On 10 July 1997, the Colombian Congress passed, and the Colombian president signed, Law 383, which introduces increased taxes for foreign investors in certain situations as follows:
- Technical services and assistance contracts performed offshore for Colombian businesses are now subject to a 10% withholding tax on the income arising for income and remittance tax purposes. Previously, such services performed offshore were not subject to withholding tax as they were not considered Colombian-source income.
- The scope of value added tax (VAT) is extended to include professional consulting, audit, and other related services as these services are now deemed to be rendered at the Colombian beneficiary's place of business. It is not clear whether VAT must be withheld on such services performed offshore.
The stamp tax on contractual instruments with a price greater than the equivalent of approximately US$6,000 is increased from 0.5% to 1%.
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