www.doingbusinessincolombia.com
EMAIL info@doingbusinessincolombia.com
TEL +57-305-461-9162
The penalty for not reporting THE FATCA information ends up being a prohibition to do business between Colombia and US. Therefore, its application ensures good terms with the US government and the possibility of continuing to conduct transactions and other negotiations with Colombia. In other words, the global and national financial sector has no choice but to comply with the norm if it wants to have any type of commercial or business relationship with the world’s largest economy.
With the new FATCA system or application, it would not be only the United States that controls the movements of its residents. With the exchange of information, some assets or properties owned by foreigners in that territory would be revealed. Therefore, Colombian sanctions could be incurred for the exchange of information and the assets one may have in the United States.
Lastly, the application of FATCA could cover the following risks in Colombian financial institutions:
Changes in contractual documents
Withholding tax and remittance to the IRS
Non-opening of an account
Account closure
Tax implications of information exchange with the United States (FATCA):
With the implementation of this regulation on individuals or entities that have assets or bank accounts in Colombia, the US government seeks to increase the contribution of these individuals to the tax revenue of that country. This way, those individuals who are somehow avoiding their tax obligations can be fully identified and considered as persons of interest to ensure they fulfill their tax duties for activities conducted outside the territory.
Similarly, those individuals who do not provide the requested information will face «penalties,» which are represented by a 30% withholding on payments they make.
In the case of the agreement with Colombia, with the exchange of information, «the DIAN-COLOMBIA TAX AGENCY will be able to obtain data from Colombians with activities in the United States, and at the same time the IRS will obtain information on operations carried out in Colombia by US residents.»
Because of this information exchange, the Colombian government considers this agreement as a tool against tax evasion and avoidance since it prevents national taxpayers from hiding their wealth and increases the payment of taxes related to such wealth.
If you have questions, please contact us for further information.
www.doingbusinessincolombia.com
EMAIL info@doingbusinessincolombia.com
TEL +57-305-461-9162
