Worldwide transfer pricing reference guide 2014

Colombia (continued)
Priorities/pricing methods (continued)
• With regard to the payment of services abroad, the taxpayer must demonstrate that the services were in fact received, and that there is
a benefit for the Colombian entity. Moreover, it is necessary to prove that the fee paid complies with the arm’s length principle.
• Company restructurings which include redistribution of functions, assets and risks, must comply with the arm’s length principle.
Transfer pricing penalties
The Colombian transfer pricing regime penalizes both the supporting documentation and the return, however it is important to mention
that the tax bill introduced in 2012 modified some aspects of the penalties applied. The following penalties apply: 1
Transfer pricing documentation
• Late filing — Starting at US$212 limited to US$203.427
• Information inconsistencies — 1% of the value of the transactions reported with inconsistencies that were carried out with related parties,
limited to US$53.682
• Omitted information (transactions) — 2% of the value of the omitted transactions carried out with related parties, limited to US$282.537.
Additionally, rejection of cost and expenses related to the omitted operations may apply
• Omitted information (related parties located in tax havens) — 4% of the total value of the transactions carried out with related parties,
limited to US$141.268. Additionally, rejection of cost and expenses related to the omitted operations may apply
Transfer pricing return
• Late filing — Starting at US$141 limited to US$135.618
• Information inconsistencies — 0.6% of the total value of the transactions carried out with related parties, limited to US$32.209
• Omitted information (transactions) — 1.3% of the total value of the transactions carried out with related parties, limited to US$282.537.
Additionally, rejection of cost and expenses related to the omitted operations may apply
• Omitted information (related parties located in tax havens) — 2.6% of the total value of the transactions carried out with related parties,
limited to US$84.761. Additionally, rejection of cost and expenses related to the omitted operations may apply
• Non-filing of the transfer pricing return — 10% of the total value of the transactions carried out with related parties, limited to
US$282.537
The penalties mentioned above do not include additional fines and penalties that taxpayers incur for the amendment of income tax
returns or transfer pricing adjustments.
Penalty relief
The transfer pricing regime gives taxpayers in Colombia penalty relief, as mentioned below:
Transfer pricing documentation
• Reduced sanction (before the tax authority’s penalty order)
• If the taxpayer amends its transfer pricing documentation for the inconsistencies or omissions, before the tax authority issues its
penalty order, the penalty will be reduced to 50% of the amount determined in the official assessment
Transfer pricing return
• Reduced sanction (before the tax authorities penalty order)
• When the taxpayer amends its transfer pricing return for the inconsistencies or omissions, before the tax authority issues its penalty
order, the penalty will be reduced to 50% of the amount determined in the official assessment
• The transfer pricing return can be voluntary amended for two years from the original date of filing
1 The amounts in US$ are applicable for taxable year 2013 and are subject to changes because of the exchange rate and the tax value unit (UVT).
Worldwide transfer pricing reference guide
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