International Tax Treaty Policy in Colombia

Abstract

In 1990, Colombia started a process of liberalization through which the traditional scheme of 'production towards domestic necessities' was left behind. In consequence, reforms in the tax, financial, foreign trade and constitutional systems took place. These reforms aimed at removing obstacles for investment and reinforcing the capital market influencing the domestic and international tax policy in Colombia. Up till recently (2005), Colombia did not conclude double taxation conventions ('DTCs'). The only treaties signed by Colombia prior to 2005, were for instance international tax agreements with regard to air and maritime transportation. Up till 2005, in bilateral and multilateral relations, the reference to tax provisions was left to provisions in regional trade agreements. In Colombia, in the context of the Latin American process of integration, taxation is influenced by the regional agreements of which Colombia is member. Since 2005, Colombia decided to start concluding DTCs mainly due to several factors such as: the objectives of promotion of Colombian products and the promotion of foreign investment included in the two National Plans of Development for Colombia (2003-2006 and 2006-2010). These objectives resulted in the negotiation of DTCs and in the negotiation of bilateral investment treaties (acuerdo de promocion y proteccion reciproca de inversiones). At the time of writing (April 2008), Colombia has concluded DTCs with Spain, Chile, and Switzerland. DTC negotiations have been concluded with Canada. Bilateral investment treaties have been concluded with Peru, Spain and Switzerland. This paper discusses the changes in the international tax treaty policy in Colombia since the process of liberalization in 1990 and it covers the developments in DTC's in the period between 2005-2008. This paper was presented at the international conference: History of Double Tax Treaties organized by the University of Vienna of Economics and Business.