INDIRECT SALE OF ASSETS LOCATED IN COLOMBIA
International taxation
The bill proposes to tax the indirect disposal of assets located in Colombia
Under the proposed bill, Colombia would have jurisdiction to levy a capital gains tax on the disposal of shares of a foreign entity when such entity holds assets located in Colombia.
The bill proposes to restrict Colombia’s jurisdiction to tax the indirect disposal of assets located within the country in two events:
- First, if it is an indirect disposal of listed stocks on a recognized stock exchange. Such stocks shall have high liquidity in the market and the same ultimate beneficial owner shall not hold more than 20% of the outstanding listed stocks.
- Second, when the assets located in Colombia worth 20% or less of both the book value and fair market value of the total assets of the foreign entity.
In computing the tax gain or loss derived from the indirect disposal of assets located in Colombia, the bill states that the seller of the shares of the foreign entity shall use the tax basis that such foreign entity has in the Colombian assets.
Seller would be required to comply with all the formal and substantial income tax obligations before the Colombian Tax Administration derived from the indirect disposal of assets located in Colombia. The bill determines that in the case seller fails to comply with such tax obligations, purchaser would be jointly and severally liable before the Tax Administration in Colombia.
