The Colombia simplified limited company (SAS) this entity is only required by law to appoint a statutory auditor if its total assets exceed USD $1,655,000 or if its annual turnover exceeds $994,000. The SAS must also appoint at least 1 legal representative who must live in Colombia. A Colombia SAS needs to file an annual tax return, requires a tax registration certificate and financial statement. The corporate tax rates is at 25%.

The Colombia limited liability company (Ltda.) This entity is not required to appoint a statutory auditor unless either I. its assets exceed $1,655,000 or II. its annual turnover exceeds USD $994,000. A Colombia Ltad. needs to file an annual tax return, requires a tax registration certificate and financial statement. The corporate tax rates is at 25%.

A Colombia SA is required by law to appoint a statutory auditor. A Colombia SA needs to file an annual tax return, requires a tax registration certificate and financial statement. The corporate tax rates is at 15% - 25%.

A Colombia branch office must appoint a statutory auditor. The entity is subject to a higher corporate tax than most at a rate of 33%. A Colombia branch office needs to file an annual tax return, requires a tax registration certificate and financial statement. The corporate tax rates is at 33%.

A Colombia representative office does not need to file an annual tax return and no tax registration certificate or financial statements are required. The is no corporate tax.

A statutory audit is not required for an LLC, SLC, and Rep Office, but is required for a PLC and Branch Office, all of which are regulated by the Bogota Chamber of Commerce. In Colombia the taxable period is the calendar year, with no exceptions being admissible, with return filing due dates set by the government every year, which usually fall in April. The audit cycle corresponds to the taxable period, which for the case of CIT is one year. The standard statute of limitations is three years (up from two years), from the due date or the date in which the return has been filed if extemporary. According to PwC, “While there are no specific topics to be observed by the tax authorities when performing an audit, usually they look at the formal compliance requirements, the correct application and deductibility of cost and expenses, and the inclusion of all assets of the taxpayer.”

There are special proceeding rules that must be applied if the Colombian Tax Authority defines that a taxpayer has incurred abusive practices. Again, according to PwC, “Such proceeding includes issuing an official requirement stating the reasons why the administration considers the taxpayer’s practice as abusive and it will only require at least summary/slight/hint evidence. The taxpayer will have a term of three months to reply to the assessment. If the argument is not satisfactory for the administration, another official statement must be issued where the Colombian Tax Authority explains the amendments that must be made to the taxpayer returns and which is, in the authorities opinion, the ‘real’ transaction.” For more information on statutory practices, the tax audit procedure, and additional tax and penalties please refer here.

At the moment, the issue is a bit confusing because, to this day, the Bank of the Republic does not recognize cryptocurrency as a legal tender in the country and, therefore, the transactions carried out under this law are not taken into consideration either framework.

However, according to the analysts surveyed by LR, the lack of an express pronouncement of the Dian before this issue, does not exempt the investors from paying the income derived from the sale of their Bitcoins. “Behind the Bitcoin there may be a range of products associated with the production of that” currency”, called” virtual currency mining “, generating income that can be valued and generate an income for those who obtain it as part of their equity and to have effects in tax matters “, the Dian assured this medium when sending her this concern. Given this scenario, in theory people should pay the Bitcoins for the general rules or the occasional gains from the sale of this cryptocurrency, understanding Bitcoin as an investment asset.

“Tax issues have yet to be decided. We should think that people will have to report them as part of their assets in the corresponding income statement. In this way, and to the extent that the Bitcoin is part of the assets of the people, they will have to follow the corresponding tax rules.

“The Dian has not given us any clarity in the matter. Although we advise investors to declare it in their income, we do not know how to do it. For example, some companies are taxing it through rent as part of their assets, but for people who have small investments, they do not. This is a matter already decided in other countries such as the United States or Japan, “revealed Carlos Mesa, director of the Bitcoin Colombia Foundation.

Finally, Gustavo Cote, former director of the Dian, made it clear that investing in Bitcoins does not free of paying taxes. “While it is true that there are no known programs to raise money from Bitcoins, an investor should include it in their income statement,” said the expert.

Sources

• Colombia Fintech
• Colombia PwC
• Healy Consultants Group PLC