As from 1 January 1998, income derived by nonresidents from technical assistance and technical services rendered from abroad are subject to a final withholding tax of 10%, which covers both the income tax and remittance surtax.
New rules regulate the use of tax benefits, including:
- a general limitation according to which the same economic fact cannot give rise to more than one tax benefit for each taxpayer; and
- introduction of a minimum income tax rule to limit the effects of tax credits. Under the rule, a taxpayer's income tax liability after all pertinent credits have been taken cannot be less than 3.75% of the taxpayer's net worth (2.5% for taxpayers whose only credits are CERTs).
Additional requirements have also been imposed for enjoying the tax benefits included in the "Paez Law", and special provisions have been added to regulate the income tax treatment of contributions to pension funds made by employers.
Services are deemed to be supplied in the place of the supplier, unless the services relate to:
- immovable property, in which case they are deemed to be supplied in the place where the property is situated;
- cultural, artistic, cargo and warehouse activities, in which case they are deemed to be supplied where the activities are carried out; or
- licenses and the exploitation of intangible property, leasing of movable property (excluding ships and aircraft used for international transport) and consultancy, translation, insurance and reinsurance services; in these cases, the services are deemed to be supplied in the place of the recipient.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
For further information contact Mario Andrade, Deloitte & Touche, Santafe de Bogota, Colombia on Tel: +57 1 256 1548, Fax: +57 1 256 1557