Two months have passed since the Structural Tax Reform was enacted. Within this period, here at Lloreda Camacho, we have advised our clients through the implementation process and have identified the Top 5 challenges that companies, their management team and their financial and accountancy staff have to face towards the Tax Reform implementation.
1. Increase of the “income tax expense” and the consequent impact on the company’s annual budget due to the application of IFRS for tax purposes, changes on methods and cost basis for depreciation and amortization and the offsetting scheme applicable to carry forwards.
2. Non-fulfillment of the Internal Rate of Return promised to shareholders as a consequence of the new tax on dividends.
3. Risk of non-fulfillment and complexity of provisions regulating payroll withholding taxes and VAT rate changes.
4. Characterization, accounting and taxation on both intangible assets and investments for exploration and development of mines and Oil & Gas assets.
5. New international tax rules (such as CFC and BEPS) that affect inbound/outbound investments and corporate structures with business presence in Colombia.
The complexity of the new tax rules and the lack of further ruling by the tax authorities, lead to a situation where the Tax Reform implementation is considered a slow and expensive process that might cause fines and penalties both to companies and managers.
At Lloreda Camacho, our Tax Department has aided several companies to identify, assess and calculate the impact of the Tax Reform and further, to come up with solutions towards a quick and effective tax implementation process.
Our tax advisors will gladly assist the legal, financial and accounting areas of your organization to easily apply the new tax provisions in Colombia and to reduce the negative impact of the Tax Reform on the company’s profits.
We will gladly clarify any question on this matter