Doctrinal developments regarding the tax treatment of tax havens in Colombia

Recently, the Colombian Tax Authority (DIAN) issued some legal concepts (private rulings), regarding operations with tax havens countries. DIAN provided the following:

1. Dividends of a Colombian Company accrued to a company resident in a tax haven country, are not subject to withholding tax, if such dividends were taxed at the Colombian company level, in accordance to provisions of Article 49 of the Colombian Tax Code.
2. If there is no obligation to withhold on a payment to a tax haven resident, because it is deemed to be as a non-domestic source income, this payment is deductible under the provisions of Article 260-7 of the Colombian Tax Code, if proven the reality and transparency of the operation.
3. Payments to bank accounts located in tax havens are tax deductible, if beneficiaries are non-residents in such jurisdictions. Withholdings of Article 124-2 of the Colombian Tax Code, are not applicable.
4. The appointment of a Colombian attorney, to act on behalf of a tax heaven Company, that is shareholder of a Colombian Company, does not constitute a permanent establishment in Colombia, since the company performs no other activity in the country.

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