Transfer pricing in Colombia

Transfer pricing in Colombia at a glance

Regulation Type National regulations with reference to the OECD
Are there specific transfer pricing regulations? Yes
Submission deadline July of each year
Submission deadline upon request N/A
Annual update required Yes
Official language requirements Spanish
Potential impact of penalties N/A

 

Colombian tax law

Rules for transfer pricing in Colombia are based upon:

  • Tax Code Articles 260-1 to 260-11
  • Decree 3030 of 2013
  • Tax Code Articles 260-1 to 260-11, 20-2 and 319

OECD

Colombia is not an OECD member but it generally follows the OECD Transfer Pricing Guidelines. In the national regulations it is decided that the OECD Guidelines and its commentaries are an auxiliary source of guidance and interpretation for the national regulations.

Methods

Accepted methods 

Accepted methods are:

  • The comparable uncontrolled price method
  • The resale price method
  • The cost plus method
  • The profit split method
  • The transactional net margin method

Priority of methods

Rules for transfer pricing in Colombia prescribe that the most appropriate method should be used.

Documentation requirements

Information that should be included in the documentation:

Rules for transfer pricing in Colombia prescribe that taxpayers should prepare supporting documentation that supports the assertion that each transaction with foreign related parties complies with the arm’s length principle.  The documentation should in any case include the following information:

  • a functional analysis (organizational structure, business description, functions, assets, risks and detailed information of the intercompany transactions, among others)
  • a macroeconomic analysis
  • an industry analysis
  • an economical analysis

Language

Transfer pricing documentation in Colombia should be submitted in Spanish. Sometimes it is accepted that some appendix can be in English, but the tax authorities can always ask for a translation.

Requirements to prepare documentation annually 

A taxpayer in Colombia is required to submit a complete transfer pricing report annually.

Submission deadline upon request by tax authorities

Not applicable.

Advance Pricing Agreements

General

Since 2004 it is possible to obtain Advance Pricing Agreements (APA) in Colombia.

Terms

The term for which an APA can be agreed upon is five years.

Penalties

Rules for transfer pricing do no prescribe specific transfer pricing penalties, meaning that ordinary penalties apply.

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