The Transfer Pricing (TP) regime is aligned with the international standards established by Action 13 of the BEPS OECD / G20 project, adapting the scope of the supporting documentation and defining the following formal duties.
- Local File or TP report
- TP Informative Return
- Master File
- Country by Country Report or the associated notification
| Taxpayers subject to the TP regime | ||
|---|---|---|
| Requirements | TUV (Tax Unit Value) | Amount |
| If your gross equity of the fiscal year 2019 is equal to or greater than: | 100.000 | COP 3.427.000.000 (Approx. USD 1.048.000) |
| Or if your gross income of the fiscal year 2019 is equal to or greater than: | 61.000 | COP 2.090.470.000 (Approx. USD 639.000) |
If the taxpayer complies with any of the above requirements, and also performed transactions with:
- Foreign related parties;
- Local related parties located in free trade zones;
- Permanent establishments (branches);
- Joint ventures and other associative structures that do not create societies.
Then, taxpayers must submit to DIAN (local tax authority) the formal duties listed above.
If the company carries out transactions with enterprises located in tax havens, whether they are related parties or not, it must comply with the fulfillment of the formal TP obligations regardless of the gross equity and gross income caps of the table above.
Local File
The Local File must contain the studies, documents and other supports with which the taxpayer of income tax prove that its incomes, costs, deductions, assets and liabilities acquired in the respective fiscal year complied with the Arm's Length principle.
Informative Return
The informative return contains a list of operations carried out with foreign related parties together with the results of the TP analyses reported in the Local File.
Master File
The Master File should provide an overview of the business of the Multinational Group including the nature of its worldwide economic activities, its general TP policies and its global allocation of revenues, risks and costs.
Country by Country Report
Since fiscal year 2016, taxpayers subject to TP regime who fulfill assumptions of numeral 2, section 260-5 of the Tax Code, must submit the Country by Country Report. However, this obligation is commonly in the head of the headquarters or corporate.
Attribution Report for Permanent Establishments
On the other hand, the Permanent Establishments must take into account the formal duties that must be accomplished in Colombia when they are taxpayers of the income tax with respect to the national source incomes that are attributable to them.
For the determination of said charges, it must be carried out based on criteria of functions, assets, risks and personnel involved defined with a Revenue Attribution Report.
The law considers Permanent Establishments to be any type of business vehicle of foreign companies such as branches, agencies, offices, factories, workshops, mines, quarries, oil and gas wells, or any other place of extraction or exploitation of natural resources.
Due Dates
The companies that must submit the TP Informative Return and the Local File, should file them using the virtual channels previous validation of the last digit of the NIT (local tax code) considering the following due dates:
| Last digit of tax code | Date |
|---|---|
| 0 | July 7, 2020 |
| 9 | July 8, 2020 |
| 8 | July 9, 2020 |
| 7 | July 10, 2020 |
| 6 | July 13, 2020 |
| 5 | July 14, 2020 |
| 4 | July 15, 2020 |
| 3 | July 16, 2020 |
| 2 | July 17, 2020 |
| 1 | July 21, 2020 |
On the other hand, the companies that must submit the Master File and the Country by Country Report, should file them using the virtual channels previous validation of the last digit of the NIT (local tax code) considering the following due dates:
| Last digit of tax code | Date |
|---|---|
| 0 | December 10, 2020 |
| 9 | December 11, 2020 |
| 8 | December 14, 2020 |
| 7 | December 15, 2020 |
| 6 | December 16, 2020 |
| 5 | December 17, 2020 |
| 4 | December 18, 2020 |
| 3 | December 21, 2020 |
| 2 | December 22, 2020 |
| 1 | December 23, 2020 |
Do not hesitate to contact us, we are at your disposal for any concern. Bear in mind that the TP Penalties Regime is onerous, in consequence, we strongly recommend to accomplish the TP formal duties on time.
About Dentons
Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
