24 October 2014 Global Tax Alert News from Americas Tax Center EY Americas Tax Center The EY Americas Tax Center brings together the experience and perspectives of over 10,000 tax professionals across the region to help clients address administrative, legislative and regulatory opportunities and challenges in the 33 countries that comprise the Americas region of the global EY organization. • Copy into your web browser: http://www.ey.com/US/en/ Services/Tax/Americas-TaxCenter---borderless-clientservice Panama is removed from Colombia’s recently issued list of tax havens On 21 October 2014, Panama and Colombia signed a memorandum of understanding (the MOU) to cooperate on the exchange of tax information and money laundering matters, resulting in the removal of Panama from Colombia’s recently issued list of tax havens.1 Panama’s recent inclusion2 in Colombia’s list of tax havens generated a strong and negative reaction from the Panamanian Government and business community. Inclusion in Colombia’s list of tax havens, which is updated every year, means, for example, that: (1) payments to tax havens that are considered to be Colombiansource income are subject to a withholding tax rate of 33%; (2) transactions between Colombian residents and entities in tax havens must comply with transfer pricing rules to ensure the deduction of related payments for Colombian corporate tax purposes; and (3) Colombian citizens with residency in a tax haven are deemed to be tax resident in Colombia. This MOU is part of an undertaking by both countries to negotiate and conclude a double taxation treaty comprising a provision for the exchange of information in line with Organisation for Economic Co-operation and Development (OECD) standards by no later than 30 September 2015. Endnotes 1. Confirmed by Decree 2095 of 2014 issued by Colombia’s Ministry of Treasury and Public Credit on 21 October 2014, which modifies Decree 1966 of 2014 and expressly excludes Panama from the list of tax havens for Colombian purposes. 2. Decree 1966 of 2014 issued by Colombia’s Ministry of Treasury and Public Credit on 6 October 2014. For additional information with respect to this Alert, please contact the following: 2 Ernst & Young Ltda., Bogotá, Colombia • Diego Casas +57 1 484 7050 • Ricardo Ruiz +57 1 484 7537 • Carlos Parra +57 1 484 7931 [email protected] [email protected] [email protected] Ernst & Young Limited Corp., Panama City, Panama • Luis Eduardo Ocando +507 208 0144 • Carlos A. Marquez González +507 208 0146 • Klaus Bieberach +507 208 0165 [email protected] [email protected] [email protected] Ernst & Young, S.A., San José, Costa Rica • Rafael Sayagues +506 2208 9880 • Alexandre Barbellion +506 2208 9841 [email protected] [email protected] Global Tax Alert Americas Tax Center EY | Assurance | Tax | Transactions | Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. Americas Tax Center © 2014 EYGM Limited. All Rights Reserved. EYG No. CM4829 This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice. ey.com