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EXCHANGE RATE APPLICABLE FOR OPERATIONS IN FOREIGN CURRENCY

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EXCHANGE RATE APPLICABLE FOR OPERATIONS IN FOREIGN CURRENCY

Income Tax  

The National Government ruled by means of Decree No. 1453 of 2018 the exchange rate taxpayers must apply for operations in a foreign currency different than US dollar 

 

The last tax reform added section 288 to the Colombian Tax Code. This section establishes that revenues, costs, deductions, assets and liabilities in foreign currency have to be measured according to the Market Representative Rate (MRR) at the time of the initial recognition.

Recently, the National Government, by means of the Decree No. 1453 of 2018, replaced section 1.1.3 of the Decree 1625 of 2016 in order to adjust it to section 288 of Colombian Tax Code.

In addition, the Decree established that in the case of transactions in a foreign currency different than the US dollar, the taxpayers must: (i) convert the foreign currency to US dollar, in accordance with the exchange rate of the day of the operation; and (ii) once the foreign currency has been expressed into dollars, make the conversion to Colombian pesos, in accordance with the MRR of the day of the operation.