The Colombian Ministry of Finance and Public Credit published for comments a draft Decree regulating the taxation of significant economic presence (per its Spanish acronym, “PES”) in Colombia, and in particular, regarding the application of Colombian tax law to Digital Services provided to users located in Colombia by non-residents or entities not domiciled in the country.
In this regard, the draft Decree provides that, for tax purposes, non-resident persons or entities not domiciled in the country may have a significant economic presence (PES) on the occasion of the sale of goods and/or the rendering of services in favor of clients or users located in Colombian territory in the following scenarios:
- The domicile or habitual residence of the client and/or user is in Colombia.
- Payments are made through credit cards, debit cards or through any payment mechanism located in Colombia.
- The credit or debit card by means of which the payment of the operation is made was issued in Colombia.
- The shipping address for the sale of goods is located in Colombia.
- The IP address of the device used by the client and/or user is located in Colombia at the time of the transaction.
- The mobile country code (MCC) of the international identity of the subscriber of the mobile service stored in the SIM card (subscriber identity module) used by the customer and/or user is located in Colombia.
We recommend that companies that provide Digital Services to customers or users located in the Colombian territory, thoroughly review and analyze the draft decree in order to identify its scope of application and the effects that it would have on their business model.
The draft Decree also establishes the technical conditions and formal requirements that entities with significant economic presence must meet in order to comply with their tax obligations in the country, including their registration in the tax registry (Registro Único Tributario – RUT) and the terms and conditions for filing taxes in Colombia.
