Transfer Prices in Colombia, regulations and formal obligations demanded by the DIAN

Since the year 2004, in Colombia it has been applying the regime of Transfer Prices, presenting to the Dirección de Impuestos y Aduanas Nacionales (DIAN) (Direction of Taxes and National Customs) in a virtual way through the sworn statement 120.

Legal Basis

This declaration is based on the articles 260-1 to 260-11, the 319 and 20-2 of the Tax Statute, in the same way, through the Regulation Decree 3030 it was established the different circumstances in which a taxpayer will have to present the informative statement of transfer prices as well as prepare and present the corresponding supporting documentation.

Compulsory Taxpayers

  • 1. Those whose gross patrimony the last day of the taxable year or period was equal or higher than the equivalent to 100,000 UVT, or
  • 2. Those whose incomes the same year, were equal or higher than the equivalent to 61,000 UVT.
  • 3. Those who performed operations with connected ones located in free zones for an amount equal or higher than the equivalent to 61,000 UVT.
  • 4. Those who performed operations with people, societies or companies located in tax heavens whose total of the operations performed was higher than the equivalent to 10,000 UVT.

Information to declare:

Some relevant aspects that should be mentioned are:
  • Type of operation performed
  • Type of relationship with the foreign entity.
  • Method of transfer prices applied to each operation performed
  • Price or profitability margin associated to the operation performed.
  • Financial results for the type of operation and at the taxpayers’ global activity level.

Date of presentation

The evidentiary documentation will have to be presented within the following year to the taxable one to which the information belongs, on the date determined by the National Government in a virtual way through the electronic informatics services of the DIAN and under the conditions determined by it attending at the last mandatory digit of the NIT, without the verifying digit.

Technical study of the transfer prices

The taxpayer will have the faculty to attach a study or inform that documents his transfer price policy which satisfies completely all the obligations imposed by the Tax Statute to support a coherent policy.

The statute does not force its elaboration but this study is very important and useful as the taxpayer when is called by the DIAN in the administrative citation period must give all the background to support his transfer price policy. For that reason, this inform is the best instrument of tax and financial analysis to fulfill with this requirement.

At the same time, the taxpayer must take into consideration that the period given by the law to attend the citation is only one month. Therefore, it must be prepared in advance.

Infractions and penalties

Ordinary penalties up to 160% of the omitted tax, penalties for delayed presentation of the informative statement or the evidentiary documentation as well as information omission. Another remarkable element in the regime of penalties in the transparent transfer prices for Colombia is the fact that it generates fines and cost refusals and deductions in the Income Tax Statement.