Our transfer pricing service seeks to ensure that our clients maintain the profitability of their businesses by complying with the country’s regulations without affecting their tax base.
Transfer Pricing Service
For this reason, we provide up-to-date advice on the transfer pricing service from our headquarters in Bogotá, Colombia, which covers accounting, tax and legal issues on the administration and avoidance of double taxation for branches of foreign companies.
- Preparation and preparation of supporting documentation (functional analysis and economic analysis) for transactions subject to the regime.
- Completion and filing of the individual transfer pricing information return
What is transfer pricing in Colombia?
Transfer pricing is a study of the economic value of transactions between related companies.
How is transfer pricing regulated in Colombia?
- In Colombia, transfer pricing is regulated under Decree 3030 of 2013.
In the tax statute, the regulations concerning transfer pricing in Colombia are as follows:
- Art. 260-1 defines the criteria for economic linkage
- Art. 260-2 establishes the taxable persons and the independent operator principle.
- Art. 260-3 sets out the methods for determining the transfer price or profit margin in linked transactions.
Who is obliged to submit transfer prices in Colombia?
According to the regulations, companies that are obliged to submit transfer prices must have 2 characteristics:
- Companies whose gross assets on the last day of the taxable year or period are equal to or greater than the equivalent of 100,000 UVT or whose gross income for the respective year is equal to or greater than the equivalent of 61,000 UVT and which enter into transactions with related parties in accordance with the provisions of Articles 260-1 and 260-2 of the Tax Statute are obliged to submit transfer prices.
- Companies resident or domiciled in Colombia that have carried out transactions with persons, companies, entities or enterprises located, resident or domiciled in tax havens, even if their gross assets as at 31 December 2015 or their gross income in the same year were lower than the ceilings indicated in the previous paragraph.
What should be considered when carrying out a transfer pricing study?
The non-wage bonus and/or allowance is not really a wage:
If a worker earns up to 2 SMMLV, even including overtime, transport allowance must be paid.
If a worker earns a sum equal to or greater than 10 SMMLV, it must be taken into account that the exception established in article 114-1 of the E.T. does not apply.
Sunday surcharge and night surcharge are different from overtime.
The worker who earns a sum equal to or greater than 4 SMMLV. You must make an additional contribution to the pension solidarity fund.
Wage is not only the fixed or variable sum, but any sum received by the worker as remuneration for the service rendered.
When settling the health and pension social security payroll, it should be taken into account that the contribution ceiling is 25 SMMLV.
When settling the social security payroll with regard to parafiscal contributions, it should be taken into account that there is no contribution ceiling.
The basic contribution rate (BCI) for the days on which the worker goes on holiday and/or paid leave is equal to the BCI of the immediately preceding month.
The contribution base rate (IBC), for the days that the worker is incapacitated, is equivalent to the salary contributed by the employer.
Are you in a difficult legal or tax situation?
The transactions it has had with its parent company or related companies should be verified and it should be established whether these have been for indebtedness, purchase transactions, sale transactions, interest or other concepts.
Once the existence of the transactions has been established, you should check whether the amount of the transactions requires you to make an informative declaration or a full transfer pricing study including supporting information or documentation.
In Colombia, the amounts that require the submission of supporting documentation and/or transfer pricing documentation are as follows:
To be subject to informative declaration, you must have gross assets equal to or greater than (one hundred thousand) 100,000 UVT or gross income equal to or greater than (sixty thousand) 60,000 UVT.
You will have to prepare a local report by carrying out a study for the types of operation indicated in article 22.214.171.124.3.2 of decree 2120 of 2017, whose accumulated annual amount exceeds (forty-five thousand) 45,000 UVT.
In order to be subject to supporting documentation, you must prepare a study for the types of transactions described in article 126.96.36.199.3.2 of decree 2120 of 2017 whose cumulative annual amount exceeds (ten thousand) 10,000 UVT.
If, in addition, the company subject to local reporting is part of a multinational group (GM), it must submit a so-called master report. A GM is composed of more than 2 companies whose tax residence is located in different jurisdictions.