Corporate Tax 2010 - BMR Advisors

Cárdenas & Cárdenas Abogados Ltda.
Colombia
5.3 Is there a participation exemption
No, there is not.
6.4 Would such a branch be subject to a branch profits tax (or
other tax limited to branches of non-resident companies)
No, there has been no branch profit (remittance) tax since 2007.
5.4 Is there any special relief for reinvestment
No, there is not.
6 Branch or Subsidiary
6.5 Would a branch benefit from tax treaty provisions, or some
of them
The answer depends on the definitions provided for in each specific
treaty, and there are no domestic laws regulating this issue.
Colombia
6.1 What taxes (e.g. capital duty) would be imposed upon the
formation of a subsidiary
There is the need to pay notary fees, calculated on the amount of
capital destined to the formation of the company at a 0.27% rate
plus VAT at 16% and there is a registration tax calculated on the
same base at a 0.7% rate.
6.6 Would any withholding tax or other tax be imposed as the
result of a remittance of profits by the branch
No, there is no withholding tax or other tax imposed as the result of
a remittance of profits by the branch. Remember that the branch is
subject to taxes in Colombia at the same tax rate of any other
company established in the country.
6.2 Are there any other significant taxes or fees that would be
incurred by a locally formed subsidiary but not by a
branch of a non-resident company
In general terms, a locally formed subsidiary and a branch of a nonresident
company are subject to the same taxes and fees. Both are
subject to a corporate tax at the same rate but in the case of
subsidiaries they are subject to worldwide income tax as opposed to
braches of non-resident companies which are subject only to
Colombian source income.
6.3 How would the taxable profits of a local branch be
determined
Taxable profits of the branch are determined in the same way as for
local companies as described in question 4.3.
7 Anti-avoidance
7.1 How does Colombia address the issue of preventing tax
avoidance For example, is there a general anti-avoidance
rule or a disclosure rule imposing a requirement to
disclose avoidance schemes in advance of the company’s
tax return being submitted
There is no general anti-avoidance rule in Colombia. However,
based on the Constitutional principle of substance over form there
is some jurisprudence and official doctrine stating that economic
reality will prevail over legal forms if such are abused to reduce
taxation. This jurisprudence and official doctrine has been scarcely
applied in practice.
ICLG TO: CORPORATE TAX 2010
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