On 3 July 2014, the tax treaty between South Korea and Colombia entered into force. The treaty is the first of its kind between the two countries.
The treaty covers Colombian income tax and its complementary taxes, and South Korean income tax, corporation tax, and the special tax for rural development.
If a company is resident in both Contracting States, then it shall be deemed to be a resident only of the State in which it is a national. If the company is a national of both States or of neither, the competent authorities will determine the company's residence for the purpose of the treaty through mutual agreement. If the authorities cannot reach mutual agreement, the company will not be entitled to any of the benefits or exemptions provided by the treaty.
Both countries generally apply the credit method for the elimination of double taxation.
The treaty includes a limitation on benefits article, whereby treaty benefits can be denied in respect of the articles on dividends, interest, royalties, capital gains, and other income. Under the provisions of the article, the denial of benefits will result when a resident of a contracting state is controlled directly or indirectly by one or more persons that are not a resident of that state, and the sole or main purpose of a transaction is to receive the benefits of the treaty.
The treaty will apply from 1 January 2015.
We’re here to answer any questions you have about the Orbitax products and services.
We’re committed to providing high value, low cost tax research and management solutions.
Our Twitter account is where you can find latest information, news updates, offers and lots more.