1.DEVELOPMENTS IN THE CUSTOMS REGULATION AND FOREIGN TRADE
Government regulated customs procedures of exports - new requirements were established for the Programs of Plan Vallejo of Raw materials; July 30 is the last day to present information on raw materials matters.
With Resolution 5656 of June 15, 2010, the National Customs and Taxes Director complemented the regulation of the customs procedures, in physical supports, to advance with the operations of the exports established in the Resolution 4240 of 2000. The new regulation determines the procedures to follow in cases where the IT electronic services have contingencies in their operation, in order to file the request of authorization of shipment, by using the physical supports of the forms or written documents established by the DIAN. Additionally, it establishes the requirements for the physical delivery of the Export Declaration with the autographed signature to obtain the corresponding certification of shipment with the manifest of shipment delivered by the carrier. Finally, it stipulates that this regulation will be applied equally to the procedures that have been initiated with the IT electronic services, which presented flaws during their development.
This new regulation modifies the grounds and procedures to present declaration of correction in documents corresponding to the export operations in Special Systems of Import / Export Plan Vallejo. Corrections are allowed, in the following cases:
- When the dates of shipment are subsequent to the authorization of indirect operations.
- When inconsistencies are detected opposite to the consumption pictures (input) - product and the Declaration of Export.
- Declaration in exceptional cases, fully valid and demonstrated, to indicate that the operation corresponds to the Special Systems of Import - Export,
- The cases of application of an untimely way of input - product pictures with presentation on a later date of the shipment but in the term of demonstration of commitments.
Only for this last case it is necessary an authorization to correct the information. The Division of Management of Customs Records of the DIAN must give this authorization.
With Resolutions 2236 and 2237 of 2010, of March 11, 2010, the National Direction of Taxes and Customs (DIAN) regulated relevant aspects for the operation of the Special Systems of Import - Export (Plan Vallejo). The above-mentioned resolutions established a new requirement of information to the users of the Raw Materials and Inputs Programs (commodities) by making an update of the Tables Input Product – Cuadros Insumo Producto ("CIP"), as well as a requirement for the constitution of a guarantee in case of acknowledgement of a temporary re-import of products in operations in the use of Plan Vallejo.
Resolution 2236 of 2010 the DIAN regulated Resolution 3133 of 2008, which established the technical characteristics, procedures and steps for approval of the information of the CIP under programs of Plan Vallejo of Raw Materials and Inputs. The above-mentioned Resolution established that for the CIP's approved before the 1st of June 2008, the legislation that would apply is the one of the date of its submission.
Nevertheless, by means of the new Resolution 2236 of 2010, the DIAN indicates a term for the realization of the update of information of the CIP for the users of the Special Systems of Import - Export who were proceeding with them accordingly to the legislation that applied before the 1st of June 2008.
These users of Plan Vallejo must proceed to do the update of the information in the new format of the CIP before July 30, 2010.
Once the above term has been fulfilled, the Division of Customs Record of the DIAN will proceed to evaluate the corresponding studies of demonstration of the export commitments of the Raw Materials and Inputs Programs considering the information that has been presented to them by the users.
It is important to highlight that the regulation indicates that in this case, the possibility of authorized extension of the term for the demonstrations of export commitments indicated in the article 28.2 of the Resolution 1860 of 1999 of the Incomex is not applicable, if the non presentation of the studies of demonstration was due to the lack of updating the CIP required by the DIAN.
On the other hand, through the Resolution 2237 of 2010 the DIAN complemented the Resolution 4240 of 2000, regarding the obligation of the constitution of a warranty when a temporary re-import of products is made, in the frame of an operation in development of a Program of Special Systems of Import - Export Plan Vallejo.
Hereby, the users of these programs who have performed a customs operation of temporary re-import of a good or product that has been exported in fulfillment of a Program of Plan Vallejo, and that has been re-imported later on as a consequence of the devolution done by the buyer, will be forced to constitute a warranty to be able to end the temporary re-import of the goods that had been previously exported.
The DIAN establishes that the final purpose is to guarantee the finalization of the temporary re-import, that can be done with the re-export of the good or the elaborated product or by means of its definitive re-import, making the proper payment of the customs taxes for the components of foreign origin, and making the payment of the applicable sanction in each particular case.
To fulfill the re-import operation, the guarantee must be valid for one year counted from the approval of the DIAN. During this period the good or elaborated product must be re-exported or else it will have to be nationalized. Also, the guarantee will have to be studied and approved by the Division of Management of the Operation Customs.
Government modifies the regime of export of services and clarifies requirements for the record and the exemption of the VAT in the export of cross border services.-
With Decision 1805 of May 24, 2010, the National Government established important modifications to the regime of exports of services, established in Colombia in the Decree 2681 of 1999 and in its Tax Statute. This regime of foreign trade and of record of operations of export of services allows to accredit and to endure access to tax benefits of VAT exemptions applicable to the exports of services.
The new Decree 1805 of 2010 regulates the literal (e), article 481 of the Tax Statute, indicating the scope and requirements to endure the access to the benefit of the exemption of VAT applicable to the operations of exports of services given in Colombia.
The regulation states that this benefit is applicable when the services are materially given from the Colombian territory, to be used exclusively outside Colombia, without the displacement of the lender or supplier of the service.
The VAT exemption indicated in the new regulation decree, will be only applicable for the exports of services when they supply a cross-border service, correspondent to the provision of services established according to the General Agreement of Services (GATS) from the World Trade Organization WTO, adopted by Colombia by Law 170 of 1994. The other different modes to supply services are not included in this regulation.
The intention of this new regulation was to eliminate the difficulties of interpretation that were present in the previous legislation. It stated that the only beneficiaries of the exemption of VAT were the operations or services done by companies or its foreign representatives that had no business or activities in Colombia.
Since Decree 1805 of 2010, the relation between the supplier of the services and the beneficiary of the service outside of Colombia is no longer considered a business activity in Colombia. Therefore, in these cases the service could have the VAT exemption, if the services rendered from Colombia, are used exclusively and totally outside of Colombia.
Additionally, Decree 1805 of 2010, modified the procedure and the opportunity to fulfill the obligation of record of the written declaration of the contracts of export of services before the VUCE (Ventana Única de Comercio Exterior), Ministry of Industry Trade, and Tourism.
First of all, it was established that the moment of registration of the corresponding record must be formalized before supplying the service.
This regulation tries to clarify the aspects of opportunity in the procedure of the record of the written declarations on the contracts of export of services, which are topics treated in the Sentence of March 11, 2010, of the Advice (Council) of State in its fourth section, in the Process Not. 16469 C.P. Judge Martha Teresa Briceño of Valencia.
The Advice Council of State (Consejo de Estado) had declared, in his jurisprudence, the partial nullity of one part of Article 6 of the Decree 2681 of 1999, which established that the opportunity of request of the record of the written declaration of the contracts of export of services had to be "Before to the refund of the currencies ".
When the Advice Council of State (Consejo de Estado) declared the nullity of this rule, it indicated that "since the exchange regime does not demand the refund of currencies if there is export of services and the tax regime does not hold the exemption of the VAT to the record of contracts of services previous to the exchange refund, the marked act could not limit the tax benefit to the fulfillment of the above mentioned temporary requirement." This way, the record of these declarations of the contracts of export of services did not have to be before the refund of currencies when they were received for the payment of the service.
With this new regulation of the Decree 1805 of 2010, article 6 of the Decree 2685 of 1999 was suppressed. Therefore, the record of the operations of export of services must be formalized before the initiating the supply of the service, presenting the declaration before the VUCE, regardless of when the currency refund of the payment of the exported service is done.
Finally, it is important to review the situation of the export of services performed by companies that have the need of displacement to another country in order to render the services. According to the new regulation of Decree 1805 of 2010, these services cannot benefit from the tax credit above mentioned. Therefore under this regulation the benefit of exemption of the VAT would be excluded as it is also the obligation to register the contracts of export of services before VUCE of the Minister of Industry, Trade and Tourism for the case of export services given out of Colombia. Even though it is an export operation, it is not a cross-border supply of services.
2. NEW ADVANCES IN THE FREE TRADE AGREEMENTS
Canada approved FTA with Colombia
Last June 30, 2010, the Department of Trade, Industry and Tourism of Colombia, stated that the law that approves and implements the Free Trade Agreement between Colombia and Canada received "Royal Assent" from the Governor General and it is now a law in this country. The law was approved by the Canadian Parliament, after having being discussed and approved by the majority of both chambers.
In Colombia, the National Congress by means of the Law 1363 of December 9, 2009 has approved the text of the Free Trade Agreement. It has also been sanctioned by the President of the Republic and submitted by him for the Constitutional control of the Constitutional Court. Currently, since June 8 of 2010, the full room of the Constitutional Court has begun the Constitutional study under the expedient LAT 359. Once these internal procedures are finished, both Countries will be able to proceed to ratify the Agreement for its entry into force.
Both countries signed the Free Trade Agreement on November 28, 2008 in Lima, Peru. It includes parallel agreements for the labor cooperation and the protection of the environment.
The Department of Trade, Industry and Tourism indicated that with the approval of the agreement the Colombian exporters will be able to access a market of approximately 34 Million people. Likewise it represents a preferential access for 97.9 % and 99.8 % of the universe of the customs taxes of the agricultural sector and of the industrial goods respectively.
The total Canadian investment in Colombia between 2002 and 2009 was USD $1.036 millions. Regarding the flow of trade it passed from 490 millions of dollars to USD $1.067 million in only 6 years. Colombia, additionally, increased its exports in USD $59 million in only one year. In 2008 it exported USD $326 millions, registering for the year 2009 a value of USD $385 million in his exports to Canada.
With the implementation of this international agreement, the Government expects that new investments will come to the country in sectors such as telecommunications, hydrocarbons, mining industry paper industry and general products and food.
Once the Free Trade Agreement with Canada enters in force it will complement the important list of Colombian Agreements of Free Trade in which it has access for products and services in extended markets. Currently the main agreements in effect include the regional Agreements established in ALADI's frame like the Economic Complementation Agreement with Mercosur, partial scope agreements in Latin America, the agreement Caricom, the Agreement of the CAN (Andean Community of Nations), Agreement G-2 (Mexico), Agreement with countries of the North Triangle of Central America (Salvador, Honduras and Guatemala), and the Agreement with Chile.
Likewise, agreements with EFTA's European countries, and with the countries of the European Market, have been negotiated. Also, agreements with other countries like Panama and Korea are in process of negotiation.
Additionally, Colombia has advanced also in the negotiation and subscription of Agreements for the Protection of Investments, apart from the agreement with Spain and the recent agreement with the United Kingdom. Soon negotiations with Kuwait will initiate.
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.