viernes, 16 de diciembre de 2016

Colombia introduces tax reform bill with transfer pricing elements

Colombia’s Ministry of Finance on October 19 introduced a structural tax reform bill that would introduce changes to the current transfer pricing regime. A summary of the most important reforms follows.

Comparable uncontrolled price method (Art. 105)
In line with Action 10 of the OECD’s Base Erosion and Profit Shifting (BEPS) Project, the proposed bill provides that for transactions involving the trading of raw materials or basic products (commodities), the comparable uncontrolled price (CUP) method could be considered (but is not mandatory) as the appropriate transfer pricing method to establish the arm´s length price in those transactions. Quoted prices in the open market may be used as a reference under this method. If necessary, comparability adjustments may be made to increase comparability. A relevant factor to be taken into account is the pricing date, which refers to a date or specific time period selected by the parties to establish the price of the transaction, which must be demonstrated by a duly registered contract with the terms established by the national government. If the taxpayer does not have such information or the pricing date is not clearly defined, the tax
authority may assume that the correct pricing date could be the shipping date defined in the corresponded documentation.

Transfer pricing report (Art. 106)
Given Colombia’s commitment to and active participation in the BEPS project, the tax reform bill considers changes in the formal transfer pricing duties of taxpayers that are aligned with BEPS Action 13. These proposed changes include
the obligation to file a master file with comprehensive information regarding the multinational group, a local file with information on each type of transaction entered into by the taxpayer, and a country-by-country (CbC) report that must contain information regarding the global allocation of income and taxes paid for each and every one of the companies comprising the group, among other indicators regarding its global economic activity.
The threshold for the requirement to file a CbC report is 81,000,000 UVT (Tributary Units), equivalent to USD 800 million in consolidated income of the headquarters domiciled in Colombia.

Formal penalties regarding the support documentation and transfer pricing informative return (Art. 109)
The tax reform bill amends Article 260-11 of the Tax Code, and introduces a more aggressive penalty regime, including new type of penalty (i.e., correction of the supporting documentation) and clarifying the current regime.
Congress is expected to vote on the bill before the end of the calendar year; if approved, the measures would be enacted by January 1, 2017.

Source & more info: Deloitte

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