Audit of international operations

The implementation of the beneficial owner registration by all Colombian companies, and their obligation to update it as soon as there is any change in this regard, will change the control of international operations in Colombia, to which special anti-abuse regimes apply.

Thus, operations that until now seemed imperceptible in Colombia -thanks to this new regime- will be notified to the Dian by the taxpayer, thus facilitating its control. This is, for example, the case of indirect disposals, mergers and spin-offs between foreign entities and operations with companies that have their Effective Administration Headquarters ("SEA") in Colombia.

The indirect alienation regime (established in Article 90-3 of the Tax Statute) establishes that "the indirect alienation of shares in companies, rights or assets located in the national territory, through the alienation, in any title, of shares, participations or rights of foreign entities, is taxed in Colombia as if the alienation of the underlying asset had been carried out directly". Without a regime such as that of the beneficial owner, which reverses the burden of proof and assigns to the Colombian companies -among others- the obligation to register and update the same before the Dian, the control of this regime would be limited to "miraculous catches" made by the tax authority in response to special exchanges of information or information provided by third parties.

The same happens with the regime for auditing mergers and spin-offs between foreign entities, which is a special regime (prior to the generic regime of indirect disposals) introduced to our legislation by Law 1607 of 2012, and of whose specific application little is known. Through this regime "it will be understood that the transfer of assets located in the country, as a result of merger or spin-off processes, in which foreign entities that own assets located in the national territory intervene as transferors and acquirers, constitutes a disposal for tax purposes".

Also, since Law 1607/2012 it was established that foreign companies and entities with “SEA” in Colombia, that is, foreign companies and entities whose commercial and management decisions are adopted in the country, would be considered as domestic companies for tax purposes. Through Resolution 0018 of March 27, 2018, the Dian created the Audit Committee for the determination of the SEA indicating for this purpose -again and again- that the decision on the existence of this situation is declarative and not constitutive. This implies the possibility that the Dian can make a retroactive audit, making the corresponding assessments and imposing penalties for not declaring the past periods in which the foreign company did not file its corresponding tax returns in Colombia. To this must be added, unfortunately, the fact that the new crime of tax fraud has as one of its governing verbs the "failure to declare" when obliged to do so. Given that one of the parties obliged to provide information on beneficial owners are foreign companies or entities with “SEA” in Colombia, the control of these entities will increase considerably.