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Colombia Updates Tax Laws For FY2013

The Government in Colombia introduced several new tax laws in 2012, which are to come into effect in FY2013. Taxand Colombia takes a look at the key tax updates affecting corporates.


Tax residence
Companies which are deemed as Colombian residents:

  • Are domiciled or incorporated in Colombia
  • Have administrative offices in Colombia
  • Hold Board meetings in Colombia
  • Colombia is where commerical and management decisions are made and it's where the administrators execute their responsibilities

Permanent establishment (PE)
Activities that do not constitute a PE are:

  • Activities that are considered exclusively auxiliary or preparatory, including those carried out by dependent agents
  • Independent Agents, provided that they act in the ordinary course of bussiness and their remuneration is agreed at market prices and conditions

Foreign tax credit
There are special rules for dividends obtained from foreign entities, which include:

  • The amount of discount
  • Social interest
  • Fiscal nature of shares or quotas
  • Limits to the discount
  • Proof of payment abroad
  • Enforceability

Thin capitalisation rules

  • Limits to deductible interests: Interests generated by liabilities of which the total average amount during the year does not exceed the amount resulting from multiplying three times the liquid net worth registered at 12/31 of the previous year
  • Non deductible interests: The ratio of interests that exceed the abovementioned limit

Transfer Pricing
The transfer pricing regulations were modified as regards the assumptions of relation between parties, as a consequence the arm's length principle is applied to operation between related parties.

Discover more: Colombian tax updates for FY2013

Your Taxand contact for further queries is:
Mauricio Pineros Perdomo
T. +57 1 319 2900

Taxand's Take

The Colombian Government has introduced numerous and varied updates and amends to tax laws which will affect both resident corporations and multinationals alike. All companies are recommended to review the new tax laws and implement changes to their tax reporting as necessary.

Taxand's Take Author