Invest in Colombia: Portfolio and Direct Investment
Foreign investments are operations on the foreign exchange market. The Colombian financial regulations stipulate that these resources must be channelled according to the regulations of the Central Bank (Banco de la República).
Investments made by non-residents in Colombia (inbound investments) and investments made by Colombian residents outside the country (outbound investments) are part of the foreign exchange market, as well as the profits or dividends from these investments.
In terms of inbound investments, there are two main investment groups:
1. Portfolio Investments
These are mainly made up of securities listed in the National Registry of Securities and Issuers (Registro Nacional de Valores y Emisores, or RNVE) which may be, among others, stocks or bonds. Here, an administrator, for example a stockbroker, must be in charge of such an investment, explain the Ecovis experts.
We can advise you on legal and tax matters when investing in Colombia. Giovanny Tellez, Legal Advisor, ECOVIS Colombia SAS, Bogotá, Colombia
2. Direct Investment
Unlike portfolio investments, whose character is mainly speculative, direct investment seeks to develop an activity in Colombia or to be part of an activity or company that is already being developed. In this case, the investor must comply with the guidelines established by the Central Bank.
Although the most common form of investment in Colombia is the transfer of foreign currency to the country through an intermediary on the exchange market or IMC (“Intermediario del Mercado Cambiario”, for example a bank), this is not the only way. Other types of contribution are also possible, for example merchandise or intangibles. In these scenarios, the Central Bank must also be informed that such contributions have been made, in order to settle the exchange balance and avoid sanctions, say the advisors from Ecovis.
Direct investment in Colombia entails certain tax responsibilities on the part of non-residents. If an investment is sold, the investor must file an income tax return with the National Tax and Customs Directorate (Dirección de Impuestos y Aduanas Nacionales, or DIAN) for these operations. In addition, the Central Bank must be informed of these transactions, using the required documentation. To comply with tax obligations, the foreign investor must be registered in the DIAN Single Tax Register (RUT), in addition to appointing an attorney-in-fact in Colombia.
We welcome our new partners from Taurus Corporate Finance headquartered in Deventer.
Ecovis cooperates with Taurus Corporate Finance a Netherlands based Corporate Finance firm. Taurus Corporate Finance was established in 2011 as a merger of the M&A-activities of our existing Dutch partners from ECOVIS BonsenReuling and a consultancy firm. Mark Eenink was the first managing partner and founder of the firm. Nowadays he is supported by three further managing partners. Taurus Corporate Finance has a total staff of 12. Taurus Corporate Finance provides services in the following consulting fields:
Restructuring & Recovery
We warmly welcome our new colleagues from the Netherlands to the Ecovis family!
Made in America Tax. More U.S. Tax Reform Planned.
Around USD 2.2 trillion is to be invested in infrastructure projects in the US and USD 1.8 trillion will be made available for families. That is set out in the “American Jobs Plan” proposed by US President Joseph Biden.
The infrastructure plan would be funded through proposed corporate tax increases, including changes to international components of the 2017 Tax Cuts and Jobs Act (TCJA), while the families plan would be funded by increases to individual taxing provisions.
Proposals for Counter-Financing the Planned Additional Expenditure
The Made in America Tax Plan (the “Plan”) addresses how to fund the costs of the infrastructure proposals. The plan alters and adds to TCJA tax provisions in order to increase tax revenues. Changes to the Global Intangible Low Tax Income (GILTI) provisions, the anti-deferral regime applicable to US shareholders of certain foreign corporations, would eliminate certain exclusions and deductions in computing GILTI income. Moreover, GILTI liability would be calculated on a per-country basis, ending the ability of taxpayers to net losses with profits between entities in different countries with disparate tax rates, explain the advisers from Marcum LLP. Coupled with the proposed 28% corporate tax rate, the GILTI minimum tax rate would essentially be increased from 10.5% to 21%.
Contact us if the proposed tax changes affect you. Douglas Nakajima, International Tax Co-Leader, Marcum LLP*, Philadelphia, USA
The plan would also repeal the Foreign Derived Intangible Income deduction (FDII) created under the TCJA, effectively eliminating a tax benefit for US corporations serving non-US clients.
Taxation of Multinational Corporations
Finally, the plan would also replace the current Base Erosion & Anti-Abuse Tax (BEAT) provisions, with an enhanced corporate minimum tax consistent with the OECD/G20 objective of implementing a global minimum tax when multinationals with offshore affiliates are taxed below a minimum tax rate. The plan seeks to disallow deductions for the offshoring of production and put in place strong guardrails against corporate inversions.
The proposals will almost certainly be subjected to major amendments before they approach the level of support needed for passage, as we are at the beginning of the legislative process. However, some form of virtually all these proposals can be expected to find their way into US tax law. Taxpayers with multinational operations and their advisors need to be ready to respond to any changes, explain the Marcum LLP experts.