Japan and Colombia have completed tax treaty negotiations, Colombia’s Finance Minister, Mauricio Cárdenas, announced on July 30.
According to Cárdenas, the tax treaty is in line with those that Colombia has signed with other OECD countries such as France, the UK, and Italy.
The tax treaty includes provisions aimed at tackling base erosion and profit shifting. The tax treaty includes a limitation of benefits Article to deny tax treaty benefits in inappropriate circumstances.
The tax treaty also provides for a detailed exchange of information Article to facilitate international tax cooperation between both nations.
Cárdenas said that double taxation discourages foreign investment in the countries and, therefore, many countries, including Colombia, have decided to offer relief through bilateral agreements that seek to eliminate it, by designating the country that has the power to tax the different incomes and the maximum rate at which these taxes can be levied.
“This gives greater legal certainty to investors of both countries regarding the applicable rules on tax matters to their investments and activities,” the Minister added.