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NEW COMMITTEE OF THE TAX AUTHORITY TO DETERMINE THE EXISTENCE OF EFFECTIVE PLACE OF MANAGEMENT

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NEW COMMITTEE OF THE TAX AUTHORITY TO DETERMINE THE EXISTENCE OF EFFECTIVE PLACE OF MANAGEMENT

Corporate Income Tax

By means of the Resolution No. 18 of 2018, the Colombia Tax Authority created the “Auditor Committee for determining an Effective Place of Management

  

Article 12-1 of the Colombian Tax Code establishes that foreign companies and entities are considered as domestic companies for tax purposes if the commercial and relevant decisions are taken by the directors within the Colombian territory, because it would be understood that its effective place of management is in Colombia.

The purpose of the recently created committee is to evaluate the facts and circumstances that could lead to conclude that a foreign company or entity has its effective place of management in Colombia.

Under such scenario, the foreign company or entity with its effective place of management in Colombia would have to comply with tax liabilities as a Colombian company, inclusively in regard to prior years.