The position of the DIAN regarding Transfer Pricing

Jorge Ricardo Suarez and David Leonardo Caldas, specialists in Transfer Pricing, review the recent concept of the...

Jorge Ricardo Suarez and David Leonardo Caldas, specialists in Transfer Pricing, review the recent concept of the DIAN (Dirección de Impuestos y Aduanas Nacionales – Directorate of National Taxes and Customs) on transfer pricing, answering the following question: Must an income taxpayer include the in-kind contributions received from foreign companies or related entities in the Transfer Pricing Information Return?

The Tax Regime and Decree 1625 present a list of different types of operations such as contributions in kind or industry to foreign companies, operations reported separately from Income and Expenses.

The DIAN cites Article 319-2 of the ET that contributions in kind and industry made by domestic entities to foreign companies constitute alienation for tax purposes. In this case, the taxpayer must demonstrate that the value of the asset in exchange for the shares complies with the Arm’s Length Principle.

From the paragraph of the mentioned article, it is concluded that all intangible contributions to foreign companies must be reported in the Transfer Pricing Statement, regardless of the amount and type of intangible, i.e., they are subject to transfer pricing.

The DIAN indicates that in the Sole Decree numeral 3 of article 1.2.2.2.3.2, the types of operations subject to the regime are established as the types of operations 59 typified as contributions in kind or industry to foreign companies or entities. It clarifies that the contributions to be considered for pricing purposes are only those made by a domestic entity to its foreign affiliates.

In response to the initial question, the contributions received by domestic entities from their foreign affiliates should not be reported in the Transfer Pricing Information Return. As contributions received by domestic companies are not addressed, they are not required to be included in the Return.

Source: Instituto Nacional de Contadores Públicos-Colombia 11/01/22

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