be requested, paid and
obtained online. Payment can be paid by credit card. The certificate
provides real time information of the company (Bogota Chamber of
Commerce: http://serviciosenlinea.ccb.org.co/cerple/index.aspx)
A study of the titles of the property is done by a lawyer
3 A lawyer, usually external to the company, will make a study of the past 5 days COP 1,113,000
titles of the property and about the history of the owners to carry out the
transaction.
Time to
complete
The study of the titles is not mandatory, but it takes place almost always
for property transactions.
The lawyer must be provided with the certificates obtained in Procedures

1 and 2 and with a copy of the company’s shareholders act authorizing
its representative to act on their behalf in order to complete this
procedure.
Obtain tax certificates ("predial" and "valorizacion")
From the VUR website, it is now possible to see and obtain online the
"certificado de paz y salvo predial" (stating municipal property taxes
have been paid from Secretaría de Hacienda del Distrito. ) and the
"certificado de paz y salvo de valorización" (taxes related to increases in
the value of the property due to constructions, roads, etc- Instituto de
4 Desarrollo Urbano -IDU). 1 day no cost
For properties with no liens, the certificates obtained and printed out
from the internet at the notary's offices can now be submitted to the
Land Registry. Notaries have a special login to access these certificates.
This certificate has no cost if requested online and can be obtained by
submitting the "chip catastral".
The VUR website is: http://www.registratupropiedad.com/
The notary prepares the public deed
The notary public will prepare the final public deed with all the
documentation previously obtained by the parties. The notary will also
check the Board of directors minutes authorizing the sale and purchase 0.27% of property
of each property respectively for each limited liability company. value + COP 7,120
The participation of a notary in the preparation of the public deed is for the escritura +
mandatory by law, and his/her fees are also established by law (0.27% of COP 26,700 for
property value + other indicated fees). copies of escritura +
5 3 days
COP 3,570 to the
The minuta establishes the terms of the sale between the parties. It is
Superintendency of
not mandatory, but it is normally prepared by a lawyer. If parties
the Notary + COP
prepare the minuta, the notary will review it while preparing the public
deed. The standard preliminary deed ("minuta") that can be prepared by 3,750 to the National
the parties can obtained for free in the notaries offices or online at Fund of the Notary
http://www.registratupropiedad.com/index.php?option=com_content&vi
ew=article&id=71&Itemid=76
Pay registration fees at the bank counter in the registry
The ―registry tax‖ or ―Impuesto de Registro‖ can be paid at the registry

office in the city of Bogotá and other large cities, where the commercial 1% of property value
bank in charge of collection of this tax has installed a branch for this (Registry Tax) + 0.5%
6 1 day
purpose. In smaller cities it will have to be paid prior to registration in a of property value
commercial bank. Despite its name, the ―Impuesto de Registro‖ is a tax (Registration Fee)
that goes to finance state-level programs on public health. It is not a fee
for a service but a tax.
Time to
complete
The public deed must be registered at the Registry Office
After the ―registry tax‖ is paid, the public deed prepared by the notary already paid in
7 3 days
must be registered at the Registry Office for its validity. After registration, procedure 6
the new public deed is automatically sent (internal procedure) to the
Office of the Cadastre to register the change of ownership.
GETTING CREDIT
Two types of frameworks can facilitate access to WHAT THE GETTING CREDIT INDICATORS
credit and improve its allocation: credit information
MEASURE
systems and the legal rights of borrowers and
lenders in collateral and bankruptcy laws. Credit
information systems enable lenders to view a Strength of legal rights index (0–10)
potential borrower’s financial history (positive or Protection of rights of borrowers and lenders
negative)—valuable information to consider when through collateral laws
assessing risk. And they permit borrowers to Protection of secured creditors’ rights through
establish a good credit history that will allow easier bankruptcy laws
access to credit. Sound collateral laws enable
businesses to use their assets, especially movable Depth of credit information index (0–6)
property, as security to generate capital—while Scope and accessibility of credit information
strong creditors’ rights have been associated with distributed by public credit registries and
higher ratios of private sector credit to GDP. private credit bureaus
What do the indicators cover? Public credit registry coverage (% of adults)
Doing Business assesses the sharing of credit Number of individuals and firms listed in
information and the legal rights of borrowers and public credit registry as percentage of adult
lenders with respect to secured transactions population
through 2 sets of indicators. The depth of credit Private credit bureau coverage (% of adults)
information index measures rules and practices
Number of individuals and firms listed in
affecting the coverage, scope and accessibility of
largest private credit bureau as percentage of
credit information available through a public credit
adult population
registry or a private credit bureau. The strength of
legal rights index measures the degree to which
collateral and bankruptcy laws protect the rights of
borrowers and lenders and thus facilitate lending.
Doing Business uses case scenarios to determine  Has 100 employees.
the scope of the secured transactions system,  Is 100% domestically owned, as is the lender.
involving a secured borrower and a secured lender
and examining legal restrictions on the use of The ranking on the ease of getting credit is based on
movable collateral. These scenarios assume that the the percentile rankings on its component indicators:
borrower: the depth of credit information index (weighted at
37.5%) and the strength of legal rights index
 Is a private, limited liability company. (weighted at 62.5%).
 Has its headquarters and only base of
operations in the largest business city.
GETTING CREDIT

How well do the credit information system and Globally, Colombia stands at 67 in the ranking of 183
collateral and bankruptcy laws in Colombia facilitate economies on the ease of getting credit (figure 6.1).
access to credit? The economy has a score of 5 on the The rankings for comparator economies and the
depth of credit information index and a score of 5 on regional average ranking provide other useful
the strength of legal rights index (see the summary of information for assessing how well regulations and
scoring at the end of this chapter for details). Higher institutions in Colombia support lending and
scores indicate more credit information and stronger borrowing.
legal rights for borrowers and lenders.
Figure 6.1 How Colombia and comparator economies rank on the ease of getting credit

GETTING CREDIT

While the most recent Doing Business data reflect how institutions and regulations have been strengthened—
well the credit information system and collateral and and where they have not (table 6.1). That can help
bankruptcy laws in Colombia support lending and identify where the potential for improvement is
borrowing today, data over time can help show where greatest.
Table 6.1 The ease of getting credit in Colombia over time

Indicator DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012
Rank .. .. .. .. .. .. 64 67
Strength of legal rights

5 5 5 5 5 5 5 5
index (0-10)
Depth of credit
5 5 5 5 5 5 5 5
information index (0-6)
Public registry coverage
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
(% of adults)
Private bureau
30.0 31.7 28.3 39.9 42.5 60.5 63.1 71.2
coverage (% of adults)
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings reflect changes
to the methodology.
GETTING CREDIT
One way to put an economy’s getting credit indicators index for Colombia in 2011 and shows the number of
into context is to see where the economy stands in the other economies having the same score in 2011.
distribution of scores across other economies. Figure Figure 6.3 shows the same thing for the depth of credit
6.2 highlights the score on the strength of legal rights information index.
Figure 6.2 Have legal rights for borrowers and lenders Figure 6.3 Have the coverage and accessibility of credit
become stronger? information grown?
Number of economies with each score on strength of legal Number of economies with each score on depth of credit
rights index (0–10), 2011 information index (0–6), 2011
Source: Doing Business database. Source: Doing Business database.

GETTING CREDIT
When economies strengthen the legal rights of lenders credit information, they can increase entrepreneurs’
and borrowers under collateral and bankruptcy laws, access to credit. What credit reforms has Doing
and increase the scope, coverage and accessibility of Business recorded in Colombia (table 6.2)?
Table 6.2 How has Colombia made getting credit easier—or not?
DB Year Reform
DB2012 No reform.
DB2011 No reform.
Access to credit improved thanks to a new credit information

law that guarantees the right of borrowers to inspect their
DB2010 own data and new rules that make it mandatory for credit
providers to consult and share information with credit
bureaus.
DB2009 No reform.
GETTING CREDIT

The getting credit indicators reported here for The data on the legal rights of borrowers and lenders
Colombia are based on detailed information collected are gathered through a survey of financial lawyers and
in that economy. The data on credit information verified through analysis of laws and regulations as
sharing are collected through a survey of a public well as public sources of information on collateral and
credit registry or private credit bureau (if one exists). bankruptcy laws. For the strength of legal rights index,
To construct the depth of credit information index, a a score of 1 is assigned for each of 8 aspects related to
score of 1 is assigned for each of 6 features of the legal rights in collateral law and 2 aspects in
public credit registry or private credit bureau (see bankruptcy law.
summary of scoring below).
Summary of scoring for the getting credit indicators in Colombia
Latin America &

Indicator Colombia OECD high income
Caribbean
Strength of legal rights index (0-10) 5 6 7
Depth of credit information index (0-6) 5 3 5
Public registry coverage (% of adults) 0.0 10.1 9.5
Private bureau coverage (% of adults) 71.2 34.2 63.9
Strength of legal rights index (0–10) Index score: 5
Can any business use movable assets as collateral while keeping possession of the assets;
Yes
and any financial institution accept such assets as collateral ?
Does the law allow businesses to grant a non possessory security right in a single category of
No
movable assets, without requiring a specific description of collateral?
Does the law allow businesses to grant a non possessory security right in substantially all of
Yes
its assets, without requiring a specific description of collateral?
May a security right extend to future or after-acquired assets, and may it extend
Yes
automatically to the products, proceeds or replacements of the original assets ?
Is a general description of debts and obligations permitted in collateral agreements; can all
types of debts and obligations be secured between parties; and can the collateral agreement Yes
include a maximum amount for which the assets are encumbered?
Is a collateral registry in operation, that is unified geographically and by asset type, with an
No
electronic database indexed by debtor's names?
Are secured creditors paid first (i.e. before general tax claims and employee claims) when a
Yes
debtor defaults outside an insolvency procedure?
Strength of legal rights index (0–10) Index score: 5
Are secured creditors paid first (i.e. before general tax claims and employee claims) when a
No
business is liquidated?
Are secured creditors either not subject to an automatic stay or moratorium on enforcement
procedures when a debtor enters a court-supervised reorganization procedure, or the law No
provides secured creditors with grounds for relief from an automatic stay or
Does the law allow parties to agree in a collateral agreement that the lender may enforce its
No
security right out of court, at the time a security interest is created?
Private credit Public credit

Depth of credit information index (0–6) Index score: 5
bureau registry
Are data on both firms and individuals distributed? Yes No 1
Are both positive and negative data distributed? Yes No 1
Does the registry distribute credit information from
retailers, trade creditors or utility companies as well as Yes No 1
financial institutions?
Are more than 2 years of historical credit information
No No 0
distributed?
Is data on all loans below 1% of income per capita
Yes No 1
distributed?
Is it guaranteed by law that borrowers can inspect
Yes No 1
their data in the largest credit registry?
Note: An economy receives a score of 1 if there is a "yes" to either private bureau or public registry.
Coverage Private credit bureau Public credit registry
Number of firms 726,133 0

Number of individuals 20,890,787 0
PROTECTING INVESTORS
Investor protections matter for the ability of WHAT THE PROTECTING INVESTORS
companies to raise the capital they need to grow,
INDICATORS MEASURE
innovate, diversify and compete. If the laws do not
provide such protections, investors may be reluctant
to invest unless they become the controlling Extent of disclosure index (0–10)
shareholders. Strong regulations clearly define Who can approve related-party transactions
related-party transactions, promote clear and efficient
Disclosure requirements in case of related-
disclosure requirements, require shareholder party transactions
participation in major decisions of the company and
set clear standards of accountability for company Extent of director liability index (0–10)
insiders. Ability of shareholders to hold interested
What do the indicators cover? parties and members of the approving body
liable in case of related-party transactions
Doing Business measures the strength of minority
Available legal remedies (damages, repayment
shareholder protections against directors’ use of
of profits, fines, imprisonment and rescission
corporate assets for personal gain—or self-dealing. of the transaction)
The indicators distinguish 3 dimensions of investor
protections: transparency of related-party Ability of shareholders to sue directly or
transactions (extent of disclosure index), liability for derivatively
self-dealing (extent of director liability index) and Ease of shareholder suits index (0–10)
shareholders’ ability to sue officers and directors for
Access to internal corporate documents
misconduct (ease of shareholder suits index). The
(directly or through a government inspector)
ranking on the strength of investor protection index is
the simple average of the percentile rankings on Documents and information available during
these 3 indices. To make the data comparable across trial
economies, a case study uses several assumptions Strength of investor protection index (0–10)
about the business and the transaction.
Simple average of the extent of disclosure,
The business (Buyer): extent of director liability and ease of
shareholder suits indices
 Is a publicly traded corporation listed on the
economy’s most important stock exchange (or
at least a large private company with multiple
the company purchase used trucks from another
shareholders).
company he owns.
 Has a board of directors and a chief executive
 The price is higher than the going price for used
officer (CEO) who may legally act on behalf of
trucks, but the transaction goes forward.
Buyer where permitted, even if this is not
specifically required by law.  All required approvals are obtained, and all
required disclosures made, though the transaction
The transaction involves the following details:
is prejudicial to Buyer.
 Mr. James, a director and the majority
 Shareholders sue the interested parties and the
shareholder of the company, proposes that
members of the board of directors.

How strong are investor protections in Colombia? The index (figure 7.1). While the indicator does not
economy has a score of 8.3 on the strength of investor measure all aspects related to the protection of
protection index, with a higher score indicating minority investors, a higher ranking does indicate that
stronger protections (see the summary of scoring at an economy’s regulations offer stronger investor
the end of this chapter for details). protections against self-dealing in the areas measured.
Globally, Colombia stands at 5 in the ranking of 183
economies on the strength of investor protection
Figure 7.1 How Colombia and comparator economies rank on the strength of investor protection index


While the most recent Doing Business data reflect how ranking on the strength of investor protection index
well regulations in Colombia protect minority investors over time shows whether the economy is slipping
today, data over time show whether the protections behind other economies in investor protections—or
have been strengthened (table 7.1). And the global surpassing them.
Table 7.1 The strength of investor protections in Colombia over time

Rank .. .. .. .. .. 5 5
Extent of disclosure
7 7 8 8 8 8 8
index (0-10)
Extent of director
2 2 2 2 8 8 8
liability index (0-10)
Ease of shareholder
9 9 9 9 9 9 9
suits index (0-10)
Strength of investor
6.0 6.0 6.3 6.3 8.3 8.3 8.3
protection index (0-10)
the methodology.
But the overall ranking on the strength of investor and ease of shareholder suits indices may also be
protection index tells only part of the story. Economies revealing (figure 7.2). Equally interesting may be the
may offer strong protections in some areas but not changes over time in the regional average scores for
others. So the scores recorded over time for Colombia those indices.
on the extent of disclosure, extent of director liability
Figure 7.2 Have investor protections become stronger?
Strength of investor protection index (0-10)
Extent of disclosure index (0-10)

Extent of director liability index (0-10)
Ease of shareholder suits index (0-10)
Note: The higher the score, the stronger the investor protections. The economy with the best performance regionally on
each indicator, and the economy with the best performance globally, are included as benchmarks. In some cases 2 or
more economies share the top regional or global ranking on an indicator.
Economies with the strongest protections of minority time. So reforms to strengthen investor protections
investors from self-dealing require more disclosure may move ahead on different fronts—such as through
and define clear duties for directors. They also have new or amended company laws or civil procedure
well-functioning courts and up-to-date procedural rules. What investor protection reforms has Doing
rules that give minority investors the means to prove Business recorded in Colombia (table 7.2)?
their case and obtain a judgment within a reasonable
Table 7.2 How has Colombia strengthened investor protections—or not?

DB Year Reform
DB2012 No reform.
DB2011 No reform.
An amendment to the Company Law

strengthened investor protections by making
DB2010
it easier to sue directors in cases of prejudicial
transactions between interested parties.
DB2009 No reform.
Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports for
these years, available at http://www.doingbusiness.org.

The protecting investors indicators reported here for shareholder suits indices, a score is assigned for each
Colombia are based on detailed information collected of a range of conditions relating to disclosure, director
through a survey of corporate and securities lawyers liability and shareholder suits in a standard case study
and are based on securities regulations, company laws transaction (see the notes at the end of this chapter).
and court rules of evidence. To construct the extent of The summary below shows the details underlying the
disclosure, extent of director liability and ease of scores for Colombia.
Summary of scoring for the protecting investors indicators in Colombia
Latin America &

Caribbean
Extent of disclosure index (0-10) 8 4 6
Extent of director liability index (0-10) 8 5 5
Ease of shareholder suits index (0-10) 9 6 7
Strength of investor protection index (0-10) 8.3 5.1 6.0
Score
Extent of disclosure index (0-10) 8

What corporate body provides legally sufficient approval for the transaction? 3
Whether disclosure of the conflict of interest by Mr. James to the board of directors is
2
required?
Whether immediate disclosure of the transaction to the public and/or shareholders is
2
required?
Whether disclosure of the transaction in published periodic filings (annual reports) is
1
required?
Whether an external body must review the terms of the transaction before it takes place? 0
Extent of director liability index (0-10) 8
Whether shareholders can sue directly or derivatively for the damage that the Buyer-Seller
1
transaction causes to the company?
Whether shareholders can hold Mr. James liable for the damage that the Buyer-Seller
2
transaction causes to the company?
Whether shareholders can hold members of the approving body liable for the damage that
2
the Buyer-Seller transaction causes to the company?
Whether a court can void the transaction upon a successful claim by a shareholder plaintiff? 1
Score
Whether Mr. James pays damages for the harm caused to the company upon a successful
1
claim by the shareholder plaintiff?
Whether Mr. James repays profits made from the transaction upon a successful claim by the
1
shareholder plaintiff?
Whether fines and imprisonment can be applied against Mr. James? 0
Ease of shareholder suits index (0-10) 9
Whether shareholders owning 10% or less of Buyer's shares can inspect transaction
1
documents before filing suit?
Whether shareholders owning 10% or less of Buyer's shares can request an inspector to
1
investigate the transaction?
Whether the plaintiff can obtain any documents from the defendant and witnesses during
4
trial?
Whether the plaintiff can request categories of documents from the defendant without
0
identifying specific ones?
Whether the plaintiff can directly question the defendant and witnesses during trial? 2
Whether the level of proof required for civil suits is lower than that of criminal cases? 1
Strength of investor protection index (0-10) 8.3
Notes:
Extent of disclosure index (0–10)
Scoring for the extent of disclosure index is based on 5 components:
Which corporate body can provide legally sufficient approval for the transaction
0 = CEO or managing director alone; 1 = shareholders or board of directors vote and Mr. James can vote; 2 =
board of directors votes and Mr. James cannot vote; 3 = shareholders vote and Mr. James cannot vote.
Whether disclosure of the conflict of interest by Mr. James to the board of directors is required
0 = no disclosure; 1 = disclosure of the existence of a conflict without any specifics; 2 = full disclosure of all
material facts.
Whether immediate disclosure of the transaction to the public, the regulator or the shareholders is required
0 = no disclosure; 1 = disclosure on the transaction only; 2 = disclosure on the transaction and Mr. James’s
conflict of interest.
Whether disclosure of the transaction in the annual report is required

0 = no disclosure; 1 = disclosure on the transaction only; 2 = disclosure on the transaction and Mr. James’s
conflict of interest.
Whether it is required that an external body (for example, an external auditor) review the transaction before it takes
place
0 = no; 1 = yes.
Extent of director liability index (0–10)
Scoring for the extent of director liability index is based on 7 components:
Whether shareholders can sue directly or derivatively for the damage that the Buyer-Seller transaction causes to the
company
0 = suits are unavailable or available only for shareholders holding more than 10% of the company’s share capital;
1 = direct or derivative suits available for shareholders holding 10% of share capital or less.
Whether shareholders can hold Mr. James liable for the damage that the transaction causes to the company
0 = Mr. James is not liable or is liable only if he acted fraudulently or in bad faith; 1 = Mr. James is liable if he
influenced the approval or was negligent; 2 = Mr. James is liable if the transaction is unfair or prejudicial to the
other shareholders.
Whether shareholders can hold the approving body (the CEO or members of the board of directors) liable for the
damage that the transaction causes to the company
0 = members of the approving body are either not liable or liable only if they acted fraudulently or in bad faith;
1 = liable for negligence in the approval of the transaction; 2 = liable if the transaction is unfair or prejudicial to
the other shareholders.
Whether a court can void the transaction upon a successful claim by a shareholder plaintiff
0 = rescission is unavailable or available only in case of Seller’s fraud or bad faith; 1 = rescission is available when
the transaction is oppressive or prejudicial to the other shareholders; 2 = rescission is available when the
transaction is unfair or entails a conflict of interest.
Whether Mr. James pays damages for the harm caused to the company upon a successful claim by the shareholder
plaintiff
0 = no; 1 = yes.
Whether Mr. James repays profits made from the transaction upon a successful claim by the shareholder plaintiff
0 = no; 1 = yes.
Whether both fines and imprisonment can be applied against Mr. James
0 = no; 1 = yes.
Ease of shareholder suits index (0–10)
Scoring for the ease of shareholder suits index is based on 6 components:
What range of documents is available to the plaintiff from the defendant and witnesses during trial
Score of 1 for each of the following: information that the defendant has indicated he intends to rely on for his
defense; information that directly proves specific facts in the plaintiff’s claim; any information relevant to the
subject matter of the claim; and any information that may lead to the discovery of relevant information.
Whether the plaintiff can directly examine the defendant and witnesses during trial
0 = no; 1 = yes, with prior approval by the court of the questions posed; 2 = yes, without prior approval.
Whether the plaintiff can obtain categories of relevant documents from the defendant without identifying each
document specifically
0 = no; 1 = yes.
Whether shareholders owning 10% or less of the company’s share capital can request that a government inspector
investigate the transaction without filing suit in court
0 = no; 1 = yes.
Whether shareholders owning 10% or less of the company’s share capital have the right to inspect the transaction
documents before filing suit
0 = no; 1 = yes.
Whether the standard of proof for civil suits is lower than that for a criminal case
0 = no; 1 = yes.
Strength of investor protection index (0–10)
Simple average of the extent of disclosure, extent of director liability and ease of shareholder suits indices.
PAYING TAXES
Taxes are essential. They fund the public amenities, WHAT THE PAYING TAXES INDICATORS
infrastructure and services that are crucial for a
MEASURE
properly functioning economy. But the level of tax
rates needs to be carefully chosen—and needless
complexity in tax rules avoided. According to Tax payments for a manufacturing company
Doing Business data, in economies where it is more in 2010 (number per year adjusted for
difficult and costly to pay taxes, larger shares of electronic or joint filing and payment)
economic activity end up in the informal sector— Total number of taxes and contributions paid,
where businesses pay no taxes at all. including consumption taxes (value added tax,
sales tax or goods and service tax)
Method and frequency of filing and payment
Using a case scenario, Doing Business measures
the taxes and mandatory contributions that a Time required to comply with 3 major taxes
medium-size company must pay in a given year as (hours per year)
well as the administrative burden of paying taxes Collecting information and computing the tax
and contributions. This case scenario uses a set of payable
financial statements and assumptions about
Completing tax return forms, filing with
transactions made over the year. Information is
proper agencies
also compiled on the frequency of filing and
payments as well as time taken to comply with tax Arranging payment or withholding
laws. The ranking on the ease of paying taxes is Preparing separate tax accounting books, if
the simple average of the percentile rankings on required
its component indicators: number of annual
Total tax rate (% of profit before all taxes)
payments, time and total tax rate, with a threshold
2
being applied to the total tax rate. To make the Profit or corporate income tax
data comparable across economies, several Social contributions and labor taxes paid by
assumptions about the business and the taxes and the employer
contributions are used.
Property and property transfer taxes
 TaxpayerCo is a medium-size business that
Dividend, capital gains and financial
started operations on January 1, 2009.
transactions taxes
 The business starts from the same financial
Waste collection, vehicle, road and other taxes
position in each economy. All the taxes
and mandatory contributions paid during
the second year of operation are recorded.  Taxes and mandatory contributions include
 Taxes and mandatory contributions are corporate income tax, turnover tax and all
measured at all levels of government. labor taxes and contributions paid by the
company.
 A range of standard deductions and
exemptions are also recorded.
2
The threshold is defined as the highest total tax rate among the top 30% of economies in the ranking on the total tax rate. It will be
calculated and adjusted on a yearly basis. The threshold is not based on any underlying theory. Instead, it is intended to mitigate the effect of
very low tax rates on the ranking on the ease of paying taxes.
PAYING TAXES

What is the administrative burden of complying with Globally, Colombia stands at 95 in the ranking of 183
taxes in Colombia—and how much do firms pay in economies on the ease of paying taxes (figure 8.1). The
taxes? On average, firms make 9 tax payments a year, rankings for comparator economies and the regional
spend 193 hours a year filing, preparing and paying average ranking provide other useful information for
taxes and pay total taxes amounting to 18.9% of profit assessing the tax compliance burden for businesses in
(see the summary at the end of this chapter for Colombia.
details).
Figure 8.1 How Colombia and comparator economies rank on the ease of paying taxes
Note: DB2012 rankings reflect changes to the methodology. For all economies with a total tax rate below the threshold of
32.5% applied in DB2012, the total tax rate is set at 32.5% for the purpose of calculating the ranking on the ease of paying
taxes.
PAYING TAXES
While the most recent Doing Business data reflect how the process have changed — and which have not
easy (or difficult) it is to comply with tax rules in (table 8.1). That can help identify where the potential
Colombia today, data over time show which aspects of for easing tax compliance is greatest.
Table 8.1 The ease of paying taxes in Colombia over time

Rank .. .. .. .. .. 120 95
Payments (number per

69 69 69 31 20 20 9
year)
Time (hours per year) 456 456 268 256 208 208 193
Total tax rate (% profit) 82.1 82.3 82.6 78.4 78.7 78.7 74.8
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings reflect changes to the
methodology. For all economies with a total tax rate below the threshold of 32.5% applied in DB2012, the total tax rate is set at
32.5% for the purpose of calculating the rank on the ease of paying taxes.
PAYING TAXES
Equally helpful may be the benchmarks provided by on ways to ease the administrative burden of tax
the economies that today have the best performance compliance. And changes in regional averages can
regionally or globally on the number of payments or show where Colombia is keeping up—and where it is
the time required to prepare and file taxes (figure 8.2). falling behind.
Figure 8.2 Has paying taxes become easier over time?
Payments (number per year)
Time (hours per year)

PAYING TAXES
Total tax rate (% of profit)
globally, are included as benchmarks. The best performer globally on an indicator has implemented the most efficient
practices in its tax system but is not necessarily the one with the highest ranking on the indicator. In some cases 2 or
more economies share the top regional ranking on an indicator. DB2012 rankings reflect changes to the methodology. For
all economies with a total tax rate below the threshold of 32.5% applied in DB2012, the total tax rate is set at 32.5% for the
purpose of calculating the ranking on the ease of paying taxes.
PAYING TAXES
Economies around the world have made paying taxes concrete results. Some economies simplifying tax
faster and easier for businesses—such as by payment and reducing rates have seen tax revenue
consolidating filings, reducing the frequency of rise. What tax reforms has Doing Business recorded in
payments or offering electronic filing and payment. Colombia (table 8.2)?
Many have lowered tax rates. Changes have brought
Table 8.2 How has Colombia made paying taxes easier—or not?
DB Year Reform
Colombia eased the administrative burden of paying taxes

DB2012 for firms by establishing mandatory electronic filing and
payment for some of the major taxes.
DB2011 No reform.
The tax burden on businesses was eased with the

DB2010 introduction of electronic tax filing and payment, and some
payments were reduced.
Colombia made electronic social security contributions

DB2009 mandatory for companies with more than 30 employees and
created unified electronic forms for filing taxes.
PAYING TAXES

The indicators reported here for Colombia are based that the company completed during the year.
on a standard set of taxes and contributions that Respondents are asked how much in taxes and
would be paid by the case study company used by mandatory contributions the business must pay and
Doing Business in collecting the data (see the section in what the process is for doing so. The taxes and
this chapter on what the indicators cover). Tax contributions paid are listed in the summary below,
practitioners are asked to review standard financial along with the associated number of payments, time
statements as well as a standard list of transactions and tax rate.
Summary of tax rates and administrative burden in Colombia
Latin America &

Caribbean
Payments (number per year) 9 32 13
Time (hours per year) 193 382 186
Profit tax (%) 18.9 19.9 15.4
Labor tax and contributions (%) 28.8 14.6 24.0
Other taxes (%) 27.1 13.2 3.2
Total tax rate (% profit) 74.8 47.7 42.7
Total tax Notes on

Tax or mandatory Payments Notes on Time Statutory
Tax base rate (% of total tax
contribution (number) payments (hours) tax rate
profit) rate
Social security gross
1 online filing 87 11.625% 23.7
contributions salaries
Municipal tax 1 online filing 0 0.1% turnover 20.2

taxable
Corporate income tax 1 online filing 40 33.0% 18.9
profit
withdrawals
Financial transactions tax 1 0 0.40% from bank 6.5
account
gross
Payroll tax 0 paid jointly 0 9% 5.1
salaries
consumptio
Fuel tax 1 0 6.0% 0.2
n value
Vehicle tax 1 0 fixed fee 0.2

Total tax Notes on

Tax or mandatory Payments Notes on Time Statutory
Tax base rate (% of total tax
contribution (number) payments (hours) tax rate
profit) rate
assessed
0,002% to
Real estate tax 1 0 real estate 0
0.033%
value
Value added tax (VAT) 1 online filing 66 16.00% value added 0 not included
Stamp duty 1 0 0 small amount
gross included in
Welfare security system 0 paid jointly 0 8.0% 0
salaries other taxes
gross included in
Labor risk insurance 0 paid jointly 0 0.522% 0
salaries other taxes
Totals 9 193 74.8

Note: DB2012 rankings reflect changes to the methodology. For all economies with a total tax rate below the threshold of
32.5% applied in DB2012, the total tax rate is set at 32.5% for the purpose of calculating the ranking on the ease of paying
taxes.
TRADING ACROSS BORDERS

In today’s globalized world, making trade between WHAT THE TRADING ACROSS BORDERS
economies easier is increasingly important for
INDICATORS MEASURE
business. Excessive document requirements,
burdensome customs procedures, inefficient port
operations and inadequate infrastructure all lead to Documents required to export and import
extra costs and delays for exporters and importers, (number)
stifling trade potential. Research shows that Bank documents
exporters in developing countries gain more from
Customs clearance documents
a 10% drop in their trading costs than from a
similar reduction in the tariffs applied to their Port and terminal handling documents
products in global markets. Transport documents
What do the indicators cover? Time required to export and import (days)
Doing Business measures the time and cost Obtaining all the documents
(excluding tariffs) associated with exporting and
Inland transport and handling
importing a standard shipment of goods by ocean
transport, and the number of documents necessary Customs clearance and inspections
to complete the transaction. The indicators cover Port and terminal handling
procedural requirements such as documentation
requirements and procedures at customs and other Does not include ocean transport time
regulatory agencies as well as at the port. They also Cost required to export and import (US$ per
cover trade logistics, including the time and cost of container)
inland transport to the largest business city. The
All documentation
ranking on the ease of trading across borders is
the simple average of the percentile rankings on its Inland transport and handling
component indicators: documents, time and cost Customs clearance and inspections
to export and import.
Port and terminal handling
Official costs only, no bribes
Doing Business uses several assumptions about the
business and the traded goods.
The business:
 Is of medium size and employs 60 people.
 Do not require refrigeration or any other
 Is located in the periurban area of the
special environment.
economy’s largest business city.
 Do not require any special phytosanitary or
 Is a private, limited liability company,
environmental safety standards other than
domestically owned, formally registered
accepted international standards.
and operating under commercial laws and
regulations of the economy.  Are one of the economy’s leading export or
import products.
The traded goods:
 Are transported in a dry-cargo, 20-foot full
 Are not hazardous nor do they include
container load.
military items.

What does it take to export or import in Colombia? Globally, Colombia stands at 87 in the ranking of 183
According to data collected by Doing Business, economies on the ease of trading across borders
exporting a standard container of goods requires 5 (figure 9.1). The rankings for comparator economies
documents, takes 14 days and costs $2270. Importing and the regional average ranking provide other useful
the same container of goods requires 6 documents, information for assessing how easy it is for a business
takes 13 days and costs $2830 (see the summary of in Colombia to export and import goods.
procedures and documents at the end of this chapter
for details).
Figure 9.1 How Colombia and comparator economies rank on the ease of trading across borders


easy (or difficult) it is to export or import in Colombia That can help identify where the potential for
Table 9.1 The ease of trading across borders in Colombia over time
Rank .. .. .. .. .. 83 87
Documents to export
5 5 5 5 5 5 5
(number)
Time to export (days) 34 34 24 14 14 14 14
Cost to export (US$ per

1,745 1,745 1,440 1,690 1,770 1,770 2,270
container)
Documents to import
6 6 6 6 6 6 6
(number)
Time to import (days) 48 35 20 15 14 13 13
Cost to import (US$ per

1,773 1,773 1,440 1,640 1,750 1,700 2,830
container)
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings reflect
changes to the methodology.
Equally helpful may be the benchmarks provided by to improve the ease of trading across borders. And
the economies that today have the best performance changes in regional averages can show where
regionally or globally on the documents, time or cost Colombia is keeping up—and where it is falling
required to export or import (figure 9.2). These behind.
economies may provide a model for Colombia on ways

Figure 9.2 Has trading across borders become easier over time?
Documents to export (number)
Time to export (days)

Cost to export (US$ per container)
Documents to import (number)


Time to import (days)
Cost to import (US$ per container)
indicator.

In economies around the world, trading across borders systems. These changes help improve the trading
as measured by Doing Business has become faster and environment and boost firms’ international
easier over the years. Governments have introduced competitiveness. What trade reforms has Doing
tools to facilitate trade—including single windows, Business recorded in Colombia (table 9.2)?
risk-based inspections and electronic data interchange
Table 9.2 How has Colombia made trading across borders easier—or not?
DB Year Reform
DB2012 No reform.
DB2011 No reform.
Implementation of an electronic declaration system has

DB2010
expedited customs clearance.
Trading across borders was expedited: better banking
services and the implementation of e-payments, electronic
DB2009
data interchange, and coordinated inspections in customs
reduced the time to import and export.

The indicators reported here for Colombia are based freight forwarders, shipping lines, customs brokers,
on a set of specific procedural requirements for port officials and banks. The procedural requirements,
trading a standard shipment of goods by ocean and the associated time and cost, for exporting and
transport (see the section in this chapter on what the importing a standard shipment of goods are listed in
indicators cover). Information on the procedures as the summary below, along with the required
well as the required documents and the time and cost documents.
to complete each procedure is collected from local
Summary of procedures and documents for trading across borders in Colombia
Latin America &

Caribbean
Documents to export (number) 5 6 4
Time to export (days) 14 18 10
Cost to export (US$ per container) 2270 1,257 1,032
Documents to import (number) 6 7 5
Time to import (days) 13 20 11
Cost to import (US$ per container) 2830 1,546 1,085
Procedures to export Time (days) Cost (US$)
Documents preparation 5 315

Customs clearance and technical control 2 250
Ports and terminal handling 3 170
Inland transportation and handling 4 1535
Totals 14 2270
Procedures to import Time (days) Cost (US$)
Documents preparation 6 250

Customs clearance and technical control 2 300
Ports and terminal handling 2 200
Inland transportation and handling 3 2080
Totals 13 2830
Documents to export Documents to import
Bill of lading Bill of lading
Customs export declaration Cargo release order
Commercial invoice Commercial invoice
Certificate of origin Customs import declaration
Inspection report Packing list
Terminal handling receipts

ENFORCING CONTRACTS
Well-functioning courts help businesses expand WHAT THE ENFORCING CONTRACTS

their network and markets. Without effective
INDICATORS MEASURE
contract enforcement, people might well do
business only with family, friends and others with
whom they have established relationships. Where Procedures to enforce a contract through
contract enforcement is efficient, firms are more the courts (number)
likely to engage with new borrowers or customers, Any interaction between the parties in a
and they have greater access to credit. commercial dispute, or between them and
the judge or court officer
Steps to file and serve the case
Doing Business measures the efficiency of the
judicial system in resolving a commercial dispute Steps for trial and judgment
before local courts. Following the step-by-step Steps to enforce the judgment
evolution of a standardized case study, it collects
data relating to the time, cost and procedural Time required to complete procedures
complexity of resolving a commercial lawsuit. The (calendar days)
ranking on the ease of enforcing contracts is the Time to file and serve the case
simple average of the percentile rankings on its
Time for trial and obtaining judgment
component indicators: procedures, time and cost.
Time to enforce the judgment
The dispute in the case study involves the breach
of a sales contract between 2 domestic businesses. Cost required to complete procedures (% of
The case study assumes that the court hears an claim)
expert on the quality of the goods in dispute. This No bribes
distinguishes the case from simple debt
Average attorney fees
enforcement. To make the data comparable across
economies, Doing Business uses several Court costs, including expert fees
assumptions about the case: Enforcement costs
 The seller and buyer are located in the
economy’s largest business city.
 The buyer orders custom-made goods,
 The dispute on the quality of the goods
then fails to pay.
requires an expert opinion.
 The seller sues the buyer before a
 The judge decides in favor of the seller; there
competent court.
is no appeal.
 The value of the claim is 200% of income
 The seller enforces the judgment through a
per capita.
public sale of the buyer’s movable assets.
 The seller requests a pretrial attachment to
secure the claim.
ENFORCING CONTRACTS

How efficient is the process of resolving a commercial Globally, Colombia stands at 149 in the ranking of 183
dispute through the courts in Colombia? According to economies on the ease of enforcing contracts (figure
data collected by Doing Business, enforcing a contract 10.1). The rankings for comparator economies and the
requires 34 procedures, takes 1346 days and costs regional average ranking provide other useful
47.9% of the value of the claim (see the summary at benchmarks for assessing the efficiency of contract
the end of this chapter for details). enforcement in Colombia.
Figure 10.1 How Colombia and comparator economies rank on the ease of enforcing contracts

ENFORCING CONTRACTS

While the most recent Doing Business data reflect how identify which areas have changed and where the
easy (or difficult) it is to enforce a contract in Colombia potential for improvement is greatest (table 10.1).
today, data on the underlying indicators over time help
Table 10.1 The ease of enforcing contracts in Colombia over time

Rank .. .. .. .. .. .. .. 149 149
Time (days) 1,510 1,346 1,346 1,346 1,346 1,346 1,346 1,346 1,346
Cost (% of claim) 47.9 47.9 47.9 47.9 47.9 47.9 47.9 47.9 47.9
the methodology.
ENFORCING CONTRACTS
Equally helpful may be the benchmarks provided by for Colombia on ways to improve the efficiency of
the economies that today have the best performance contract enforcement. And changes in regional
regionally or globally on the number of steps, time or averages can show where Colombia is keeping up—
cost required to enforce a contract through the courts and where it is falling behind.
(figure 10.2). These economies may provide a model
Figure 10.2 Has enforcing contracts become easier over time?
Procedures (number)
Time (days)
ENFORCING CONTRACTS
Cost (% of claim)
indicator.
ENFORCING CONTRACTS
Economies in all regions have improved contract often work on reducing backlogs by introducing
enforcement in recent years. A judiciary can be periodic reviews to clear inactive cases from the docket
improved in different ways. Higher-income economies and by making procedures faster. What reforms
tend to look for ways to enhance efficiency by making it easier (or more difficult) to enforce contracts
introducing new technology. Lower-income economies has Doing Business recorded in Colombia (table 10.2)?
Table 10.2 How has Colombia made enforcing contracts easier—or not?
DB Year Reform
DB2012 No reform.
DB2011 No reform.
DB2010 No reform.
DB2009 No reform.
ENFORCING CONTRACTS

The indicators reported here for Colombia are based regulations, as well as through surveys completed by
on a set of specific procedural steps required to local litigation lawyers (and, in a quarter of the
resolve a standardized commercial dispute through economies covered by Doing Business, by judges as
the courts (see the section in this chapter on what the well). The procedures for resolving a commercial
indicators cover). These procedures, and the time and lawsuit, and the associated time and cost, are listed in
cost of completing them, are identified through study the summary below.
of the codes of civil procedure and other court
Summary of procedures for enforcing a contract in Colombia—and the time and cost
Latin America &

Caribbean
Time (days) 1346 707.78 518.03
Filing and service 68
Trial and judgment 913
Enforcement of judgment 365
Cost (% of claim) 47.9 31.21 19.71
Attorney cost (% of claim) 23.2
Court cost (% of claim) 12.6
Enforcement Cost (% of claim) 12.1
Procedures (number) 34 40.03 31.42

RESOLVING INSOLVENCY
A robust bankruptcy system functions as a filter, WHAT THE RESOLVING INSOLVENCY
ensuring the survival of economically efficient
companies and reallocating the resources of INDICATORS MEASURE
inefficient ones. Fast and cheap insolvency
proceedings result in the speedy return of Time required to recover debt (years)
businesses to normal operation and increase
Measured in calendar years
returns to creditors. By improving the expectations
of creditors and debtors about the outcome of Appeals and requests for extension are
insolvency proceedings, well-functioning included
insolvency systems can facilitate access to finance, Cost required to recover debt (% of debtor’s
save more viable businesses and thereby improve estate)
growth and sustainability in the economy overall.
Measured as percentage of estate value
Court fees
Doing Business studies the time, cost and outcome
Fees of insolvency administrators
of insolvency proceedings involving domestic
entities. It does not measure insolvency Lawyers’ fees
proceedings of individuals and financial Assessors’ and auctioneers’ fees
institutions. The data are derived from survey
Other related fees
responses by local insolvency practitioners and
verified through a study of laws and regulations as Recovery rate for creditors (cents on the
well as public information on bankruptcy systems. dollar)
The ranking on the ease of resolving insolvency is Measures the cents on the dollar recovered
based on the recovery rate, which is recorded as by creditors
cents on the dollar recouped by creditors through Present value of debt recovered
reorganization, liquidation or debt enforcement
(foreclosure) proceedings. The recovery rate is a Official costs of the insolvency proceedings
are deducted
function of time, cost and other factors, such as
lending rate and the likelihood of the company Depreciation of furniture is taken into
continuing to operate. account
To make the data comparable across economies, Outcome for the business (survival or not)
Doing Business uses several assumptions about the affects the maximum value that can be
business and the case. It assumes that the recovered
company:
 Is a domestically owned, limited liability
company operating a hotel.
 Has 201 employees, 1 main secured creditor
 Operates in the economy’s largest business and 50 unsecured creditors.
city.
 Has a higher value as a going concern—and
the efficient outcome is either reorganization
or sale as a going concern, not piecemeal
liquidation.

Speed, low costs and continuation of viable businesses Globally, Colombia stands at 12 in the ranking of 183
characterize the top-performing economies. How economies on the ease of resolving insolvency (figure
efficient are insolvency proceedings in Colombia? 11.1). The rankings for comparator economies and the
According to data collected by Doing Business, regional average ranking provide other useful
resolving insolvency takes 1.3 years on average and benchmarks for assessing the efficiency of insolvency
costs 1% of the debtor’s estate. The average recovery proceedings in Colombia.
rate is 82.8 cents on the dollar.
Figure 11.1 How Colombia and comparator economies rank on the ease of resolving insolvency


While the most recent Doing Business data reflect the changed—and where it has not (table 11.1). That can
efficiency of insolvency proceedings in Colombia help identify where the potential for improvement is
today, data over time show where the efficiency has greatest.
Table 11.1 The ease of resolving insolvency in Colombia over time

Rank .. .. .. .. .. .. .. 29 12
Time (years) 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 1.3
Cost (% of estate) 1 1 1 1 1 1 1 1 1
Recovery rate (cents on

55.7 55.0 55.1 57.7 58.3 52.8 52.8 62.4 82.8
the dollar)
the methodology. ―No practice‖ indicates that in each of the previous 5 years the economy had no cases involving a judicial
reorganization, judicial liquidation or debt enforcement procedure (foreclosure). This means that creditors are unlikely to recover
their money through a formal legal process (in or out of court). The recovery rate for ―no practice‖ economies is 0.
Equally helpful may be the benchmarks provided by on ways to improve the efficiency of insolvency
the economies that today have the best performance proceedings. And changes in regional averages can
regionally or globally on the time or cost of insolvency show where Colombia is keeping up—and where it is
proceedings or on the recovery rate (figure 11.2). falling behind.
Figure 11.2 Has resolving insolvency become easier over time?
Time (years)
Cost (% of estate)
Recovery rate (cents on the dollar)
A well-balanced bankruptcy system distinguishes change. Many recent reforms of bankruptcy laws have
companies that are financially distressed but been aimed at helping more of the viable businesses
economically viable from inefficient companies that survive. What insolvency reforms has Doing Business
should be liquidated. But in some insolvency systems recorded in Colombia (table 11.2)?
even viable businesses are liquidated. This is starting to
Table 11.2 How has Colombia made resolving insolvency easier—or not?
DB Year Reform
Colombia amended regulations governing insolvency

DB2012 proceedings to simplify the proceedings and reduce their
time and cost
DB2011 No reform.
Several decrees were passed continuing efforts to regulate

DB2010
the profession of insolvency administrators.
Authorities also introduced two new insolvency proceedings:
a reorganization procedure to restructure insolvent
companies and a mandatory liquidation procedure. Its new
DB2009 insolvency law tightens time limits for negotiating
reorganization agreements. Before, the term allowed was six
months, with a possible extension of eight months. The new
law limits the term to four months, and the extension to two.
DATA NOTES
The indicators presented and analyzed in Doing
Business measure business regulation and the ECONOMY CHARACTERISTICS
protection of property rights—and their effect on
businesses, especially small and medium-size domestic
firms. First, the indicators document the complexity of
Gross national income (GNI) per capita
regulation, such as the number of procedures to start a
business or to register and transfer commercial Doing Business 2012 reports 2010 income per capita
property. Second, they gauge the time and cost of as published in the World Bank’s World Development
achieving a regulatory goal or complying with Indicators 2011. Income is calculated using the Atlas
method (current US$). For cost indicators expressed
regulation, such as the time and cost to enforce a
as a percentage of income per capita, 2010 GNI in
contract, go through bankruptcy or trade across
U.S. dollars is used as the denominator. Data were
borders. Third, they measure the extent of legal not available from the World Bank for Afghanistan;
protections of property, for example, the protections Australia; The Bahamas; Bahrain; Brunei Darussalam;
of investors against looting by company directors or Canada; Cyprus; Djibouti; the Islamic Republic of
the range of assets that can be used as collateral Iran; Kuwait; New Zealand; Oman; Puerto Rico
according to secured transactions laws. Fourth, a set of (territory of the United States); Qatar; Saudi Arabia;
indicators documents the tax burden on businesses. Suriname; Taiwan, China; the United Arab Emirates;
Finally, a set of data covers different aspects of West Bank and Gaza; and the Republic of Yemen. In
employment regulation. these cases GDP or GNP per capita data and growth
rates from the International Monetary Fund’s World
The data for all sets of indicators in Doing Business Economic Outlook database and the Economist
3
2012 are for June 2011. Intelligence Unit were used.
Region and income group
Methodology Doing Business uses the World Bank regional and
income group classifications, available at
The Doing Business data are collected in a
http://www.worldbank.org/data/countryclass. The
standardized way. To start, the Doing Business team, World Bank does not assign regional classifications
with academic advisers, designs a questionnaire. The to high-income economies. For the purpose of the
questionnaire uses a simple business case to ensure Doing Business report, high-income OECD
comparability across economies and over time—with economies are assigned the ―regional‖ classification
assumptions about the legal form of the business, its OECD high income. Figures and tables presenting
size, its location and the nature of its operations. regional averages include economies from all
Questionnaires are administered through more than income groups (low, lower middle, upper middle
9,028 local experts, including lawyers, business and high income).
consultants, accountants, freight forwarders, Population
government officials and other professionals routinely
administering or advising on legal and regulatory Doing Business 2012 reports midyear 2010
population statistics as published in World
requirements. These experts have several rounds of
Development Indicators 2011.
interaction with the Doing Business team, involving
conference calls, written correspondence and visits by
the team. For Doing Business 2012 team members The Doing Business methodology offers several
visited 40 economies to verify data and recruit advantages. It is transparent, using factual information
respondents. The data from questionnaires are about what laws and regulations say and allowing
subjected to numerous rounds of verification, leading multiple interactions with local respondents to clarify
to revisions or expansions of the information collected. potential misinterpretations of questions. Having
representative samples of respondents is not an issue;
3
The data for paying taxes refer to January – December 2010.
Doing Business is not a statistical survey, and the texts entrepreneurs reported in the World Bank Enterprise
of the relevant laws and regulations are collected and Surveys or other perception surveys.
answers checked for accuracy. The methodology is
inexpensive and easily replicable, so data can be
collected in a large sample of economies. Because Subnational Doing Business indicators
standard assumptions are used in the data collection, This year Doing Business published a subnational study
comparisons and benchmarks are valid across
for the Philippines and a regional report for Southeast
economies. Finally, the data not only highlight the
Europe covering 7 economies (Albania, Bosnia and
extent of specific regulatory obstacles to business but Herzegovina, Kosovo, the former Yugoslav Republic of
also identify their source and point to what might be
Macedonia, Moldova, Montenegro and Serbia) and 22
reformed.
cities. It also published a city profile for Juba, in the
Information on the methodology for each Doing Republic of South Sudan.
Business topic can be found on the Doing Business
The subnational studies point to differences in
website at http://www.doingbusiness.org/methodology/.
business regulation and its implementation—as well as
in the pace of regulatory reform—across cities in the
same economy. For several economies subnational
Limits to what is measured studies are now periodically updated to measure
The Doing Business methodology has 5 limitations that change over time or to expand geographic coverage
should be considered when interpreting the data. First, to additional cities. This year that is the case for the
the collected data refer to businesses in the economy’s subnational studies in the Philippines; the regional
largest business city and may not be representative of report in Southeast Europe; the ongoing studies in
regulation in other parts of the economy. To address Italy, Kenya and the United Arab Emirates; and the
this limitation, subnational Doing Business indicators projects implemented jointly with local think tanks in
were created (see the section on subnational Doing Indonesia, Mexico and the Russian Federation.
Business indicators). Second, the data often focus on a
Besides the subnational Doing Business indicators,
specific business form—generally a limited liability
Doing Business conducted a pilot study this year on
company (or its legal equivalent) of a specified size—
the second largest city in 3 large economies to assess
and may not be representative of the regulation on
within-country variations. The study collected data for
other businesses, for example, sole proprietorships.
Rio de Janeiro in addition to São Paulo in Brazil, for
Third, transactions described in a standardized case
Beijing in addition to Shanghai in China and for St.
scenario refer to a specific set of issues and may not
Petersburg in addition to Moscow in Russia.
represent the full set of issues a business encounters.
Fourth, the measures of time involve an element of
judgment by the expert respondents. When sources Changes in what is measured
indicate different estimates, the time indicators
reported in Doing Business represent the median The methodology for 3 of the Doing Business topics
values of several responses given under the was updated this year—getting credit, dealing with
assumptions of the standardized case. construction permits and paying taxes.
Finally, the methodology assumes that a business has First, for getting credit, the scoring of one of the 10
full information on what is required and does not components of the strength of legal rights index was
waste time when completing procedures. In practice, amended to recognize additional protections of
completing a procedure may take longer if the secured creditors and borrowers. Previously the
business lacks information or is unable to follow up highest score of 1 was assigned if secured creditors
promptly. Alternatively, the business may choose to were not subject to an automatic stay or moratorium
disregard some burdensome procedures. For both on enforcement procedures when a debtor entered a
reasons the time delays reported in Doing Business court-supervised reorganization procedure. Now the
2012 would differ from the recollection of highest score of 1 is also assigned if the law provides
secured creditors with grounds for relief from an
automatic stay or moratorium (for example, if the regulatory environment for local entrepreneurs in each
movable property is in danger) or sets a time limit for economy has changed over time.
the automatic stay.
Ease of doing business
Second, because the ease of doing business index now
The ease of doing business index ranks economies
includes the getting electricity indicators, procedures,
from 1 to 183. For each economy the ranking is
time and cost related to obtaining an electricity
calculated as the simple average of the percentile
connection were removed from the dealing with
rankings on each of the 10 topics included in the index
construction permits indicators.
in Doing Business 2012: starting a business, dealing
Third, a threshold has been introduced for the total tax with construction permits, registering property, getting
rate for the purpose of calculating the ranking on the credit, protecting investors, paying taxes, trading
ease of paying taxes. All economies with a total tax across borders, enforcing contracts, resolving
rate below the threshold (which will be calculated and insolvency and, new this year, getting electricity. The
adjusted on a yearly basis) will now receive the same employing workers indicators are not included in this
ranking on the total tax rate indicator. The threshold is year’s aggregate ease of doing business ranking. In
not based on any underlying theory. Instead, it is addition to this year’s ranking, Doing Business presents
meant to emphasize the purpose of the indicator: to a comparable ranking for the previous year, adjusted
highlight economies where the tax burden on business for any changes in methodology as well as additions of
4
is high relative to the tax burden in other economies. economies or topics.
Giving the same ranking to all economies whose total
Construction of the ease of doing business index
tax rate is below the threshold avoids awarding
economies in the scoring for having an unusually low Here is one example of how the ease of doing business
total tax rate, often for reasons unrelated to index is constructed. In the Republic of Korea it takes 5
government policies toward enterprises. For example, procedures, 7 days and 14.6% of annual income per
economies that are very small or that are rich in capita in fees to open a business. There is no minimum
natural resources do not need to levy broad-based capital required. On these 4 indicators Korea ranks in
th th rd
taxes. the 18 , 14 , 53 and 0 percentiles. So on average
st
Korea ranks in the 21 percentile on the ease of
th
starting a business. It ranks in the 12 percentile on
Data challenges and revisions th
getting credit, 25 percentile on paying taxes, 8
th
th
percentile on enforcing contracts, 7 percentile on
Most laws and regulations underlying the Doing
resolving insolvency and so on. Higher rankings
Business data are available on the Doing Business
indicate simpler regulation and stronger protection of
website at http://www.doingbusiness.org. All the
property rights. The simple average of Korea’s
sample questionnaires and the details underlying the st
percentile rankings on all topics is 21 . When all
indicators are also published on the website. Questions
economies are ordered by their average percentile
on the methodology and challenges to data can be
rankings, Korea stands at 8 in the aggregate ranking
submitted through the website’s ―Ask a Question‖
on the ease of doing business.
function at http://www.doingbusiness.org.
More complex aggregation methods—such as
principal components and unobserved components—
Ease of doing business and distance to
frontier 4
In case of revisions to the methodology or corrections to the
underlying data, the data are back-calculated to provide a
This year’s report presents results for 2 aggregate comparable time series since the year the relevant economy or topic
measures: the aggregate ranking on the ease of doing was first included in the data set. The time series is available on the
business and a new measure, the ―distance to frontier.‖ Doing Business website (http://www.doingbusiness.org). The Doing
While the ease of doing business ranking compares Business report publishes yearly rankings for the year of publication
as well as the previous year to shed light on year-to-year
economies with one another at a point in time, the
developments. Six topics and more than 50 economies have been
distance to frontier measure shows how much the added since the inception of the project. Earlier rankings on the ease
of doing business are therefore not comparable.
yield a ranking nearly identical to the simple average Consider the example of Canada. It stands at 12 in the
5
used by Doing Business. Thus, Doing Business uses aggregate ranking on the ease of doing business. Its
the simplest method: weighting all topics equally and, ranking is 3 on both starting a business and resolving
within each topic, giving equal weight to each of the insolvency, and 5 on protecting investors. But its
6
topic components. ranking is only 59 on enforcing contracts, 42 on
trading across borders and 156 on getting electricity.
If an economy has no laws or regulations covering a
specific area—for example, insolvency—it receives a Variation in performance across the indicator sets is
―no practice‖ mark. Similarly, an economy receives a not at all unusual. It reflects differences in the degree
―no practice‖ or ―not possible‖ mark if regulation exists of priority that government authorities give to
but is never used in practice or if a competing particular areas of business regulation reform and the
regulation prohibits such practice. Either way, a ―no ability of different government agencies to deliver
practice‖ mark puts the economy at the bottom of the tangible results in their area of responsibility.
ranking on the relevant indicator.
Economies that improved the most across 3 or more
The ease of doing business index is limited in scope. It Doing Business topics in 2010/11
does not account for an economy’s proximity to large
Doing Business 2012 uses a simple method to calculate
markets, the quality of its infrastructure services (other
which economies improved the most in the ease of
than services related to trading across borders and
doing business. First, it selects the economies that in
getting electricity), the strength of its financial system,
2010/11 implemented regulatory reforms making it
the security of property from theft and looting, its
easier to do business in 3 or more of the 10 topics
macroeconomic conditions or the strength of 7
included in this year’s ease of doing business ranking.
underlying institutions.
Thirty economies meet this criterion: Armenia, Burkina
Variability of economies’ rankings across topics Faso, Burundi, Cape Verde, the Central African
Republic, Chile, Colombia, the Democratic Republic of
Each indicator set measures a different aspect of the
Congo, Côte d'Ivoire, The Gambia, Georgia, Korea,
business regulatory environment. The rankings of an
Latvia, Liberia, FYR Macedonia, Mexico, Moldova,
economy can vary, sometimes significantly, across
Montenegro, Morocco, Nicaragua, Oman, Peru, Russia,
indicator sets. The average correlation coefficient
São Tomé and Príncipe, Senegal, Sierra Leone,
between the 10 indicator sets included in the
Slovenia, the Solomon Islands, South Africa and
aggregate ranking is 0.36, and the coefficients
Ukraine. Second, Doing Business ranks these
between any 2 sets of indicators range from 0.17
economies on the increase in their ranking on the ease
(between protecting investors and getting electricity)
of doing business from the previous year using
to 0.57 (between starting a business and protecting
comparable rankings.
investors). These correlations suggest that economies
rarely score universally well or universally badly on the Selecting the economies that implemented regulatory
indicators. reforms in at least 3 topics and improved the most in
the aggregate ranking is intended to highlight
economies with ongoing, broad-based reform
programs.
5
See Simeon Djankov, Darshini Manraj, Caralee McLiesh and Rita
Ramalho, ―Doing Business Indicators: Why Aggregate, and How to Distance to frontier measure
Do It‖ (World Bank, Washington, DC, 2005). Principal components
This year’s report introduces a new measure to
and unobserved components methods yield a ranking nearly
identical to that from the simple average method because both
illustrate how the regulatory environment for local
these methods assign roughly equal weights to the topics, since the businesses in each economy has changed over time.
pairwise correlations among indicators do not differ much. An The distance to frontier measure illustrates the
alternative to the simple average method is to give different weights distance of an economy to the ―frontier‖ and shows
to the topics, depending on which are considered of more or less
importance in the context of a specific economy.
6 7
A technical note on the different aggregation and weighting Doing Business reforms making it more difficult to do business are
methods is available on the Doing Business website subtracted from the total number of those making it easier to do
(http://www.doingbusiness.org). business.
the extent to which the economy has closed this gap The difference between an economy’s distance to
over time. The frontier is a score derived from the most frontier score in 2005 and its score in 2011 illustrates
efficient practice or highest score achieved on each of the extent to which the economy has closed the gap to
the component indicators in 9 Doing Business indicator the frontier over time.
sets (excluding the employing workers and getting
The maximum (max) and minimum (min) observed
electricity indicators) by any economy since 2005. In
values are computed for the 174 economies included
starting a business, for example, New Zealand has
in the Doing Business sample since 2005 and for all
achieved the highest performance on the time (1 day),
years (from 2005 to 2011). The year 2005 was chosen
Canada and New Zealand on the number of
as the baseline for the economy sample because it was
procedures required (1), Denmark and Slovenia on the
the first year in which data were available for the
cost (0% of income per capita) and Australia on the
majority of economies (a total of 174) and for all 9
paid-in minimum capital requirement (0% of income
indicator sets included in the measure. To mitigate the
per capita).
effects of extreme outliers in the distributions of the
Calculating the distance to frontier for each economy rescaled data (very few economies need 694 days to
involves 2 main steps. First, individual indicator scores complete the procedures to start a business, but many
th
are normalized to a common unit. To do so, each of need 9 days), the maximum (max) is defined as the 95
the 32 component indicators y is rescaled to (y − percentile of the pooled data for all economies and all
min)/(max − min), with the minimum value (min) years for each indicator.
representing the frontier—the highest performance on
Take Colombia, which has a score of 0.21 on the
that indicator across all economies since 2005. Second,
distance to frontier measure for 2011. This score
for each economy the scores obtained for individual
indicates that the economy is 21 percentage points
indicators are aggregated through simple averaging
away from the frontier constructed from the best
into one distance to frontier score. An economy’s
performances across all economies and all years.
distance to the frontier is indicated on a scale from 0
Colombia was further from the frontier in 2005, with a
to 100, where 0 represents the frontier and 100 the
score of 0.43. The difference between the scores shows
lowest performance.
an improvement over time.
RESOURCES ON THE DOING BUSINESS WEBSITE
Current features Doing Business reforms

News on the Doing Business project Short summaries of DB2012 business regulation
http://www.doingbusiness.org reforms, lists of reforms since DB2008 and a
ranking simulation tool
Rankings http://www.doingbusiness.org/reforms/
How economies rank—from 1 to 183
http://www.doingbusiness.org/rankings/ Historical data
Customized data sets since DB2004
Reports http://www.doingbusiness.org/custom-query/
Access to Doing Business reports as well as
subnational and regional reports, reform case Law library
studies and customized economy and regional Online collection of business laws and
profiles regulations relating to business and gender
http://www.doingbusiness.org/reports/ issues
http://www.doingbusiness.org/law-library/
Methodology http://wbl.worldbank.org/
The methodologies and research papers
underlying Doing Business Contributors
http://www.doingbusiness.org/methodology/ More than 9,000 specialists in 183 economies
who participate in Doing Business
Research http://www.doingbusiness.org/contributors/doing-
Abstracts of papers on Doing Business topics business/
and related policy issues
http://www.doingbusiness.org/research/

Doingbusiness COL2012

Uploaded by

Copyright:

Available Formats

Doingbusiness COL2012

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Doingbusiness COL2012

Uploaded by

Copyright:

Available Formats

Economy Profile:

All rights reserved.

Printed in the United States

THE BUSINESS ENVIRONMENT

For policy makers trying to improve their economy’s

The aggregate ranking on the ease of doing business

THE BUSINESS ENVIRONMENT

Source: Doing Business database.

THE BUSINESS ENVIRONMENT

Source: Doing Business database.

THE BUSINESS ENVIRONMENT

Figure 1.3 How Colombia ranks on Doing Business topics

Source: Doing Business database.

THE BUSINESS ENVIRONMENT

THE BUSINESS ENVIRONMENT

Table 1.1 Summary of Doing Business indicators for Colombia

Best performer globally

Procedures (number) 9 9 14 15 13 13 6 5 Canada (1)*

Time (days) 14 14 26 50 119 56 9 26 New Zealand (1)

Cost (% of income per

Paid-in Min. Capital (%

Procedures (number) 8 8 25 14 17 16 10 16 Denmark (5)

Time (days) 46 46 365 249 469 128 81 188 Singapore (26)*

Cost (% of income per

Best performer globally

Procedures (number) 5 5 6 8 6 6 7 5 Germany (3)*

Time (days) 165 165 67 42 34 89 114 100 Germany (17)

Cost (% of income per

Procedures (number) 7 7 7 7 13 9 7 4 Portugal (1)*

Time (days) 15 20 53 92 39 16 74 7 Portugal (1)

Getting Credit (rank) 67 64 67 126 98 78 40 24 United Kingdom (1)*

Strength of legal rights

Public registry coverage

Private bureau coverage

Best performer globally

Ease of shareholder suits

Payments (number per

Trading Across Borders

Hong Kong SAR,

Cost to export (US$ per

Time to import (days) 13 13 16 23 17 25 12 17 Singapore (4)

Cost to import (US$ per

Best performer globally

Procedures (number) 34 34 36 40 45 39 38 41 Ireland (21)*

Cost (% of estate) 1 1 12 15 12 18 18 7 Singapore (1)*

Recovery rate (cents on

Where does the economy stand today?

Figure 2.1 What it takes to start a business in Colombia

Source: Doing Business database.

What are the changes over time?

Table 2.1 The ease of starting a business in Colombia over time

Cost (% of income per

Figure 2.3 Has starting a business become easier over time?

Paid-in minimum capital (% of income per capita)

Colombia reduced the costs associated with starting a

Business start-up was made easier by creating a public-

What are the details?

Open a bank account and deposit the nominal capital

To open an account at a branch of a commercial bank, the owner