Colombia publishes MAP guidance for resolution of tax treaty disputes

By Juana Obando, Transfer Pricing Associate, BaseFirma Colombia.

On August 21, the Colombian tax authority issued guidance on the procedure to request the resolution of cross-border tax disputes under Colombia’s tax treaties.

The guidance, resolution 000085, includes key concepts, procedures, required tax authority response times, and information required to initiate a mutual agreement procedure (MAP) request referred to in article 869-3 of Colombia’s tax statute.

The document provides all the relevant information regarding how taxpayers may request assistance from the Colombian tax authority when they consider that the actions of one or both contracting states are or will result in taxation that is not in accordance with the provisions of the relevant tax treaty. 

A MAP request can arise from different scenarios, including transfer pricing adjustments, determination of residence, withholding tax applied, determination of the existence of a permanent establishment, and application of anti-abuse provisions.

The request for assistance by the taxpayer must be submitted within the term provided in the relevant treaty, as amended by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The MLI establishes a deadline of three years after an action of the tax authority of a contracting state that results in taxation that is not in accordance with the provisions of the applicable convention.

If taxation is not in accordance with the treaty, the MAP may be requested even before the tax is assessed. 

The guidance states that the Colombian tax authority will have 45 calendar days from the date of receipt of the initial MAP request to ask for additional information from the taxpayer.

The Colombian tax authority will notify the taxpayer if the request has been accepted or denied within 90 calendar days following the receipt of a completed application.

Pursuant to the resolution, MAP agreements may be implemented at any time by submitting a copy of the MAP agreement signed by the Colombian tax authority. 

The resolution also specifies the types of that cases in which the Colombian tax authority will not accept a MAP request, how to make a request, coordination with other procedures, and the charges and penalties related to the MAP.