Corporate Tax 2010 - BMR Advisors

Cárdenas & Cárdenas Abogados Ltda.
Colombia
3.7 Are there any restrictions on tax relief for interest
payments by a local company to a non-resident in addition
to any thin capitalisation rules mentioned in questions
3.4-3.6 above
laws in Colombia allow for a deductible expense of 40% of the
investment value of productive tangible fixed assets used to
generate taxable income which generates a difference between
accounting and tax accounts.
Colombia
Not applicable to this jurisdiction.
3.8 Does Colombia have transfer pricing rules
Yes, transfer pricing rules have been in effect since taxable year
2004 and are applied exclusively to transactions with related parties
domiciled abroad.
4.5 Are there any tax grouping rules Do these allow for relief
in Colombia for losses of overseas subsidiaries
No such rules exist in Colombia.
4.6 Is tax imposed at a different rate upon distributed, as
opposed to retained, profits
4 Tax on Business Operations: General
4.1 What is the headline rate of tax on corporate profits
Currently, the headline rate of tax on corporate profits is 33%.
4.2 When is that tax generally payable
For companies other than large taxpayers, corporation tax is usually
due and the first quota is payable during the month of April of the
year following that which is being filed. The specific dates when
the returns are to be filed depend on the two last digits of the
taxpayers ID and are set by means of Resolution of the Colombian
Tax Authorities (DIAN). The second quota is to be paid in the
month of June of that same year. First and second quotas are paid
in equal parts.
Large Taxpayers are defined as such through a Resolution of the
Colombian Tax Authorities (DIAN). Large taxpayers must pay the
first quota in February of the year following that which is being
filed. The first quota is equivalent to 20% of the amount payable of
the tax return of the previous taxable year. Any balance must be
paid to the tax authorities as follows: (i) 35% of the balance at the
time the return is filed in May of that same year; (ii) 30% of the
balance in June; (iii) 25% of the balance in August; and (iv) the
final 10% in October of that same year.
4.3 What is the tax base for that tax (profits pursuant to
commercial accounts subject to adjustments; other tax
base)
The income tax base is the higher between the ordinary taxable
income (profits pursuant to commercial accounts subject to
adjustments) and the presumptive income (3% of the liquid net
worth as of December 31 of the previous taxable year).
Tax is not imposed at a different rate to retained profits in
Colombia.
4.7 What other national taxes (excluding those dealt with in
“Transaction Taxes”, above) are there - e.g. property taxes,
etc.
There is an equity tax that is payable over the companies net equity.
The accrual of such tax takes place on January 1 of each year and
the tax rate is equivalent to 1.2%. Only net equities of US$1.6
million or higher are taxed. This tax is initially enforceable through
2010, though there is currently a Bill in Congress promoted by the
Government to further extend the tax and to lower its base.
4.8 Are there any local taxes not dealt with in answers to
other questions
In Colombia there are local taxes over the gross income of the
companies. This tax is called Industry and Commerce Tax
(Rollover Tax) and is payable in each municipality where
companies develop and carry out industrial, commercial or services
activity. The rates vary in the case of Bogotá (Colombia’s Capital)
from 0.5% to 1.38%.
There is municipal tax over real estate. These taxes also apply
according to each municipality. This tax accrues on January 1 of
each year and the rates vary according to the real estate. In general
terms rates vary in the case of Bogotá from 0.2% to 3.3%.
There is also a municipal tax over vehicles. In the case of Bogota
the rates vary from 1.5% to 2.5% over the total list price of the
vehicle. This list price is determined by the national government
through an official resolution.
5 Capital Gains
48
4.4 If it otherwise differs from the profit shown in commercial
accounts, what are the main other differences
Certain items of expenditure are shown as reducing the profits in
the commercial accounts but are not allowed from a tax point of
view. For example, expenses incurred abroad which have not been
subject to income tax withholding have a limited deductibility.
Penalties paid for tax purposes are not tax deductible. Accounting
provisions are not tax deductible. Expenses that have been
accounted for in a specific taxable year can be rejected if the
expense corresponds to a different taxable year.
On the other hand, there are certain tax benefits that allow for a
greater expense than that allowed for tax purposes. Currently, tax
5.1 Is there a special set of rules for taxing capital gains and
losses
Yes, there is a special set of rules for taxing capital gains and losses.
Before the enforcement of the inflation adjustment regime (2006),
capital gains and losses were included in the determination of the
ordinary taxable income.
5.2 If so, is the rate of tax imposed upon capital gains
different from the rate imposed upon business profits
Except for the capital gains originated in prizes, lotteries, bets and
equivalents, which are subject to a 20% rate, the same business
profit rate is applicable.
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