The growth of global operations has made tax compliance one of the main strategic pillars in today’s business market. In this context, the increase in international transactions between related companies has heightened the importance of Transfer Pricing, particularly regarding the obligation to file the Informative Affidavit.
Various analyses of tax compliance and the rigor of the Tax Administration highlight regulatory challenges that increase the importance of Transfer Pricing in international operations, focusing on the correct submission of information in accordance with DIAN parameters.
Intragroup operations and transaction reporting
The structure of modern companies is highly internationalized. Various companies participate in production, services, and marketing through supply agreements and intra-group transactions.
In many cases, these transactions are conducted with related parties located in other jurisdictions or free trade zones. In this context, Colombia’s Transfer Pricing regime becomes particularly important to ensure that transactions are reported in accordance with the economic reality of the market.
The regulations require that these transactions be detailed in the Informative Affidavit, following guidelines aligned with OECD directives, ensuring that every transaction between related parties is transparent to the tax authority.
Risks of Omission and Tax Base Erosion
One of the main challenges identified in the corporate sphere is the need to strengthen control mechanisms over what is reported. Omissions or inconsistencies in the Informative Affidavit can lead to tax contingencies, adjustments by the DIAN, and even penalties resulting from formal non-compliance.
In the reporting of transactions, errors or missing information can directly impact:
- Income Tax.
- The local entity’s taxable base.
- Profit allocation within the multinational group.
Furthermore, the complexity of international operations increases the difficulty of the comparability analyses that must be included in the return, especially in complex international marketing structures.
The challenge of comparability in the Informative Affidavit
The global market is constantly changing and presents factors that directly impact the comparability analyses required by the DIAN. According to Chapter 3, it is not enough to simply report the amounts; the methodology used must be substantiated.
Transactions must be analyzed in accordance with current regulations and the administration’s guidelines. The Informative Affidavit serves as the executive summary where the following must be substantiated:
- The valuation criteria applied.
- The comparability adjustments made.
- The agreed-upon contractual terms.
- The functions and risks assumed by each related party.
Regulatory fragmentation and tax transparency
Another relevant aspect is compliance with the established thresholds for mandatory reporting (gross assets exceeding 100,000 UVT or gross income exceeding 61,000 UVT). The absence of rigorous internal controls creates challenges related to:
- The coordination of financial information.
- The traceability of international transactions.
- Transparency in determining taxable bases.
- Predictability regarding potential tax audits.
At the same time, the market demands increasingly higher standards of transparency and compliance. In this regard, consistency in reporting and legal certainty are crucial to avoiding the severe penalties for late filing or errors detailed by the DIAN in its manual.
Compliance with the Informative Affidavit represents a strategic obligation, but also an exposure to risks if not managed with technical rigor. Strengthening Transfer Pricing controls and moving toward more transparent reporting will be key factors in ensuring the competitiveness and sustainability of companies in today’s global environment.
At TPC Group, we have a team of highly trained specialists to advise your company on compliance with regulations in Colombia and throughout the region. Our global experience allows us to offer comprehensive solutions in the preparation of technical documentation and comparability analysis, ensuring that your intercompany transactions meet the highest international standards.
Source: DIAN