DECREE OF THE MINISTRY OF FINANCE
The Ministry of Finance amends foreign exchange regulations
The amended guidelines establish new criteria for determining the residency in Colombia for foreign exchange purposes
Through its Decree No. 119 of 2017, the Ministry of Finance made amendments to the current foreign exchange regime in Colombia (in-bound and out-bound investments). Within these changes, it is worth mentioning the following:
- The criteria for establishing the residency of an individual in Colombia for foreign exchange purposes was modified, adopting an objective criteria currently used for tax purposes. According to the amendment, are residents in Colombia for foreign exchange purposes the “Colombian citizens living in Colombia or foreign nationals who remain continuously or discontinuously in Colombia for a period of more than one hundred eighty-three (183) days, including the days of entry and exit of the country, during a period of three hundred and sixty-five consecutive days (365)“;
- Additionally, the concept of in-bound direct investments in Colombia was redefined. The new definition restricts its scope to the acquisition of the assets listed in article 188.8.131.52.1.2 of Decree 1068 of 2015. Also, the decree includes as a criteria to determine whether an investment from abroad is considered a direct investment in Colombia, that the acquisition of the Colombian asset has been made by a non-resident “by virtue of a legal act, contract or operation”; and
- On the other hand, changes were included regarding the legal representation in Colombia of foreign investors. Under the new regulation, investors can name a different proxy for each of their investment operations in the country. However, in future, in the case of portfolio investments the representation may only be exercised by “brokerage firms, trust companies or investment management firms, subject to the inspection and supervision of the Financial Superintendence of Colombia”.
Finally, it is important to bear in mind that these new regulations will enter into force after the Central Bank of Colombia issues a Regulatory Circular with regards to this topic. The issuance of this document shall be carried out within the next six (6) months.