Written by: Juan Guillermo Ruiz
If the buyer is a non-resident foreign company or individual, the acquisition of stock of a Colombian company will not be subject to VAT and will not generate a taxable income for the buyer. The foreign non-resident buyer is not deemed to apply income tax withholding on this acquisition.
From a tax perspective the acquisition of business assets will be subject to VAT at a 16 per cent rate depending on the nature of such assets. Please note that the sale of fixed assets, receivables, real estate, deferred assets and other intangibles are not subject to VAT. Basically, VAT will apply to inventories. If the buyer is a foreign entity, it may be required to incorporate a branch.
For exit purposes, please note that the tax basis of the stock will be its historical cost plus a yearly inflationary step-up. The tax basis for assets will be their historical cost plus a yearly inflationary step-up, minus their accumulated depreciation or amortisations…