All the necessary information concerning Transfer Pricing in Colombia

1. Transfer Pricing Definition

These are the prices at which a company transfers goods or services to its related parties abroad, located in free zones, or to individuals, corporations, entities, or companies located, resident, or domiciled in tax havens. 

In this regard, the Arm’s Length Principle implies the obligation to treat its related parties as separate and independent entities in their operations to be carried out under open market conditions as in similar operations with independent companies, thus paying the corresponding tax in the place where it is actually generated. 

2. Entities required to comply with the Transfer Pricing Regime

Those taxpayers with the following conditions must comply with the transfer pricing regime: 

• To be taxpayers of income tax and complementary taxes.  
• To have related parties abroad and/or located in free trade zones.  
• To carry out operations during the taxable year with: 
  • Related parties abroad,  
  • Individuals, corporations, entities, or companies located, resident, or domiciled in tax havens;  
  • Related parties located in free trade zones. 

3. Obligations for transactions between related parties?

3.1. Supporting Documentation

According to Article 260-5 of the Tax Statute, taxpayers of Income Tax and complementary taxes who enter into transactions with related parties must prepare and keep the supporting transfer pricing documentation.   

This documentation must be filed before the Tax Authority within the year immediately following the taxable year to which the information corresponds. According to the aforementioned article, the taxpayers of income tax and complementary taxes whose gross equity on the last day of the taxable year or period is equal or greater than the equivalent of 100,000 UVT (Unidades de Vinculación Tecnológica – Technological Linking Units) or whose gross income for the respective year is equal or greater than the equivalent of 61,000 UVT and enter into transactions with related parties, must prepare and send the supporting documentation related to each type of transaction. 

What does the transfer pricing documentation consist of?

This documentation must contain the studies, documents, and other supports with which the taxpayer must demonstrate that its income, costs, deductions, assets, and liabilities acquired in the taxable year, related to operations with its related parties, were under the Principle of Full Competition.  

It must contain the Executive Summary, the Functional Analysis, the Market Analysis, and the Economic Analysis. 

3.2. Information Statement 

According to the provisions of Article 260-9 of the Tax Statute, taxpayers of Income Tax and complementary taxes, whose gross equity on the last day of the taxable year or period is equal to or greater than the equivalent of 100,000 UVT or whose gross income for the respective year is equal or greater than the equivalent of 61,000 UVT that enter into transactions with related parties, are obliged to file the information statement. 

What does the information transfer pricing statement consist of?

An information statement is that by which the taxpayers of the income tax and complementary taxes, obliged to apply the transfer pricing rules, inform the DIAN (Dirección de Impuestos y Aduanas Nacionales – National Tax and Customs Directorate) about the operations performed during the taxable year with related parties abroad, in free trade zones and tax havens. 

4. Schedule for filing such obligations

According to the last digit of the NIT, these are the dates for transfer pricing filings in Colombia: