Colombia: local rules

Colombia's transfer pricing rules are in articles 260-1 to 260-11 of the Estatuto Tributario (ET), added by Law 1607 of 2012 and changed by Law 1819 of 2016. They are detailed in Decreto 1625 of 2016 (DUR, articles 1.2.2.1.1 and following, as changed by Decreto 2120 of 2017) and in DIAN Resolution 1210 of 2022. Taxpayers that deal with related parties abroad, related parties in a free zone, or parties in non-cooperative, low-tax or preferential-regime jurisdictions must set their income, costs, deductions, assets and liabilities at arm's length (ET arts. 260-2 and 260-7). Related parties are defined in art. 260-1 (control, branches, permanent establishments, common control and similar links). The rules only affect income tax (art. 260-2, parágrafo).

There are three layers. First, an informative return (Formulario 120, with the data loaded through the DIAN Formato 1125 prevalidator) is due when gross equity at year end is at least 100,000 UVT or gross income for the year is at least 61,000 UVT, and the taxpayer deals with related parties abroad or in free zones (ET art. 260-9, DUR art. 1.2.2.1.2). Second, a local file is due for each type of transaction above 45,000 UVT a year, or above 10,000 UVT for transactions with non-cooperative, low-tax or preferential-regime parties. Third, a master file is due from those taxpayers who belong to a multinational group and meet the same caps. Taxpayers dealing with non-cooperative or low-tax jurisdictions must file whatever their size (ET art. 260-7, parágrafo 2). The local and master files go in as PDF files, the financial data must be signed by the legal representative and the public accountant or statutory auditor, and records must be kept five years (ET art. 260-5). For 2026, 1 UVT is COP 52,374, so 61,000 UVT is about COP 3.19bn.

Five methods are allowed (ET art. 260-3): comparable uncontrolled price, resale price, cost plus, transactional net margin and profit split. The most appropriate method is chosen on the facts and a functional analysis, the reliability of data, comparability and the adjustments needed. For commodities, the comparable uncontrolled price method must be used except in special cases. Several comparables give an arm's length range, which can be narrowed with the interquartile range. If the taxpayer's result is inside the range it is accepted, and if it is outside the range the median is treated as the arm's length result. Internal comparables come first, unlisted shares cannot be valued at book value, and intra-group services need proof that the service was really provided. Interest on loans that fail the comparability tests is not deductible and is treated as a dividend (DUR art. 1.2.2.1.3).

Penalties are in ET art. 260-11 and are counted in UVT. A late local or master file costs 0.05% of the value of the transactions (cap 417 UVT) if filed within 5 business days, and then 0.2% a month (cap 1,667 UVT a month, 20,000 UVT in total). Not filing costs 4% of the value (cap 25,000 UVT), or 6% for tax haven transactions (cap 30,000 UVT), and the related costs and deductions are disallowed. For the informative return, late filing costs 0.02% (cap 313 UVT) within 5 business days and then 0.1% a month (cap 1,250 UVT a month, 15,000 UVT in total). Wrong data costs 0.6% (cap 2,280 UVT), omitted data 1.3% (cap 3,000 UVT), and not filing after a one month summons costs 4% (cap 20,000 UVT). Penalties for wrong or omitted data are halved if the taxpayer fixes them voluntarily in time. The country-by-country report is penalised under ET art. 651 instead, with a fine of up to 7,500 UVT.

Colombia has not adopted the OECD GloBE rules as far as could be confirmed on 26 October 2026: no income inclusion rule, undertaxed profits rule, qualified domestic minimum top-up tax or GloBE information return was found, so there is no Pillar Two filing deadline for Colombia. As context only, Law 2277 of 2022 added a domestic minimum tax, the Tasa de Tributación Depurada (TTD), which tops up the income tax of Colombian companies and permanent establishments (but not foreign companies without residence) to 15% of adjusted accounting profit (ET art. 240, parágrafo 6) from tax year 2023. It is a local rule that is not a GloBE rule, and it is paid through the normal income tax return.

Colombia's tax year is the calendar year (31 December). The general corporate income tax rate is 35% (ET art. 240). Due dates for the return and the transfer pricing filings are set in business days by Decreto 2229 of 2023, which applies from 2024 on with no yearly decree needed, and depend on the last digit of the NIT (tax ID, without the check digit): digit 1 is the 7th business day and digit 0 is the 16th. Unilateral, bilateral and multilateral advance pricing agreements are possible (ET art. 260-10); a unilateral one can cover the year of signing, the year before and up to three years after. If a treaty partner makes a transfer pricing adjustment that the DIAN accepts, the Colombian party can file a corrected return without penalty (ET art. 260-6).