FAQs exchange control
1. What is the exchange rate regime?
The exchange rate regime is the set of rules that regulate aspects of international changes.
Exchange can be defined as all foreign transactions that involve payment or transfer of currencies or securities representing them.
According to the Colombian exchange rate regime there are two markets:
· Regulated market
· Free market
2. How is the exchange market constituted?
The foreign exchange market or regulated foreign exchange market in Colombia is made up of all currencies that must be channeled through the authorized Exchange Market Intermediaries authorized for this purpose or through the compensation mechanisms (Compensation Accounts) and by the currencies that Despite being exempt from this obligation, they are channeled voluntarily.
The Colombian exchange market is managed solely and exclusively through two legally authorized channels:
The channel supplied by the exchange market intermediaries
Channel clearing accounts registered with the Bank of the Republic
3. What is channeling?
It is the action of selling, buying or transferring foreign currency and, in some cases, paying or disposing of Colombian legal currency, in the development of exchange operations held through the exchange market intermediaries.
On the other hand, it is the action of crediting or debiting foreign exchange for exchange operations held through a current account of compensation.
4. What are the operations that are mandatory channeling through the exchange market?
The currencies that must be channeled through the exchange market are those that originate in:
· Import and export of goods.
· External debt operations carried out by residents in the country, as well as the financial costs inherent in them.
· Foreign capital investments in the country, as well as the returns associated with them.
· Investments of Colombian capital abroad, as well as the returns associated with them.
· Financial investments in securities issued and in assets located abroad, as well as the returns associated with them, except when the investments are made with currencies from operations that should not be channeled through the foreign exchange market.
· Guarantees in foreign currency.
· Derivative operations.
5. Who are the Exchange Market Intermediaries?
· Commercial bank
· Hipotecary Bank
· Financial corporation
· Commercial financing company
· La Financiera Energética Nacional -FEN-
· Banco de Comercio Exterior de Colombia S.A. -BANCOLDEX-
· Financial cooperative
· Stock Exchange Commission
· Exchange intermediation and special financial services companies.
6. What is the non exchange market or free market?
The non-exchange market or free market is made up of all currencies generated by operations that are not required to be channeled, transferred or negotiated through the exchange market.
7. What are the foreign exchange market operations whose control by the Directorate of National Taxes and Customs?
DIAN exercises control and vigilance over compliance with the exchange regime regarding:
Imports and exports of goods and services.
Expenses associated with imports and exports of goods and services.
Financing of import and export operations of goods.
Compliance with obligations of the holders of Compensation Accounts that channel operations of competence of the DIAN.
All other operations of the Exchange Regime whose surveillance and control is not within the competence of another entity (residual exchange competition).
8. What are the other operations derived from the exchange regime whose control corresponds to the DIAN?
DIAN, exercises control over transactions with currencies which negotiations should not only be possible through authorized intermediaries, which means they are free possession, possession and negotiation within the constraints identified by the exchange rate regime.
Entrance or exit of foreign exchange by travelers.
Those received by tourism agencies and hotels for goods and services sold to foreign tourists.
The sale and purchase of foreign currency and traveler checks exercised by residents in the country:
Transactions between residents of the country in foreign currency.
9. What is a foreign exchange infraction?
The exchange infraction is the administrative contravention of the exchange regulations in force at the time of the occurrence of the events to which the imposition of an economic sanction corresponds.
10. How is the foreign exchange penalty quantified?
The sanction regime for foreign exchange infringements within the jurisdiction of the DIAN establishes sanctions in Tax Value Units (UVT) in a percentage (%) directly applied and calculated on the total amount of the sanctionable operation, liquidated or expressed in Colombian legal currency, in the event that the transaction is denominated in currencies in accordance with the Representative Market Exchange Rate (TCRM) certified and published by the Financial Superintendence of Colombia for the date of occurrence of the act constituting the infraction.
11. What are the deadlines for the DIAN to impose the exchange penalty?
As of the date of occurrence of the facts constituting the foreign exchange infraction, the Dian has five (5) years to issue and notify the act of formulating charges, two (2) years from the expiration of the term of transfer of the Act of Formulation of Charges, to issue and notify, either the sanctioning resolution or the resolution that terminates the investigation, prior to the practice of evidence that may take place. The term to issue and notify the resolution that resolves the appeal for reconsideration shall be seven months from the day following its filing in due form.
12. What is the change statement?
The exchange rate regime does not contain an explicit definition of the exchange declaration, but to the extent that the exchange regulation associates it with the concept of channeling foreign exchange in the exchange market, the following definition can be proposed:
It is a sworn statement in a form in which the information on the amount, characteristics and other conditions of the exchange transaction to take place through the exchange market is entered.
Likewise, a declaration of change is presented when an operation of purchase or sale of currencies is carried out with the professionals of purchase and sale of currency in cash and authorized traveler’s checks (free market).
13. Who submits the Declaration of Change?
According to Article 1 of External Resolution 8 of 2000 of the Board of Directors of the Banco de la República, residents and non-residents who carry out a foreign exchange transaction in Colombia must submit the respective declaration of change.
The declarations of change must be completed in the name of the resident or non-resident who performs the exchange operation (eg, Importer, exporter, debtor, creditor or investor) and subscribe by him or her legal representative, agent or agent in the signature field of the declarant.
Likewise, the person obliged to present the declaration can grant mandate to the exchange market intermediaries to make the presentation of the exchange declaration, intermediaries who can also act as informal agents for this purpose, subject to the restrictions and formalities imposed by the law .
The declaration of exchange for purchase and sale of currencies, through the professionals of purchase and sale of currencies, must be demanded by the latter at the time of making the transaction.
14. How can you correct the statement of change?
The declarations of change that are presented as of February 8, 2011 may be modified or replaced by others at any time. These modifications include clarifications for statistical purposes, which were previously made through communications submitted to the exchange market intermediaries.
Chapter 1.5 of the new Circular states in this regard that the data of a declaration of change may be modified at any time by the resident or non-resident who has submitted the initial declaration, indicating option 4 “modification” in the Section “Type of Operation ”, in the modification form.
The foregoing, without prejudice to the timely transmission of these modifications to the DIAN through the available electronic services, regarding the operations that this entity has indicated as required to report in the exogenous information, in compliance with the technical specifications indicated for the Effect on the resolutions of the Director General.
All the data of a previously submitted declaration can be modified, with the exception of the following:
· IMC NIT or compensation account code
· Period of Form No. 10
15. For what time should the supporting documents of exchange operations be kept?
Article 3 of External Resolution 8 of the Board of Directors of the Bank of the Republic establishes that for exchange purposes and without prejudice to the provisions of special regulations, residents of the country that carry out exchange operations are obliged to keep the documents that accredit the amount, characteristics and other conditions of the operation and the origin or destination of the currencies, as the case may be, for a period equal to the expiration or prescription of the penalty action for violations of the exchange regime (5 years), in order to be presented to the authorities in charge of the control and monitoring of compliance with the exchange regime that require them or within the administrative actions that are initiated to determine the commission of foreign exchange infractions.
16. Can residents in the country have, own and trade currencies?
Residents in the country are free to have, possess and negotiate foreign exchange that is not mandatory channeling through the exchange market, however, it is established in the exchange regulations expressly some operations that can be performed with such currencies and others whose realization is prohibited, then we will refer to them.
17. What can use free-market currencies residents in the country?
Residents in the country are free to own, own and negotiate currencies, which can be used primarily to:
· Be sold to other residents.
· To pay operations that are not of the foreign exchange market.
· To make financial investments or assets abroad.
· To open current accounts in foreign currency.
· To channel them through the exchange market.
· To pay operations in the country for the following concepts:
• Freight and international transport tickets.
• Personal expenses incurred through international credit cards.
• Insurance denominated in foreign currencies dealt with by Decree 2821 of 1991 and concordant regulations.
18. What amount of cash can be entered or taken out of the country by a person without declaring it to the customs authority?
A person entering or leaving the country may carry up to the sum of ten thousand dollars of the United States of America (USD10,000) or its equivalent in any other currency, WITHOUT DECLARING them before the Customs Authority. The previous amount of money that corresponds to a minor, can be carried by his legal representative at the time of entering or leaving the country.
19. How does the exchange regime regulate the exercise of the professional activity of buying and selling currency in cash and traveler’s checks by residents of the country?
The professional activity of buying and selling currency in cash and traveler’s checks can only be carried out in the country by residents in the country who are previously authorized by the Directorate of National Taxes and Customs – DIAN, by means of an issued and final resolution , in accordance with the provisions of DIAN Resolution 3416 of 2006.
Note: For more information regarding the international exchange regime, you can check the website of the Banco de la Republica de Colombia, at the following address:
TECHNOLOGY IMPORT REGISTRATION
1. What are the current regulations on technology import contracts?
– Resolution No. 012379 of December 17, 2015 amended by Resolution No. 00006 of January 21, 2016, of the DIAN. Through the aforementioned resolutions, it is the responsibility of the International Fiscalization Management Branch, to keep, supervise, control and administer the registration of technology import contracts.
– Resolution of the DIAN No. 000062 of February 24, 2014, which establishes the form, content and terms for the registration of technology import contracts with the DIAN.
– Decree 4176 of November 3, 2011, by which some functions of the Ministerio de Comercio, Industria y Turismo to DIAN.
– Decree 259 regulating Decision 291 of the Commission of the Cartagena Agreement of 1992.
– Decision 291 Common regime for treatment of foreign capital and on trademarks, patents, licenses and royalties of 1991. Articles 12 to 15.
2. Who can submit the application for import contract registration?
This registry is intended for natural persons and legal entities that import technology under the following modalities:
a) Technology license agreements
b) Trademark license agreements
c) Patent license agreements
d) Technical assistance contracts
e) Technical service contracts
f) Basic engineering contracts
g) Other technology contracts.
License agreements for the distribution or use of software (Software) and license agreements for literary, artistic and scientific property must not be submitted for registration, as they are works framed within the Copyright (Law 23 of 1982 ).
3. Where to register a technology import contract?
The registration process is done electronically through the Electronic Information Service (SIE) Registrations, Authorizations and Certifications of the DIAN.
This tool will allow the importing person to submit requests for registration of contracts, consult the registration of their contracts and carry out a process with an agile and timely response.
4. What aspects must be taken into account to enter the SIE Registrations, Authorizations and Certifications of the DIAN for the first time?
Once you enter the DIAN portal:
– Check if you have access to electronic computer services. The legal representative or agent must be registered as a user to use electronic computer services.
– Check if the legal representative or agent has the digital certificate signing mechanism, granted by the DIAN (Left Menu / Online Services Guide).
– Check the technological requirements of your computer that allow you to enter electronic computer services (Left Menu / Online Services Guide).
– Find out how to download and install the Java virtual machine, which allows you to perform the signing process successfully (Left menu / Online Services Guide).
– Verify your signature system (Left menu / Other Services).
5. How to enter the Registries, Authorizations and Certifications service to register import contracts?
Once you have verified that your equipment has the necessary technical requirements, log in to the electronic computer services.
The authentication process implies that the DIAN has prior knowledge about the person entering the portal and the type of services available to it, that is, an account must be created and enabled.
Proceed to click on the Registered Users option.
Perform the authentication process for which the information requested from the natural person or the Legal Representative or Representative that appears in the RUT must be typed in the Computer Service.
Select the option Registrations, Authorizations and Certifications Click on the option: “Submission of Applications”
6. How do you submit a contract registration application?
The procedure for submitting an application includes:
– Fill in the application, send and sign the application
– Upload documents associated with the request
– Request consultation
The completion of the request consists of typing the information required on form 020, which automatically displays the Computer Service.
For the correct completion, sending and signing of the application, take into account the step by step described in detail in the manual that is in the following route:
www.dian.gov.co / Online Services Guide / Registration of Technology Import Contracts / Manual.
Signed the request, the Electronic Computer Service Records, Authorizations and Certifications, will indicate that it is in a sent state and will be waiting to receive the support documents associated with the request.
The Applicant must upload the supporting documents associated with the Request, at the time of signing the same or at the latest within ten (10) business days of signing the application.
7. How to upload the documents associated with the application?
To load support documents, consider the following recommendations:
– As of the date of submission of the Request, the applicant has 10 business days to upload the support documents required in the Form 020 application. Refer to the Form 020 – main sheet the Deadline box, as it is the maximum date to finalize the application submission process.
– For each required support document, a file must be uploaded, in any format, preferably in PDF.
– The system allows uploading files up to 5 MGB.
– It is recommended that the files be in black and white, with low resolution.
– The files that are uploaded must correspond to the required support document, be clear and legible in such a way that verification is allowed.
Perform the following steps to load documents required media for the request:
In the Electronic Computing Service, Registrations, Authorizations and Certifications, click on the Request Submission option.
Select the option Upload documents associated with the request.
8. Who registers the import contract?
Once the application for registration of the technology import contract has been completed, the DIAN Sub-Directorate of International Control Management will carry out the Formalization in Format 1638, through the Electronic Computing Service Registers, Authorizations and Certifications, within the term of eight (8) business days, as established in article 3 of Decree 259 of 1992, indicating the result as follows:
· Registered Technology Import Contract: When the DIAN determines in the verification process that all the required requirements are met.
· Unregistered Technology Import Contract: When the DIAN determines in the verification process that all the required requirements are not met.
The result of the verification is shown to the applicant, through the system, in the option Consult requests – Supports associated with the request – Details button (see 5.1 of the Manual).
In the formalization process consider:
The formalization of the request is reflected in the Format 1638 and can be consulted in the option Consult request – Subject (see section 5.1 of the Manual).
9. How to consult and obtain the 1638 Format?
The Format 1638 can be consulted and printed in the electronic computer service Records, Authorizations and Certifications as follows:
– Click on the Request Submission option, and then select the option Request Request.
– To facilitate the query, in the search filter No. Request, register the corresponding data, example 209000047109 and click on the Consult button.
– Click on the magnifying glass and the system shows you the Support screen associated with the request.
– Click on the Back to subject button, located at the bottom of the Support screen associated with the request.
– Click on the “Documents” tab
To consult any document, including Format 1638, click on the PDF button
10. What to do when the result is an unregistered contract?
When the Technology Import Contract is not registered in the formalization process, the DIAN through the Electronic Computer Service Registers, Authorizations and Certifications, will inform the reason that gave rise to it. The applicant may submit a new application, correcting, if feasible, the reason that gave rise to the Unregistered Technology Import Agreement.
11. What is the validity of a registered contract?
Once the contract is registered, the registration will be valid From the date the technology import contract was registered, through the Electronic Computing Service Registers, Authorizations and Certifications, until the end date of the term agreed in the contract. It is necessary that the end date be indicated on form 020, box 71.
TAX RESIDENCE AND TAX SITUATION
1. What is the difference between the Fiscal Residence Certificate and the Tax Status Certificate?
Fiscal Residence Certificate: is the one through which the DIAN certifies that the taxpayer has domicile or residence in Colombia for tax purposes for the taxable period requested, while the Tax Situation Certificate is the one issued by the DIAN to certify the nature and amount of income and taxes paid or withheld in Colombia, specifying whether they have been subject to income tax, CREE equity and wealth tax. These certificates may be requested for the application of agreements to avoid double taxation.
2. Who can apply for the Certificate of Fiscal Residence and / or Tax Status?
· The Certificate of Fiscal Residence may be requested by taxpayers domiciled or resident in Colombia or their attorney.
· The Tax Situation Certificate may be requested by taxpayers, with or without domicile or residence in Colombia or attorney.
3. What is the procedure to apply for the Certificate of Fiscal Residence and / or Tax Status?
The procedure for the issuance of the Certificates of Fiscal Residence and / or Tax Status, for the application of agreements to avoid double taxation is established in Resolution 3283 of March 31, 2009.
Article 4 of the aforementioned standard establishes the requirements that must be accredited for the required document to be issued for which the petitioner, whether legal or natural person, must complete the 1381 format found on the website of the DIAN, on the route CITIZEN SERVICE / FORMS AND INSTRUCTIONS / 2015/1381 Application Form Certification on Fiscal Residence and / or Tax Status.
4. Before which Unit is the request for Certification on Fiscal Residence and / or Tax Status addressed?
The request must be made before the Subdirección de Gestión de Fiscalización Internacionale located in Carrera 7 No. 6C-54 Piso 7 in Bogotá and located in the Coordinacion de Documentacion located on the first floor of the same address or in the Sectional Directorate of Taxes and / o Customs of your domicile.
5. What is the period of validity of the Certificate of Fiscal Residence and / or Tax Status?
One (1) year effective as of the date of issue.
6. Can a foreign company branch request Certification of Tax Residence Accreditation in Colombia?
Foreign company branches are not considered tax residents in Colombia, in accordance with the provisions of article 12-1 of the Tax Statute.
Advance pricing agreements – APA
1. APAs What legal framework regulates APAs?
· Articles 111 to 121 of Law 1607 of 2012.
· Decree 4349 of 2004, modified by decree 1602 of 2012
· Decision 578 CAN
· Double Taxation Agreements
2. At what time can I apply for an APA?
Taxpayers can submit their APA application at any time of the year.
3. How much time does the Tax Administration have to respond to an APA request?
The Tax Administration will have a maximum period of nine (9) months from the presentation of the request for unilateral agreements, to carry out the pertinent analyzes, request and receive modifications and clarifications and accept or reject the request. For bilateral or multilateral agreements, the time will be determined jointly between the competent authorities of two or more states.
4. Can the Tax Administration reject an APA application?
Indeed, the Tax Administration can reject an APA application, if the analysis of the same verifies that it does not contain the TOTALITY of the information that is detailed in Article 2 of Decree 1602 of 2012.
5. What is the effective date of the agreement between the Administration and the Taxpayer?
According to Law 1607 of 2012, the Agreement may take effect in the year in which the agreement is signed, the year immediately preceding, and for up to three (3) taxable periods following the signing of the agreement.
6. Once the Advance Price Agreement has been signed, can I make modifications to it?
According to Article 120 of Law 1607 of 2012, an APA can be modified when there are significant variations of the assumptions considered at the time of signing the Agreement, to adapt it to the new circumstances, bearing in mind that this can be done
· i) at the request of the taxpayer,
· ii) at the request of the Tax Administration or
· iii) as an agreement between the parties.
For this, the Tax Administration will have a term of two (2) months to accept, reject or reject the application, in accordance with the provisions of the regulations.
In the event that the modification is by the Administration, the taxpayer will be informed, who will have one (1) month from the knowledge of the report to request the modification of the agreement. If after this deadline the corresponding application is not submitted, the Tax Administration will cancel the agreement.
7. On what grounds can complete a Advance Pricing Agreement?
According to article 120 of Law 1607 of 2012, Advance Price Agreements may be terminated under the following grounds:
to. For breach.
b. For providing information that does not correspond to the economic reality of society.
C. For the non-submission of the modification request. (Only when the DIAN establishes new variations and the taxpayer does not submit the modification request).
d. By termination by mutual agreement.