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PERMANENT ESTABLISHMENTS WOULD BE SUBJECT TO TAX IN COLOMBIA ON ATTRIBUTABLE WORLDWIDE INCOME

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PERMANENT ESTABLISHMENTS WOULD BE SUBJECT TO TAX IN COLOMBIA ON ATTRIBUTABLE WORLDWIDE INCOME

International taxation

Following some recommendations from the OECD, the bill proposes to broader the taxable income attributable to permanent establishments in Colombia

 

The bill includes the obligation for permanent establishment and branches of foreign entities to include attributable foreign-source income when computing their taxable income in Colombia. Under current law, in computing the attributable taxable income, permanent establishments are only required to include Colombian-source income.

If the proposed amendment is approved, foreign entities would need to take into consideration sound transfer-pricing-based economic and functional analysis to determine also the foreign-source income that may be attributable to their permanent establishments or branches in Colombia as of taxable year 2019.