EXCLUSIVE: Why Colombia is paying close attention to M&A
24 February 2012
Jack Grocott speaks to Diego Gonzalez-Bendiksen, the head of the Colombian tax office's (DIAN) international audit unit about the future of compliance and why he is scrutinising M&A activity.
International Tax Review: What advice would you give taxpayers to avoid investigation from DIAN?
Diego Gonzalez-Bendiksen: There are several criteria we consider to review taxpayers and launch an audit, so the following are some recommendations for taxpayers to avoid scrutiny:
Comply with formal requirements to avoid penalties;
Prepare documentation in advance and identify if adjustments must be performed; it is much better for taxpayers to perform voluntary adjustments than to perform them motivated by an official assessment, which usually include high penalties;
Avoid switching or changing the use of comparables or methodology from one year to another in a same type of transaction. This clearly is subject to scrutiny;
Amounts and recurrence of cross-border intercompany transactions are reviewed;
We suggest taxpayers not to modify their profit margins over time, since the performance of the businesses and their profitability/losses is critical;
Other transactions involving services or intangibles may be subject to scrutiny.
ITR: What are the typical...
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