Law 1459 2011

Original Language Title: LEY 1459 de 2011

Read the untranslated law here: http://www.secretariasenado.gov.co/senado/basedoc/arbol/../ley_1459_2011.html

ACT 1459 2011
(June 29)
Official Gazette No. 48116 of June 30, 2011 CONGRESS OF THE REPUBLIC

Through which the Convention between Canada and the Republic of approving Colombia to avoid double taxation and prevent tax evasion in relation to income tax and wealth, and its Protocol, made in Lima to the 21 days of November two thousand and eight (2008). Effective Jurisprudence


THE CONGRESS OF THE REPUBLIC,
Having regard to the text of the Convention between Canada and the Republic of Colombia, to avoid double taxation and prevent tax evasion in relation to income tax and capital, and Protocol, made in Lima to the 21 days of November two thousand and eight (2008).
(To be transliterated: true and complete copy of the original text is attached in Castilian of the Convention and its Protocol, which consists of twenty (26) pages, duly authenticated by the Coordinator of the Treaties; document rests on the archives of the Legal Advisory Office of the Ministry of Foreign Affairs).
DRAFT LAW NUMBER 205 2009
through which the Convention between Canada and the Republic of Colombia approved, to avoid double taxation and prevent tax evasion in relation to income tax and on capital, and its Protocol, made in Lima to the 21 days of November two thousand and eight (2008).
The Congress,
having regard to the text of the Convention between Canada and the Republic of Colombia, to avoid double taxation and prevent tax evasion in relation to income tax and capital, and Protocol, made in Lima to the 21 days of November two thousand and eight (2008).
(To be transliterated: true and complete copy of the original text is attached in Castilian of the Convention and its Protocol, which consists of twenty (26) pages, duly authenticated by the Coordinator of the Treaties; document rests on the archives of the Legal Advisory Office of the Ministry of Foreign Affairs).
AGREEMENT BETWEEN CANADA AND THE REPUBLIC OF COLOMBIA
to avoid double taxation and prevent tax evasion in relation to income tax and capital
CANADA AND THE REPUBLIC OF COLOMBIA,
Desiring to conclude an agreement to avoid double taxation and prevent tax evasion regarding taxes on income and capital,
HAVE AGREED as follows:
I.
SCOPE OF THE CONVENTION ARTICLE 1o.
PERSONS COVERED.
This Convention shall apply to persons resident in one or both of the Contracting States.
Article 2.
.
TAXES COVERED.
1. This Convention shall apply to taxes on income and on capital imposed by each Contracting State, whatever the levy system.
2. Be regarded as taxes on income and on capital all taxes imposed on total income or assets or any part thereof, including taxes on gains from the alienation of movable or immovable property, taxes on the total amount of wages or salaries paid by enterprises, as well as taxes on capital appreciation.
3. The existing taxes to which the Convention shall apply are in particular:
a. in the case of Canada the taxes imposed by the Government of Canada under the Income Tax Act (hereinafter "Canadian tax");
B. in Colombia:
i. Tax on income and complementary;
Ii. National Order Tax on capital (hereinafter referred to as "Colombian tax").
4. The Convention shall also apply to taxes identical or substantially similar and taxes imposed after the date of signature, and additional to, or in place today. The competent authorities of the Contracting States shall notify each other of any significant changes that have been made in their respective taxation laws.
II. DEFINITIONS

ARTICLE 3.
GENERAL DEFINITIONS.
1. For the purposes of this Convention, unless the context a different interpretation otherwise requires:
a. the term "Canada" means the Canadian territory, including its land portion, internal waters and territorial sea, the airspace over these areas, and also the exclusive economic zone and the continental shelf, as defined by its domestic law, in accordance with international law;
B. the term "Colombia" means the Republic of Colombia;
C. the terms "a Contracting State" and "the other Contracting State" mean, as the context requires, Canada or Colombia;

D. the term "person" includes individuals, corporations, trusts ( "trust"), partnerships and any other body of persons.
E. the term "company" means any body corporate or any entity which is considered legal person for tax purposes;
F. the term "enterprise" applies to the conduct of any trade or business;
G. the term "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;
H. the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting, State except when such transport is made mainly between places in the other Contracting State;
I. the term "competent authority" means:
i. In Canada, the Minister of National Revenue or his authorized representative; and ii
. in Colombia, the Minister of Finance or his authorized representative;
J. the term "national", in relation to the Contracting State, means:
i. any individual possessing the nationality of that Contracting State; and ii
. any legal person, partnership or association constituted under the law of that State.
K. the term "business" includes the performance of professional services and other activities of an independent character.
2. For the implementation of the Convention at any time by a Contracting State, any term not defined therein shall, unless the context a different interpretation otherwise requires, have the meaning that at that time under the law of that State concerning the taxes to which the Convention, overriding the meaning attributed by the tax on term under other laws of that State legislation.

ARTICLE 4.
RESIDENT.
1. For the purposes of this Convention, the term "resident of a Contracting State" means:
a. any person who, under the law of that State, is liable to tax therein by reason of his domicile, residence, place of management, place of incorporation or any other criterion of a similar nature. However, this term does not include any person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein, and
b. that State and any political subdivision or local authority thereof or any agency or instrumentality of such government, subdivision or authority.
2. When, under the provisions of the 1st paragraph, an individual is a resident of both Contracting States, then his status shall be determined as follows:
a. that person is resident only of the State in which a permanent home available to him; if I had permanent home is available in both States, he shall be deemed a resident of the State with which his closest personal and economic relations (center of vital interests);
B. can not be determined if the State in which that person has the center of vital interests, or if not a permanent home available in either State shall be considered resident only of the State of habitual abode;
C. if habitual abode in both States or not to do any of them, it shall be considered resident only of the State of nationality;
D. if a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
3. When a society is a national of a Contracting State and for the reasons of the 1st paragraph is a resident of both Contracting States shall be considered resident only in the first-mentioned State.
4. Where, by reason of the provisions of paragraph the 1st, a person other than the individual or society described in paragraph the 3rd is a resident of both Contracting States, the competent authorities of the Contracting States shall decide by mutual agreement the matter and determine the implementation of the Convention in that case. In the absence of agreement, such person may not have access to benefits or tax exemptions provided for in the Convention.

The 5th ITEM.
Permanent establishment.
1. For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through which an enterprise is wholly or partly carried on.
2. The term "permanent establishment" includes especially:
a. place of management;

B. branches;
C. The offices;
D. the factories;
E. workshops, and
f. mine, an oil or gas well, a quarry or any other place in connection with the exploration or exploitation of natural resources.
3. The term "permanent establishment" also includes:
a. a building site or construction project or installation, including planning and preparatory work and supervisory activities in connection therewith, but only if such building site, construction or activities last more than six months, and | || b. the provision of services including consultancy services, by an enterprise of a Contracting State through its employees or other persons entrusted by the company for that purpose in the other Contracting State, but only if such activities continue in that State for a period or periods aggregating more than 183 days within any period of twelve months.
4. Notwithstanding the preceding provisions of this Article, it is considered that the term "permanent establishment" shall not include:
a. the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;
B. the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;
C. the maintenance of a stock of goods or merchandise belonging to the enterprise solely so that processing by another enterprise;
D. the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;
E. the maintenance of a fixed place of business solely for the company for any other activity of a preparatory or auxiliary character; or
f. the maintenance of a fixed place of business solely for any combination of activities mentioned in subparagraphs a) to e), provided that the overall activity of the fixed place of business resulting from this combination is of character preparatory or auxiliary.
5. Notwithstanding the provisions of the 1st and 2nd paragraphs, when a person other than an independent agent to which the 7th paragraph will be applicable, acting on behalf of an enterprise and has, and habitually exercises in a Contracting State, an authority to conclude contracts on behalf of the company it shall be deemed that the company has a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4th and that, if exercised through a fixed place of business, this fixed place of business is not unfavorably regarded as a permanent establishment under the provisions of that paragraph.
6. Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except with regard to reinsurance, a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or You insure risks situated therein through a representative other than an independent agent to which the 7th paragraph applies.
7. It is not considered that a company has a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or other independent agent, provided that such persons are acting in the ordinary course of its activity, and that the conditions of transactions between the agent and the enterprise are those which may have been established between companies or independent parties.
8. The fact that a company resident of a Contracting State controls or is controlled by a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.
III. TAXATION OF INCOME

ARTICLE 6o.
REVENUES OF PROPERTY.
1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.

2. For the purposes of this Convention, the term "immovable property" shall have the meaning given to it in the relevant tax provisions of the Contracting State in which the property is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, the provisions of general law respecting landed property rights that apply, usufruct of immovable property and the right to receive variable or fixed payments for the holding or the granting of the exploitation of mineral deposits, sources and other natural resources. Ships and aircraft shall not be regarded as immovable property.
3. The provisions of the 1st paragraph apply to income derived from the direct use, leasing and any other form of immovable property and income derived from the sale of the property.
4. The provisions of paragraphs 1st and 3rd shall also apply to the income from immovable property of an enterprise.

ARTICLE 7.
BUSINESS PROFITS.

1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries or has carried on business as aforesaid, the profits of the enterprise may be taxed in the other State, but only to the extent that can be attributed to that permanent establishment.
2. Subject to the provisions of paragraph the 3rd, where an enterprise of a Contracting State carries (or has made) business in the other Contracting State through a permanent establishment situated therein, in each Contracting State be attributed to that permanent establishment the benefits that this could get to be a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment and with all others.
3. For the determination of the profits of a permanent establishment the deduction of expenses incurred to carry out the purposes of the permanent establishment, including management expenses and general administrative for the same purposes is permitted, whether incurred in the State in which the permanent establishment is situated or elsewhere.
4. no benefit to a permanent establishment shall be attributed by the mere fact that the goods or merchandise for the enterprise.
5. For the purposes of the preceding paragraphs, the profits attributable to the permanent establishment shall be determined by the same method year unless there is good and sufficient reasons to proceed otherwise.
6. Where profits include items of income which are dealt with separately in other articles of this Convention, the provisions of these Articles shall not be affected by this article.

Article 8.
AIR AND MARITIME TRANSPORT.
1. The profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State.
2. Notwithstanding the provisions of paragraph 1st and 7th Article, profits of an enterprise of a Contracting State from the transportation by ships and aircraft, which is mainly done by two places in the other Contracting State may be taxed in the other Contracting State .
3. For the purposes of this article:
a. the term "profits" includes gross revenues derived directly from the operation of ships or aircraft in international traffic, and
b. the term "operation of ships or aircraft" by an enterprise also includes:
i. the charter or rental of ships or aircraft on a bareboat basis;
Ii. the rental of containers and related equipment, if that charter or rental is incidental to the operation by the enterprise of ships or aircraft in international traffic.
4. The provisions of paragraphs 1st and 2nd also apply to profits from participation in a "pool" consortium, a joint business or in an international operating agency.

Article 9.
AFFILIATES.
1. When:
a. an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or

B. the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, and in either case the two enterprises in their commercial or financial relations, case conditions are made or imposed that differ from those which would be made between independent enterprises, the benefits that have accrued to one of the companies in the absence of such conditions, and in fact have not been performed because of them, may be included in the profits of that enterprise and taxed accordingly.
2. Where a Contracting State includes in the profits of an enterprise of that State, and taxes accordingly, to tax the profits on which an enterprise of the other Contracting State has been taxed in that other State and the profits so included are benefits that would have been made by the company for the first-mentioned State if the conditions made between the two enterprises had been those which would made between independent enterprises, that other State, if it agrees that the adjustment made by the said State first is justified, an appropriate adjustment of the amount of tax charged on those profits. In determining such adjustment, the other provisions of this Agreement shall be considered and the competent authorities of the Contracting States shall consult if necessary.
3. A Contracting State shall not change the income of a company according to the circumstances referred to in paragraph the 1st after the expiry of the period in their national legislation and in any event no later than seven years from the end of the year in which income that would be subject to such change would have been, except for the conditions mentioned in the 1st paragraph, attributed to the company.
4. The forecasts of the 2nd and the 3rd paragraphs shall not apply in the case of fraud or willful misconduct.


ARTICLE 10. DIVIDENDS.
1. Dividends paid by a company resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:
a. 5 percent of the gross amount of the dividends if the beneficial owner is a company which controls directly or indirectly at least 10 percent of voting shares of the company paying the dividends; and
b. 15 percent of the gross amount of the dividends in all other cases.
This paragraph shall not affect the taxation of the company in respect of the profits out of which dividends are paid.
3. The term "dividends" as used in this Article means income from shares, stock or bond s enjoyment, mining shares, of shares or other rights, not credit, participating in profits as well as income from other investments subject to the same taxation treatment as income from shares by the laws of the State of residence of the company making the distribution.
4. The provisions of the 2nd paragraph shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on in the other Contracting State of which he is a resident the company paying the dividends, a business through a permanent establishment situated participation there and that the dividends are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 apply.
5. When a company resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or participation that the dividends are paid is effectively connected with a permanent establishment situated in that other State, nor subject the undistributed profits of the company to a tax on them, even if the dividends paid or undistributed profits consist wholly or partly of profits or income arising in that other State.

6. Nothing in this Agreement shall be construed as preventing a Contracting State from imposing on the earnings of a company attributable to a permanent establishment in that State, or the earnings attributable to the alienation of immovable property situated in that State, a society that trades in real estate, an additional tax that is charged on the profits of a national society of that State, except that any additional tax so charged shall not exceed 5 percent of the amount of such gains and the same have not been subject this additional tax in previous fiscal years. For the purposes of this provision, the term "earnings" means the earnings attributable to the alienation of such immovable property situated in a Contracting State may be taxed by that State under the provisions in Article 6 or paragraph 1o of Article 13, and profits, including any gains, attributable to a permanent establishment in a Contracting State in a year or previous years, after deducting all taxes, other than the additional tax mentioned here, which were imposed on such profits in that State.


ARTICLE 11. INTEREST.
1. Interest arising in a Contracting State and paid to a resident of the other Contracting State State may be taxed in that other State.
2. However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10% the gross amount of the interest.
3. The term "interest" within the meaning of this Article means income from debt claims of every kind, whether or not secured by mortgage, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds and debentures and any other income that the law of the State in which interests assimilated to income from money lent. However, the term "interest" does not include income dealt with in Articles 8 or 10.
4. The provisions of the 2nd paragraph shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on in the other Contracting State in which the interest arises a business through a permanent establishment situated therein and credit generate the interest is effectively connected with such permanent establishment. In such case the provisions of Article 7 apply.
5. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. However, the person paying the interest, whether or not resident of a Contracting State, have ga in a Contracting State a permanent establishment in connection with which incurred the debt for which interest is paid, and these are supported by the permanent establishment, such interest shall be deemed to arise in the State in which the permanent establishment is situated.
6. Where, by reason of a special relationship between the payer and the recipient or between both of them and some other person, the amount of interest, given the credit for which it is paid, exceeds the amount which would have been agreed the debtor and creditor in the absence of such relationship, the provisions of this Article shall apply only to the latter amount. In such case, the excess amount shall remain taxable according to the laws of each Contracting State, taking into account the other provisions of this Agreement.


ARTICLE 12. ROYALTIES.
1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such royalties may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner is a resident of the other Contracting State, the tax so charged shall not exceed 10 percent the gross amount of the royalties.

3. The term "royalties" as used in this Article means payments of any kind paid for the use, or the right to use, any copyright of literary, artistic or scientific work, including cinematograph films or films, tapes and other media reproducing sound, patents, trademarks, design or model, plan, secret formula or process or other intangible property, or for the use or right to use industrial equipment is, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience. The term "royalties" also includes payments received for the provision of technical assistance, technical services and consulting services. However, the term "royalties" does not include related revenue article 8.
4. The provisions of the 2nd paragraph shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries in the Contracting State in which the royalties arise a business through a permanent establishment situated therein and the right or the right by of which the royalties are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 apply.
5. Royalties arising in a Contracting State when the payer is a resident of that State. However, the person paying the royalties, whether or not resident of a Contracting State, has in a Contracting State a permanent establishment in connection with which incurred the obligation to pay royalties and that permanent establishment support load thereof, royalties shall be deemed to arise in the State in which the permanent establishment is situated.
6. Where, by reason of a special relationship between the payer and the recipient or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which they would have been agreed by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the latter amount. In such case, the excess amount shall remain taxable according to the laws of each Contracting State, taking into account the other provisions of this Agreement.


ARTICLE 13. CAPITAL GAINS.
1. Gains derived by a resident of a Contracting State from the alienation of immovable property situated in the other Contracting State may be taxed in that other State.
2. Gains from the alienation of movable property forming part of the assets of a permanent establishment which an enterprise of a Contracting State has or had in the other Contracting State, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) may be taxed in that other State.
3. The profits of an enterprise of a Contracting State from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft shall be taxable only in that State.
4. Gains by a resident of a Contracting State from the alienation of:
a. shares whose value is derived directly or indirectly more than 50 percent of real property situated in the other Contracting State,
b. an interest in a partnership, trust fund or other entity whose value is derived directly or indirectly more than 50% of immovable property situated in that other State, or
c. shares or other rights in the capital of a company which is a resident of the other State if the resident of the first-mentioned State was owner at any time within the period of twelve months prior to the sale, directly or indirectly, 25 percent or more of the capital of that company, may be taxed in that other State.
5. Gains from the alienation of any property other than those mentioned in paragraphs 1st, 2nd, 3rd and 4th can only be taxed in the Contracting State in which the transferor resides.
6. The provisions of paragraph the 5th not affect the right of a Contracting to impose State according to its law, a tax on gains from the alienation of property, other than those considered in the implementing provisions of the 7th paragraph, derived by a individual resident of the other Contracting State and has been a resident of the first-mentioned State during the six (6) years immediately preceding the alienation of the property.

7. When an individual ceases to be a resident of a Contracting State and immediately thereafter becomes a resident of the other Contracting State for tax purposes will be considered in the first-mentioned Contracting State, the individual has alienated its properties and will be taxed in that State for that same reason. The individual may elect to be treated for tax purposes as if before becoming resident of that Contracting State, sold and repurchased had the property for an amount equal to the fair market value at that time. However, this provision does not apply to profit from any property that has been generated immediately before the individual becomes resident of the other State which may be taxed in that other State. Nor apply to the derivative gain of real property located in a third country.


ARTICLE 14. INCOME FROM EMPLOYMENT.
1. In accordance with the provisions of Articles 15, 17 and 18, salaries, wages and other remuneration derived by a resident of a Contracting State in respect of an employment may only be taxed in that State unless the employment it is exercised in the other Contracting State. If the employment is exercised in that way, remuneration derived therefrom may be taxed in that other State.
2. However, the provisions of the 1st paragraph remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:
a. the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned, and b
. the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and
c. the remuneration is not borne by a permanent establishment which the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State may be taxed in that State unless the remuneration is derived by a resident of the other Contracting State.


ITEM 15. DIRECTORS INTERESTS.
Fees and other similar payments derived by a resident of a Contracting State as a member of a board or a similar body of a company resident of the other Contracting State may be taxed in that other State.


ARTICLE 16 ARTISTS AND ATHLETES.
1. Notwithstanding the provisions of Articles 7, and 14, income derived by a resident of a Contracting State from the exercise of personal activities in the other Contracting State as an entertainer, such as theater, film, radio or television, or musician or as an athlete, they may be taxed in that other State. Income to which this paragraph shall include income derived from any personal activity in the other Contracting State relating to his renown as an artiste or athlete.
2. Notwithstanding the provisions of the 7th and 14 articles, where income in respect of personal activities of artists or athletes, in that capacity, to the entertainer or athlete accrues not but to another person, that income may be taxed in the Contracting State in which the activities of the entertainer or athlete are exercised.
3. The provisions of the 2nd paragraph shall not apply if it is determined that neither the entertainer or the athlete nor persons related to their activity directly or indirectly in the profits of the person referred to in that paragraph.


ARTICLE 17. PENSIONS.
1. Pensions and annuities arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. Pensions arising in a Contracting State and paid to a resident of the other Contracting State may also be taxed in the State from whom and in accordance with the laws of that State. However, in the case of periodic pension payments, the tax so charged shall not exceed the lesser of:
a. 15% of the gross amount of the payment; and
b. the rate determined in relation to the amount of tax that the recipient of the payment would otherwise have had to pay in the year, on the total amount of periodic pension payments received by the individual in the year, if that person were a resident of Contracting State from which the payment.

3. The various pensions, arising in a Contracting State and paid to a resident of the other Contracting State annuities may also be taxed in the State of origin and in accordance with the law of that State, but the tax so charged shall not exceed 15% of the part of those that are taxed in that State. However, this limitation does not apply to single payments from the waiver, cancellation, redemption, sale or other alienation of an annuity, or payment of any kind under a contract of annuity, the cost of all or in part, it was deducted in computing the income of any person who acquired the contract.
4. Notwithstanding anything in this Convention:
a. pensions and allowances of war (including pensions and allowances paid to war veterans or paid as a result of damages or injuries suffered as a consequence of a war) arising in a Contracting State and paid to a resident of the other Contracting State They will be taxed in that other State to the extent that they had not been taxed, being received by a resident of the first-mentioned State, and
b. payment of food and other payments like child support from a Contracting State and paid to a resident of the other Contracting State, which is subject to tax in that State in relation to them, will only be taxed in that other State, but the amount on which these taxes are applied may not exceed the amount on which would apply in the Contracting State mentioned first, whether the recipient is resident in the same.


ARTICLE 18. PUBLIC FUNCTIONS.
1. to. Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political subdivision or local to an individual authorities in respect of services rendered to that State or subdivision or authority, can only undergo taxed in that State.
B. However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:
i. is a national of that State, or ii
. He did not become a resident of that State solely to provide the services.
2. The provisions of Articles 14, 15 and 16 shall apply to salaries, wages and other similar remuneration in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or local authorities.


ARTICLE 19. STUDENTS.
The amounts received to cover maintenance, studies or training expenses a student or a trainee who is or was immediately before visiting a Contracting State, a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of continuing their studies or training, can not be taxed in that State, provided that they come from sources outside that State.


ARTICLE 20. OTHER INCOME.
1. The income of a resident of a Contracting State not dealt with in the foregoing Articles of this Convention and arising in the other Contracting State may be taxed in that other State.
2. In the case of Canada, where such income is income from a different to a trust in which the contributions have been deductible, trust the tax so charged shall not exceed 15% of gross income, provided that the beneficial owner is resident in Colombia and income are taxed in Colombia.
IV. TAXATION OF CAPITAL
ARTICLE 21.

HERITAGE.
1. Capital represented by immovable property owned by a resident of a Contracting State and situated in the other Contracting State may be taxed in that other State.
2. Capital represented by movable property forming part of the assets of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State may be taxed in that other State.
3. Capital represented by ships or aircraft operated by an enterprise of a Contracting State in international traffic and movable property pertaining to the operation of ships or aircraft tals, can only be taxed in that State.
4. All other elements of capital of a resident of a Contracting State shall be taxable only in that State.

V. METHODS FOR AVOIDANCE OF DOUBLE TAXATION


ARTICLE 22. ELIMINATION OF DOUBLE TAXATION.
1. In the case of Canada, double taxation shall be avoided as follows:
a. subject to the existing provisions in the legislation of Canada regarding the deduction from tax payable in Canada in respect of tax paid outside Canada, and any subsequent modification of those provisions "that does not affect its general principles" and unless greater deduction or benefit in terms of the laws of Canada, tax payable in Colombia on profits, income or gains from Colombia may be deducted from any Canadian tax payable in respect of such profits, income or gains is granted;
B. subject to the existing laws of Canada regarding the possibility of using provisions of the tax paid in a territory outside Canada as a tax credit against Canadian tax and any subsequent modification of those provisions "that does not affect its general principles" when a society which is a resident of Colombia pay a dividend to a company which is a resident of Canada and that it directly or indirectly controls at least 10 percent of the voting power in the first-mentioned company, the credit shall take into account the tax payable in Colombia for the first mentioned company regarding the earnings on which such dividend is paid; and
c. when in accordance with any provision of the Convention, income derived by a resident of Canada are exempt from tax in Canada, Canada may nevertheless, in calculating the amount of tax on other income, take into account the income tax exempt.
2. In Colombia, double taxation shall be avoided as follows:
a. Where a resident of Colombia derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in the other Contracting State, Colombia will allow, within the limitations imposed by its domestic law:
i. deduction (discount) tax the income of that resident, an amount equal to the income tax paid in the other State;
Ii. deduction (discount) tax on capital of that resident, an amount equal to the tax paid in the other Contracting State on those assets, and
iii. deduction (discount) of corporation tax actually paid by the company distributing the dividends for the profits out of which the dividends are paid.
However, such deduction (discount) may not exceed that part of income tax or wealth tax, calculated before deduction (discount), attributable to the income or assets that may be subject to taxed in the other Contracting State.
B. Where in accordance with any provision of this Convention, income derived by a resident of Colombia or capital owned exempt from tax in Colombia, Colombia may, however, take into account the exempted income or assets to calculate the tax the remaining income or capital of that resident.
3. For the purposes of this article, shall be considered as income, income or gains of a resident of a Contracting State may be taxed in the other Contracting State under this Convention have their origin in that other State.
VI. SPECIAL PROVISIONS


ARTICLE 23. NON-DISCRIMINATION.
1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or obligation relating to it which is more burdensome than those which are or may be subjected nationals of that other State who are in the same conditions in particular with respect to residence.
2. Permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be subjected in that State to a less favorable than the enterprises of that other State carrying on the same activities imposition.
3. Nothing in this Article shall be construed to require a State Co ntratante to grant to residents of the other Contracting State any personal allowances, reliefs and tax reductions which it grants to its own residents on account of civil status or charges family.

4. Enterprises of a Contracting State whose capital is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State shall not be subjected in the first-mentioned State to any taxation or obligation relating to the same are not required or are more burdensome than those which are or may be subject similar companies resident of the first-mentioned State whose capital is wholly or partly owned or controlled, directly or indirectly, by one or more residents of a third State .
5. In this article, the term "taxation" means taxes which are the subject of this Agreement.


ARTICLE 24. MUTUAL AGREEMENT PROCEDURE.
1. When a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Convention, irrespective of the remedies provided by the domestic law of those States, may present the competent authority of the Contracting State of which he is a resident or, alternatively, if the paragraph 1o of Article 23 applicable, to the Contracting State of nationality, a written request stating the grounds for claiming the revision of such taxation. To be admissible, the said petition should be filed within three years from the first notification of the action resulting taxation not in accordance with the provisions of the Convention.
2. The competent authority referred to in paragraph 1o is concerned, if the objection appears to be justified and if it can not by itself a satisfactory solution, will endeavor to resolve the case by mutual agreement procedure with the competent authority of the other Contracting State in order to avoid taxation not in accordance with the Convention. Any agreement that is reached must be implemented, regardless of time limits in the domestic law of the Contracting States.
3. A Contracting State can not increase the tax base of a resident of any of the Contracting States by including therein of income also have been taxed in the other Contracting State, after the expiry of the period specified in its domestic legislation and in any case, after seven years from the last day of the fiscal year in which the income in question was obtained. The provisions of this paragraph shall not apply in the case of fraud or willful misconduct.
4. The competent authorities of the Contracting States shall endeavor to resolve any difficulties or doubts arising as to the interpretation or application of the Convention through a mutual agreement procedure.
5. The authorities of the Contracting States may consult together for the purpose of elimination of double taxation in cases not provided for in the Convention and may communicate directly for the purposes of the application of the Convention.


ARTICLE 25. EXCHANGE OF INFORMATION.
1. The competent authorities of the Contracting States shall exchange foreseeably relevant information to apply the provisions of this Convention or to the administration or enforcement of domestic law concerning taxes of every kind and description imposed by the Contracting States to the extent that the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by articles 1st and 2nd.
2. The information received by a Contracting State under paragraph the 1st will be kept secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) have interest in the assessment or collection of taxes, the enforcement or prosecution regarding these taxes or the determination of appeals in relation thereto, or supervision of the above functions. Such persons or authorities use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.
3. In any case, the provisions of paragraph 1st and 2nd be construed as obliging a Contracting State to:
a. adopt contrary to its legislation or administrative practice, or of the other Contracting State administrative measures;
B. to supply information which is not obtainable on the basis of their own laws or in the normal course of the administration of that or of the other Contracting State; or

C. to supply information which would disclose any trade, business, industrial or professional secret or trade process, or information which would be contrary to public policy.
4. When information is requested by a Contracting State under this article, the other Contracting State shall use its information gathering measures available to it in order to obtain the requested information, regardless of the fact that the other State does not require such information for its own tax purposes. The foregoing obligation is limited by the provisions of the 3rd paragraph, provided that such limitations are not construed to prevent a Contracting State to provide information solely because it has no domestic interest in it.
5. In no case shall the provisions of paragraph the 3rd be construed to permit a Contracting State to decline to supply information solely because it is held by banks, other financial institutions, or anyone institutions acting in an agency or fiduciary capacity or because that information refers to ownership interests in a person.


CLAUSES Article 26 anti-abuse.
1. The provisions of Articles 10, 11 and 12 shall not apply if the purpose or one of the main purposes of any person concerned with the creation or assignment of an action, credit or right in respect of which the dividends, interest or royalties They are paid to the profit of one or more of these items by that creation or assignment.
2. Nothing in this Agreement shall be construed as preventing a Contracting State from taxing the amounts included in the income of a resident of that State with respect to partnerships, trusts ( "trust"), companies or other entities in which that resident has a stake.
3. The Convention shall not apply to a corporation, trust or other entity that is a resident of a Contracting State and beneficially owned one or nonresidents several people that this do, or is directly or indirectly controlled by them, if the amount he applied by that State on income or assets of the corporation, trust, or other entity, is substantially less than the amount that would have been applied by that State (after taking into account any way of reducing or offsetting the amount of tax, including a refund, reimbursement, contribution, credit, benefit to society, trust or partnership, or any other person) if all the shares of the company or all interests in the trust, or other entity, as appropriate, actually belong to one or more natural persons who are residents of that State.
4. In the event that one or more of the provisions of the Convention arising unintended results or covered by it, the Contracting States shall consult with each other with the aim of reaching a mutually acceptable solution, including possible amendments to the Convention.


ARTICLE 27 MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS.
1. The provisions of this Agreement shall not affect the fiscal privileges of members of diplomatic missions or consular offices in accordance with the general principles of international law or under the provisions of special agreements.
2. Notwithstanding the provisions of article 4, a person who is a member of a diplomatic mission, consular post or permanent mission of a Contracting State situated in the other Contracting State or in a third State shall be deemed, for the purposes of this Agreement, as a resident of the sending State if that person is subject in the State which sends it to the same obligations relating to taxes on total income residents of that State.


ARTICLE 28. MISCELLANEOUS PROVISIONS.
1. The provisions of this Agreement shall not be construed as restricting in any manner any exemption, deduction, credit or other deduction established by the laws of a Contracting State to determine the tax required by that State.

2. For the purposes of paragraph 3rd of Article 22 (Consultation) of the General Agreement on Trade in Services, the Contracting States agree that, however not that paragraph, any dispute between them as to whether a measure falls within the scope of this Agreement may be subject to Council for Trade in Services, as provided in that paragraph, only with the consent of both Contracting States. Any questions concerning the interpretation of this paragraph shall be resolved under paragraph 4o of Article 24, or, in the absence of an agreement under that procedure, pursuant to any other procedure agreed between both Contracting States.
3. Contributions in a year for services rendered in that year paid by, or on behalf of, an individual resident of a Contracting State or who is temporarily present in that State to a pension plan that is recognized for tax purposes in the other Contracting State shall, for a period not exceeding a total of 60 months, be treated in that State in the first place, in the same way as a contribution paid to a recognized system of pensions for tax purposes in that State if: | || a. such individual was contributing on a regular basis to the pension plan for a period ending immediately before he became a resident of or temporarily present in the first-mentioned State, and
b. the competent authorities of the first-mentioned State agree that the pension plan generally corresponds to a pension plan recognized for tax purposes by that State.
For the purposes of this paragraph, "pension plan" includes a pension plan created under the social security system of each Contracting State.
VII. FINAL PROVISIONS


ARTICLE 29. ENTRY INTO FORCE.
1. Each Contracting State shall notify the other through diplomatic channels, upon completion of the procedures required by its legislation for the entry into force of this Agreement. This Agreement shall enter into force on the date of the last notification and provisions of the Convention shall apply:
a. in Canada,
(i) regarding the tax withheld at source, for amounts paid or credited to non-residents, from the first day of January in the calendar year following that in which the Convention enters into vigor, and
(ii) in respect of other Canadian tax, for fiscal years beginning on or after pr imer day of January in the calendar year following that in which the Convention enters into force.
B. in Colombia,
(i) with respect to taxes on income obtained and amounts paid, credited to an account, put at the disposal or accounted as an expense, from the first day of January the calendar year next following that in which the Convention enters into force;
(Ii) in other cases, since the entry into force of the Convention.
ARTICLE 30. DENUNCIATION

.
This Agreement shall remain in force indefinitely, but either Contracting State may, not later than June 30 of each subsequent calendar year after that in which the Convention enters into force, give the other Contracting State a notice of termination writing through diplomatic channels. In this case, the provisions of this Convention shall cease to have effect:
a. in Canada,
(i) in respect of taxes withheld at source on amounts paid or credited to non-residents, after the end of that calendar year, and
(ii) with respect to other Canadian taxes, for tax years beginning after the end of that calendar year.
B. in Colombia,
(i) with respect to taxes on income obtained and amounts paid, credited to an account or accounted as an expense, from the first day of January of the calendar year immediately following that in which the notice is given;
(Ii) in other cases, from the date the notice is given.
IN WITNESS WHEREOF the undersigned, being duly authorized thereto, have signed this Agreement.
DONE in duplicate at Lima, at 21 days of November 2008 in English, French and Spanish, being equally authentic.
For Canada,
Illegible signature.
For the Republic of Colombia,
Illegible signature. PROTOCOL

At the moment of signing the Convention between Canada and the Republic of Colombia and to avoid double taxation and prevent tax evasion in relation to income tax and capital, have agreed upon the following provisions which form an integral part of the agreement:
1. It is understood that:

A. Regarding paragraph 3rd of article 5, for the purposes of calculating the time limits in this paragraph refers to the period during which activities are carried out by a company associated with another enterprise within the meaning of article 9, it will be added to period during which activities are carried out by the company which is associated if the activities of both enterprises are identical or substantially similar or are made in connection with the same site or project.
B. Regarding paragraph 3rd of the 5th article, planning, preparatory work and monitoring activities should be considered associated with a building site or construction or installation, only if such work or activity is carried out in the work or construction project or installation.
C. For purposes of Article 7, profits will be attributed to a permanent establishment under the 7th article 2nd paragraph as if the permanent establishment were a company that is managed independently of the company which is part. The 3rd paragraph of Article 7 establishes the principle that the expenses incurred by the company for purposes of the permanent establishment, irrespective of where they are incurred may be deducted from profits attributable to the permanent establishment. To implement this paragraph, the deductibility of these expenses always proceed the requirements, conditions and limitations to which they are subject, according to the domestic laws of the Contracting State in which the permanent establishment is situated are met.
D. In the case of Colombia, for the purposes of this Convention, the term "vessel" includes all types of ships.
E. Without prejudice to the provisions of the 2nd paragraph of Article 10, for the case of Colombia, where a resident in Colombia society has not paid income tax on profits distributed to the partners or shareholders by having an exemption or exceed the ceiling untaxed in Article 49 and paragraph 1o of Article 245 of the Tax Code, the dividend to be distributed may be submitted in Colombia at the rate of 15 per cent, if the beneficial owner of the dividend is a partner or shareholder resident in Canada.
F. For greater certainty, the term "right" in the 4th paragraph of Article 12 includes contractual rights to receive payments for the provision of technical assistance, technical services or consulting services rights.
G. If after signing the Convention, Colombia has signed with a third country an agreement stipulating provisions for technical assistance, technical services or consulting services that are more favorable than those provided for in Article 12 of the Convention, these provisions will automatically apply the Convention, under the same conditions as if those provisions have been established by the Convention. These provisions apply to this Agreement as from the entry into force of the agreement with the third country. The competent authority shall Colombian will inform the competent Canadian authority, without delay, who have fulfilled the conditions of application of this subparagraph.
H. 6th and 7th paragraphs of Article 13 are listed in the Convention taking into account the domestic law of Canada regarding the rules that apply to the emigration of taxpayers. At the time of the signing of this Convention, Colombia does not have similar rules in their domestic law and, therefore, it is anticipated that these paragraphs only apply initially in cases of people who are no longer residents of Canada.
I. Regarding the 2nd paragraph of Article 20, it was agreed that this only applies in the case of Canada under the understanding that, as the domestic law of Colombia, income from a trust maintain the legal characterization of the underlying income generated by the trust.
J. For greater certainty, the seven-year limit in paragraph 3rd of Article 24 and paragraph 3rd of article 9 referred to term shall apply only if the domestic legislation of the Contracting State first mentioned in these paragraphs a period is foreseen top.
IN WITNESS WHEREOF the undersigned, being duly authorized by their respective Governments, have signed this Protocol.
DONE at Lima, at 21 days of November 2008, in duplicate, in English, French and Spanish, all texts being equally authentic.
For Canada,
LAWRENCE CANNON,
Foreign Minister.
For the Republic of Colombia, Jaime Bermudez
,
Minister of Foreign Affairs. RAMA

PUBLIC POWER EXECUTIVE PRESIDENCY OF THE REPUBLIC
Bogotá, DC, August 21, 2009

Authorized. Submit for consideration by the honorable Congress for constitutional purposes.
Alvaro Uribe.
The Minister of Foreign Affairs Jaime Bermudez
.
DECREES: Article 1.
. Approval of the Agreement between Canada and the Republic of Colombia, to avoid double taxation and prevent fiscal evasion with respect to taxes on income and on capital and its Protocol, made in Lima, on the twenty (21) days in November of two thousand and eight (2008). Article 2.
. In accordance with the provisions of article 1 of Law 7 of 1944, the Convention between Canada and the Republic of Colombia, to avoid double taxation and prevent fiscal evasion with respect to taxes on income and on capital, and its Protocol, made in Lima, on the twenty (21) days of November of two thousand and eight (2008), that article 1 of this Act are passed, they will force the country from the date it was perfect international bond in respect thereof.
Article 3o. This law applies from the date of publication.
Given in Bogotá, DC, to ...
honorable Presented to Congress by the Minister of Foreign Affairs.
Jaime Bermudez.
The Minister of Finance and Public Credit, Óscar Iván Zuluaga
.
EXPLANATORY STATEMENT. Honorable Senators and Representatives
:
On behalf of the Government, in accordance with Articles 189 paragraph 2, 150 paragraph 16 and 224 of the Constitution, presented for consideration by the honorable Congress the bill whereby the Convention between Canada and the Republic of Colombia is approved for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion in Relation to Income Tax and Wealth Tax "and its Protocol, made in Lima on 21 days in November 2008.
Agreements to avoid Double Taxation (ADT) international

General economic openness brings implicit strengthening of investment, technology and capital among the several States who adopt measures to ensure that these are attractive. Now, it is known that one of the factors that investors consider when establishing an investment in a given country is the tax component. In this sense, a factor that may affect the establishment of foreign investment is the high level of taxation and legislative uncertainty in this field, combined, in most cases, the phenomenon of juridical double taxation where the same income or the same goods are taxed in two or more countries, upon application of similar taxes for the same taxable period.
The economic effects at international level caused by internal taxation of different countries, has led to the need to seek solutions, unilateral, bilateral and even multilateral basis, in order to provide means to prevent cases of double or multiple taxation.
It be said that the most visible consequences of the phenomenon of double taxation are among others, hindering the flow of investment and technology between countries, excessive tax burden on the taxpayer, brake on economic development and particularly the increased foreign investment also accentuated tax evasion internationally.
Agreements to regularize the tax relations between countries and avoid international double taxation are consolidated as one of the mechanisms that turn States to eliminate double taxation and thus attract foreign investment.
In addition, note that such agreements should provide certainty for taxpayers, as they provide legal stability. This stability means that with the signing of a treaty of this nature, the investor has the peace of mind that tax conditions agreed between States will remain in time.
At this point, it is important to note that the agreements to avoid double taxation are intended to define the scope of the tax authority of States. Thus in some cases the exclusive right enshrined taxation by one of the Contracting States or other tax remembers sharing between States.

It should be noted that the power of states to create and set tax bases and other elements of the tax is preserved in their head, because in general, the criteria used to define the right of a State to tax certain income or capital, is founded to distribute the tax jurisdiction of the countries on the basis of criteria such as residence or the origin or source of income taxed. This, always in the objective pursued: the object economic facts of the treaty are not subject to taxation by two or more countries.
In this regard, agreements to prevent double taxation, have no impact on the determination of elements such as costs or tax deductions.
It is important to note that the double taxation treaties in any way be interpreted or used to create tax exemptions, because what is sought is that if a certain income or capital already taxed in a particular country, not again be taxed in another country, without in any way and effect of the treaty, income remains untaxed in any of the two states.
Similarly, because of what the doctrine has called principle of no aggravation, agreements to prevent double taxation are not creators of higher tax burdens as these are limited to distributing taxes between countries without such target has due to tax a taxpayer in excess of what domestic laws of states are planned.
Moreover, the agreements to avoid double taxation generally contain provisions against non-discrimination between domestic and foreign as well as dispute resolution mechanisms by mutual agreement between countries. Such agreements also seek to regulate international cooperation through mechanisms such as the exchange of tax information between tax administrations in order to combat tax evasion and tax fraud.
The power tax in the field of international trade
The taxing power, defined as the power or right which holds a State to tax their nationals or residents, is limited by legal principles to be observed, principles such as legality, equality, generality, and no confiscation. In addition, there are political constraints resulting from the coexistence within a single state, endowed different authorities (national, regional and municipal) tax power.
To determine the legal relationship between the sovereign state and the taxpayer, that determines criteria for linking both subjective in nature and objective.
The first "subjective" take into account situations or circumstances pertaining to obligated to contribute, within which, for the case study subjects include nationality, residence or place of business.
The second "objective" refer to the event for the tribute, understood as that given economic fact in the law and gives rise to the tax liability.
Based on subjective criteria such as nationality or residence, States require their nationals or residents to pay taxes on their income generality of "worldwide income" and wealth, without regard to where such revenues were generated or without regard to the place where the property is located.
Also, according to objective criteria, States tax any business or activity in its territory, that is, subject to its tax income generated on their territory, ie taxed income from national sources.
As a result of the above, under the taxation on worldwide income, a resident or national of a State is taxed in the country in which he is a resident or national on income earned in foreign countries, countries which in turn they subjected to tax the same income for considering national source income of those States, generating an international juridical double taxation.
Faced with this problem have been proposed solutions to avoid international double taxation, either by giving a State the exclusive right to tax the income of its residents regardless of where in the world where they have been generated, while another solution proposal is the exclusive right of a state to tax the income produced in its territory, regardless of the residence of the recipient of such income.

As can be expected, developed countries, exporters of capital, seek to agree in their treaties that income earned abroad by their nationals or resident investors are taxed in those States, which captured taxation on income generated in countries foreign "foreign source income".
By contrast, developing countries whose rates of investment abroad are minor and are recipients of investment, seeking that the income earned by these investments in favor of foreign or living abroad, are taxed on their territory, that is, under that correspond to domestic source income that State.
To solve this problem, the OECD, the International Fiscal Association (IFA), the Interamerican Bar Association, the Latin American Institute for Tax Law and the Central American Common Market have joined forces in an attempt to achieve three basic objectives: to
) in pursuit of general principles, capable of acquiring the character of uniform international practice;
B) At the conclusion of bilateral or multilateral agreements; and
c) the harmonization of legislation.
Internal methods implemented for the elimination of double taxation
One method for eliminating international double taxation is the imputation method which is used in Colombia.
In accordance with the method of allocation, taxes paid abroad by a resident of a State may be deducted from the tax paid in the State of residence on that same income.
This method partially eliminates double taxation, since the discounting or deduction of tax paid abroad is allowed to the extent of tax money payable by the State of residence on that same income. Thus, if the rate of tax paid abroad is higher than such income paid in the State of residence, however subsists double taxation.
With the signing of agreements on double taxation, the treatment of income derived by a resident of a Contracting State shall be taxed only in one of the signatory countries of the treaty, or taxation will be shared with limited rate in one of subscribers countries "source country".
Because of this treatment, the internal method of eliminating double taxation becomes more efficient, as you like, in the event that, under the provisions of the treaty, a single serious country certain income. This implies in itself that juridical double taxation is not given and, in the event that the agreement allows for shared taxation, the fact that one of the countries have a limited rate "that is, in the source country "allows the investor to apply in their country of residence discount total tax paid abroad, thereby eliminating international juridical double taxation.
In addition, the definition of an agreement which country has the power to tax on certain income, investors clearer rules are provided.
Finally, in the case of shared taxation, taxation limit is guaranteed, a situation which provides legal stability to foreign investors.
On the other hand, to combat tax evasion international information sharing is a need for effective development of the functions of tax administration. It can be stated that the control function of tax obligations not represent different thing to manage and use information. The need for exchange of information for tax purposes, refers both domestically and international.
The exchange of information between parties in different countries is a degree of di ficulty and is a prerequisite for an effective performance of the functions of tax administration, particularly on an international stage as the current which is characterized by increasing globalization instrument . In this regard, it is important to note that the signing of treaties does not eliminate per se evasion, but to the extent that the country subscribes agreements in this area, advances in the fight against tax evasion because, in this way, it has greater oversight tools that enable the tax administration closer to the economic reality of transactions.
Currently, it is difficult to control tax evasion if no information is available and oversight tools on nationals and residents in Colombia who earn income abroad or have assets abroad.

Issues such as the manipulation of transfer pricing, tax havens, abuse of treaties to eliminate double taxation, undercapitalization, control on electronic commerce, among others, are recurring concerns in the tax administrations of all the world and without mutual assistance between those administrations that provide the possibility of having information from abroad, reliable and timely fiscal control claims become a very difficult task realization.
The exchange of information at the international level may occur informally, ie without there being any conventional commitment; just as the fruit of an attitude of courtesy or solidarity between countries. This form of processed exchange, however useful it can offer, suffers from the disadvantages of not having sufficient legal backing, if sporadic, inarticulate and subject to all internal legal limitations of the reporting country and its good will as to opportunity, extension and how they will be borrowed information. Because of these circumstances, it is today recognized the need to conclude international agreements on this matter to enable Contracting States access to information that could not be obtained using means and sources available internally.
The Inter-American Center of Tax Administration (CIAT) has made an especially oriented to the analysis of information exchange agreements concluded by CIAT member countries from Latin America and the Caribbean and prospects for strengthening the practice of this exchange research by their tax administrations.
In this context, it is necessary to recognize the importance of information exchange in the Model Conventions to avoid double taxation. The provisions on the subject contained in existing agreements that are part of the countries concerned, the reasons that advise the conclusion of specific agreements for information exchange; Agreements of this latter type that Latin America and the Caribbean and, finally, the work that CIAT is developing in this field involved.
Notably, of the 131 bilateral agreements in force, only 8 have been concluded between CIAT member countries from Latin America and the Caribbean: Argentina-Bolivia, Argentina-Brazil, Argentina-Chile, Barbados-Venezuela, Brazil-Ecuador Chile-Mexico, Ecuador-Mexico and Trinidad and Tobago-Venezuela.
As for the exchange of information in those 131 bilateral agreements, 5 of them do not contain any clause about: Argentina-Switzerland, Ecuador-Switzerland, Jamaica-Switzerland, Trinidad and Tobago and Venezuela-Switzerland-Switzerland, others they relied predominantly two in the Andean Pact Model: Argentina-Bolivia and Argentina-Chile, two in the Model UN: Barbados-United States and Brazil-India, and the rest in the OECD Model in versions 1963 or 1977.
the importance for Colombia of agreements to avoid double international taxation
in the new international scenario in which the Colombian tax and customs administration moves, is required to advance in adapting the tax system, order to make the country attractive to foreign investment and international trade. Thus, the design and implementation of new legal and technical tools that achieve a balance between control and facilitation thereof to significantly improve the country's competitiveness is necessary.
So you can if n doubt be argued that for a developing country like Colombia is particularly important to achieve increases in both domestic and foreign investment. To achieve this objective, efforts should be made to establish mechanisms that allow them to reduce trade barriers and attract such investment. So, the country must move quickly in consolidating international agreements that seek to clear rules according to avoid international double taxation.
Colombia, as the generality of States, provides for taxation for foreigners on their income earned in the country and its nationals or residents the tax on their income earned both in the country and abroad; ie their worldwide income taxes, a situation that involves international double taxation, hence the importance of the signing of these agreements.
Government Policy

According to the above, the Government, in its state policy, giving prevalence to the criterion of national interest, has focused international tax policy towards the negotiation and signing of treaties to avoid double taxation, the It understood that, as already noted, one of the variables of interest to investors and evaluate when investing is the tax component. With this policy, is to overcome the relative progress made because of the timidity with which until very recently negotiating these agreements was discussed and especially against those economies that represent a significant flow of investment to the country, such as Spain, Switzerland, Chile, the United States and Canada, among others.
So said the President of the Republic, Dr. Alvaro Uribe Velez, in a speech during the visit of Spanish Prime Minister Jose Luis Rodriguez Zapatero, noting that the recent agreement with that country (which after selection the stage of constitutional revision was approved by the Congress through Law 1082 of July 31, 2006) "(") goes a long way to attract foreign investment and constitutes a precedent to be imitated with other nations (... ) ".
In this context and with the aim of further developing the policy pursued by the President of the Republic, the Supreme Council of Foreign Com erce proposed by a document dated March 27, 2007, the Joint Negotiating Agenda both International Investment Agreements AII (which until now has been developed under the coordination of the Ministry of Commerce, Industry and Tourism) and the agreements to avoid double taxation International ADT (which has been the initiative of the Ministry of Finance and Public Credit in coordination with the Directorate of National Taxes and Customs (DIAN)).
This Agenda promotes the negotiation of the two instruments with the same countries, coordinated in time and in the interests of Colombia ensuring that the countries with which it is traded are those which generate more foreign investment to Colombia, such as Mexico , Switzerland, United Kingdom, Canada, France, the Netherlands and, among others.
The Agenda was developed taking into account, inter alia, the flow of investment criteria of the countries interested in subscribing to the ADT:
"(...) In addition to being a guide to prioritize and focus efforts, joint agenda is vital to ensure that countries with which it is traded are those which generate more foreign investment to Colombia. That is, negotiate without following the agenda represent a high opportunity cost to postpone the negotiations themselves represent a substantial impact on foreign investment.
For the preparation of the negotiating agenda Joint, figures for 2005 were used, being the last year for which it has full information at the national level (source Bank of the Republic), and internationally (source UNCTAD ). The criteria for the construction of the agenda are:
2. Recent investment flows
While a foreign country can not have a significant capital accumulated and installed in Colombia, you may have recently brought high investment flows, reflecting a dynamic relationship with Colombia. For classification under this criterion investment flows of the last five years (2000-2005) they were analyzed for each of the countries in the sample, and the relative position averaged over the period (ordinal position). The result of this exercise was an ordered list (ranking) of the relative importance of countries under this criterion. The most dynamic countries regarding recent investment flows were: Switzerland, United Kingdom, United States, Mexico, Canada, Netherlands, France, Germany and Venezuela "...
In this context and developing government policy, in 2008 negotiations with Canada were completed; reaching the signing of this treaty which is now subject to consideration by the honorable Congress.
The Directorate of National Taxes and Customs, based on the type of the OECD Model, he developed the model for Colombia adjusted to the conditions and the tax system of the country, which constitutes a guideline for all negotiations the National Government. Therefore, the agreement with Canada that is the subject of this analysis was discussed and agreed therefrom.
Agreement between Canada and the Republic of Colombia to avoid double taxation and prevent fiscal evasion with respect to taxes on income and on capital

As mentioned above, the model used for the development and negotiation of this agreement is now to the consideration of the honorable Congress, it is proposed by the OECD, which since 1977 has had a major influence on negotiation, application and interpretation of tax treaties. Today and since 1992, it is known as the Model Convention "dynamic" that allows regular and timely updating and modification as a result of the ongoing processes of globalization and liberation of world economies.
However, it should be noted that this model is not a straitjacket for Colombia. In this sense, the Colombian model inspired by the OECD has several variations, collected a model UN and other characteristics of Colombia, in order to have a suitable model for the interests and the Colombian tax system.
The Convention maintains the principle of the source, although with some exceptions as will be seen later.
The first part of the Double Taxation Agreement (DTA) provides the scope to include both taxes covered as persons to whom it applies and clearly define some terms and expressions v. gr. what it is considered income tax and capital for purposes of the Convention and taxes which relate shall apply. equally concrete, its application to identical or substantially similar taxes which are imposed after signing it, which are added to, or in place today. also it provides that the competent authorities of the Contracting States shall notify each other of significant changes which have been made in their respective taxation laws.
Subsequently, the terms on which the ADT is structured well defined:
political and geographical terms of the signatories expressions frequently used in the ADT as a competent "a Contracting State" authority are defined, and "Contracting the other State", "person", "company", "company", "international trade", "competent authority", "national", "resident" and "business" and clarifies that any term or expression not it defined therein shall, unless the context a different interpretation otherwise requires, have the meaning that at that time under the law of that State concerning the taxes to which the Convention, whichever is the meaning ascribed by the tax legislation which result from other branches of law of that State.
For clear understanding explicitly define what is meant by "resident of a Contracting State" and the criteria will prevail if you can not clearly determine the place of residence of a natural or legal person established . Later "permanent establishment" figure that does not exist in our legislation and that therefore it is particularly important accuracy to the Convention defines its application as defined. However, it is important to note that in domestic law equivalent is the branch companies or other foreign entities in Colombia, since according to Article 471 of the Commercial Code, when foreign companies to carry or will carry out permanent activities in Colombia They must establish a branch in the country. It is further noted what is not understood by the permanent establishment and the development of activities that are essentially preparatory or auxiliary character.
It is pertinent to note that in the case of works or construction projects is incorporated that it constitutes a permanent establishment if it lasts more than six (6) months "away from the model OECD convention which sets the term under 12 months" , which is more favorable for the country receiving the investment to the extent that the concept of permanent establishment. It is used to determine the right of a Contracting State (not the residence) to tax the profits of an enterprise of the other State of which he is a resident.
The main part corresponds to Articles 6 to 20 and 22, in which it defines and delimits the taxing power of the Contracting States concerning taxes on income and capital.
In terms of independent services, accepting the position of the OECD in revising the 2000 model agreement eliminated Article 14 which referred to these services, "considering that they may be governed by article 7 as they are a form of "business income", "this agreement integrates with the provisions of Article 7 on business profits.

It should be noted however that not be incorporated into the OECD Model Convention, in Article 26, the so-called "anti-abuse clause" that aims, in line with international practice, serve as an instrument in the fight against fraud included or tax evasion, stating that if configured abusive conduct of the provisions of the agreement, the provisions of the treaty will not benefit who commits such misconduct, a provision which is of high importance for the exercise of the powers of oversight of the tax Administration .
In the last part of the agreement some provisions that are generally accepted in international treaties to avoid double taxation, such as incorporated:
- The non-discrimination clause which aims to give the same treatment they have residents of the Contracting State to residents of the other Contracting State.
- The mutual agreement procedure between the contracting develop when a resident of a Contracting State considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Convention .
- The exchange of information is vital for tax administrations in their struggle to prevent and deter tax evasion.
- Normative reference to not affect the privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.
- Finally, the entry into force of ADT and regulates its complaint.
Below presents the main aspects covered by the Convention, which certainly will lead to enhanced dynamics and very important business activity that operates between the two countries:
- Includes income taxes and complementary and wealth for Colombia and Canada these same taxes.
- Revenues from business activities, air and maritime transport, investment, real estate income, services, capital seek protection, and artists and athletes, among others.
- Regarding the estate tax includes real estate, furniture, ships and aircraft and other assets.
- With regard to the elimination of double taxation will be allowed by Colombia and Canada discounting or deduction of income tax and wealth for residents (natural or legal persons) by a value equal to tax paid in the other State.
- For interest, the rate for the country of the source of 10% of the gross value in all cases is established.
- In the case of fees and royalties paid to residents of the other State, the rate of income tax is set at 10% of the gross value thereof.
- Regarding information exchange it is enshrined as a mechanism to facilitate Contracting States implementing the Convention and its internal taxation laws. In addition, the secrecy of such information is established and its disclosure is allowed only to the competent bodies on taxes.
- Regarding non-discrimination, it is agreed that nationals of the Contracting States shall not be subject in the other Contracting State to any taxation or any obligation relating thereto which is not required or is more burdensome than those who are or may be subjected its nationals who are in the same conditions, in particular with respect to residence (Clause Reciprocal).
- Regarding the mutual agreement procedure between the contracting develop when a resident of a Contracting State considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Convention; he remembers as it raises the OECD Model, that irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident.
- Finally, note that as addendum to Article 26 is agreed that, in the event that the provisions of the Convention are used in a manner that grant benefits not contemplated or not intended, the competent authorities of the Contracting States will examine the necessary amendments to the Convention. The Contracting States agree to discuss expeditiously with a view to amending the Convention in so far as necessary.

For the above reasons, the Government, through the Ministers of Foreign Affairs and Finance, he asks the honorable Congress approve the Agreement between Canada and the Republic of Colombia, to avoid double taxation and the Prevention of Fiscal Evasion in Relation to Income Tax and Wealth Tax, and its Protocol, made in Lima, at 21 days of November 2008.
of the honorable Senators and Representatives | || The Minister of Foreign Affairs Jaime Bermudez
.
The Minister of Finance and Public Credit, Óscar Iván Zuluaga
.

LAW 424 1998 (January 13)
why tracking the international agreements signed by Colombia is ordered.

The Congress of Colombia DECREES: Article 1.
. The National Government through the Foreign Ministry presented annually to the Second Committee on Foreign Affairs of the Senate and House, and within the first thirty days of the legislative session that begins each July 20 calendar, a detailed report on how they are fulfilling and developing the existing international agreements signed by Colombia with other States. Article 2.
. Each branch of the National Government responsible for implementing international treaties within their competence and require reciprocity in them, will communicate the relevant information to the Ministry of Foreign Affairs and east to the Second Committees.
Article 3o. The full text of this law shall be annexed to each and every one of the international conventions that the Ministry of Foreign Affairs present to Congress.
Article 4o. This law governs from its promulgation.
The President of the honorable Senate.
AMILKAR ACOSTA MEDINA.
The Secretary General of the honorable Senate,
PUMAREJO PEDRO VEGA.
The President of the honorable Chamber of Representatives,
CARLOS ARDILA BALLESTEROS.
The Secretary General of the honorable House of Representatives, DIEGO VIVAS
TAFUR.
REPUBLIC OF COLOMBIA - NATIONAL GOVERNMENT
published and execute.
Given in Santa Fe de Bogota, DC, 13 January 1998.

Ernesto Samper Pizano Minister of Foreign Affairs, Maria Emma Mejia
VÉLEZ. RAMA

PUBLIC POWER EXECUTIVE PRESIDENCY OF THE REPUBLIC
Bogotá, DC, August 21, 2009
authorized. Submit for consideration by the honorable Congress for constitutional purposes.
Alvaro Uribe.
The Minister of Foreign Affairs Jaime Bermudez
.
DECREES: Article 1.
. Approval of the Agreement between Canada and the Republic of Colombia, to avoid double taxation and prevent fiscal evasion with respect to taxes on income and on capital and its Protocol, made in Lima, on the twenty (21) days in November of two thousand and eight (2008). Article 2.
. In accordance with the provisions of article 1 of Law 7 of 1944, the Convention between Canada and the Republic of Colombia, to avoid double taxation and prevent fiscal evasion with respect to taxes on income and on capital, and its Protocol, made in Lima, on the twenty (21) days of November of two thousand and eight (2008), that article 1 of this Act are passed, they will force the country from the date it was perfect international bond in respect thereof.
Article 3o. This law applies from the date of publication.
The President of the honorable Senate, Armando Benedetti
Villaneda.
The Secretary General of the honorable Senate,
EMILIO RAMÓN OTERO DAJUD.
The President of the honorable Chamber of Representatives,
CARLOS ALBERTO DIAZ ZULUAGA.
The Secretary General of the honorable House of Representatives,
JESUS ​​ALFONSO RODRÍGUEZ CAMARGO.
REPUBLIC OF COLOMBIA - NATIONAL GOVERNMENT
transmittal and enforcement.
Run, after review by the Constitutional Court, pursuant to Article 241-10 of the Constitution.
Given in Bogotá, DC, on June 29, 2011.

CALDERON JUAN MANUEL SANTOS Minister of Foreign Affairs Maria Angela Holguin
CUÉLLAR.
The Minister of Finance and Public Credit,
JUAN CARLOS ECHEVERRI GARZÓN.