The United Kingdom and Colombia signed a double taxation agreement (DTA) during President Santos' visit to the UK, on November 2.
The convention, based on the OECD model, includes an LOB clause and allows exchange of information between tax authorities.
Eliminating the risk of double taxation will provide more certainty to employees and businesses operating between the UK and Colombia, regarding what taxes to pay and where. The agreement reduces barriers to cross-border trade and investment, as well as promote growth and jobs. The DTA also includes provisions which will help both countries work together to tackle tax avoidance and evasion.
Under the treaty provisions, there is a 5% withholding tax on dividends paid to shareholders that own more that 20% of the share capital and a 15% withholding tax in other cases. Interest payments between financial entities are exempted and subject to a 10% in other cases.
The DTA will support greater trade, investment and tax cooperation between the two countries. Even though it has yet to complete both countries legislative procedures, the sign of the treaty consolidates the political and commercial relations between the UK and Colombia.