Who deducts ICA withholdings in a joint venture in Colombia?

When a company teams up with another to bid on a Colombian government contract, almost all the attention goes to the proposal, the bonds and the experience each partner brings. Taxes are usually left for later. And that is exactly where, years down the road, the tax inquiries show up.

One of the questions contractors ask us most is this: if the public entity withheld ICA (the municipal industry and commerce tax) from the joint venture, can I, as a member, deduct my share in my own return? The temptation is understandable. The money was withheld on income that, in the end, is also mine. But the Council of State has just said no, and the reasoning makes sense once you look at the whole system.

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First, how the rule works

Article 54 of Law 1430 of 2010, as amended by Law 1607 of 2012, is confusingly worded and for years led municipalities to interpret it differently. Since ruling 28351 of 2024, the Fourth Section of the Council of State has read it this way: the ICA taxpayer is each member of the consortium or joint venture, because the vehicle has no legal personality or assets of its own. But the one who files is the vehicle's representative.

In practical terms: the tax belongs to the partners, but the return is filed by the consortium or joint venture. And for tax purposes the court sees no reason to treat a consortium and a joint venture (unión temporal) differently; that distinction matters to the contracting entity, not to the tax authority.

With that in mind, the two cases below are two sides of the same coin.

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Hyundai in Bello: what the consortium already paid cannot be charged twice

Hyundai Engineering Co. Ltd. Sucursal Colombia held a 20% stake in Consorcio Aguas de Aburrá HHA, together with Hyundai Engineering & Construction and Acciona Agua, to build the wastewater treatment plant contracted by Aguas Nacionales EPM. The consortium registered in Bello and declared and paid ICA for those years.

Even so, the municipality summoned Hyundai to file. In 2021 the branch filed its own returns for 2016 to 2019 showing zero tax, because the income was already in the consortium's returns. Bello disagreed: it argued that the taxpayer was the consortium member, added that income, assessed the tax and imposed an inaccuracy penalty. It even asked the Council of State to change its 2024 position.

In its ruling of March 27, 2025 (case 29137), the Council of State did not change it. It upheld the annulment of the assessments: if the consortium had already paid tax on that income, charging it again to the member was double taxation. And it accepted that Hyundai reported that income in its own return as excluded or non-taxable.

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Grupo ASD in Bogotá: what the joint venture did not declare cannot be fixed by the partner

Grupo Asesoría en Sistematización de Datos S.A.S. (Grupo ASD) was a member of three joint ventures that provided services to the National Civil Registry in 2018: Unión Temporal Consultas 2018, UT SIE Consulta Anticorrupción 2018 and UT Soluciones Informáticas Electorales. The Registry withheld ICA from them, but none of the three joint ventures filed a return in Bogotá.

Grupo ASD then did what seemed reasonable at first sight: in its returns for the 3rd, 4th and 5th bimonthly periods of 2018 it reported that income as non-taxable activities and, on top of that, deducted from its own tax its share of the withholdings. Its argument was that the rule was unclear, that other cities allow it and that the tax had already been paid through withholding.

Bogotá's Tax Office rejected the withholdings and imposed an inaccuracy penalty. The Administrative Court of Cundinamarca sided with the city, and the Council of State upheld that decision in its ruling of October 1, 2026 (case 31305), with an order to pay costs.

The interesting part is the reasoning. In Bogotá, article 21 of Decree 469 of 2011 says that the joint venture files through its representative, and that a member who files ICA for other activities subtracts from its tax base the amount declared by the joint venture, based on the representative's certificate. The rule talks about subtracting income, not about taking withholdings. And that makes sense: a withholding is an advance payment of the tax, so only whoever declares the income it was withheld on can deduct it.

Citing Medellín's revenue code did not help either: what another municipality says does not define how the rules apply in Bogotá. And two arguments Grupo ASD raised only on appeal, such as the city having closed similar investigations for other years, were not examined because they had not been raised in the lawsuit.

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How I read these two rulings

Many will present them as contradictory decisions: one for the taxpayer and one against. In my view they are not. They are the same rule applied to two different situations. Income and its withholding travel together and are declared in the same place: the joint vehicle. If the vehicle complies, the partner is protected. If it does not, the partner cannot fill that gap from its own return.

That is why, in my experience, the real risk for a business owner is not in their own books but in the joint venture's. It is very common for the vehicle to be formed for a contract, for the work to be done and for nobody to take charge of the municipal returns. When the inquiry arrives, the joint venture has already been wound up and the problem lands on the partners.

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What I would check in your company

If you contract with the Colombian government through a consortium or joint venture, these are the questions I would ask today:

• Is the vehicle filing ICA in every municipality where the contract is performed? It is the partner's first line of defense, as the Hyundai case shows.
• Are the withholdings being deducted in the vehicle's return? That is where they belong, not in yours.
• Do you have the representative's certificate with your share of the income? In Bogotá it is the support to subtract it from your own tax base.
• Does your return include withholdings that were actually made to the consortium or joint venture? If so, review it with your advisor before the tax authority does.
• Do you know each municipality's rules? Each one has its own procedure, and one city's rules are no defense in another.

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