Tax treaty between Korea and Colombia has been concluded for double tax relief and prevention of tax evasion. The treaty became effective from July 3, 2014 and will apply to payments of income to be made on or after January 1, 2015. Key contents of the agreement are as follows:
Main contents |
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Taxes covered Article 2 |
▪ Korea: Individual income tax, Corporate income tax, Special tax for rural development ▪ Colombia: Income tax and its complementary taxes |
Permanent Establishment Article 5 |
▪ Building site, construction project, or installation activity which lasts more than six months. |
Business Profit Article 7 |
▪ Only taxable in the source country for business profit which is attributable to Permanent Establishment |
Shipping and Air transport Article 8 |
▪ Taxable in the resident country of the enterprise which is operating ships and aircraft in international traffic |
Dividends Article 10 |
▪ 5% (when the shareholder holds directly at least 20 percent of the capital of the company paying the dividends) ▪ 15% (when a company which is a resident of Colombia has not paid income tax on profits distributed to shareholders because of exemptions or because the profit exceeds the non-taxed limit, the dividend distributed to beneficial owner who is a resident of Korea) ▪ 10% (in all other cases) |
Interest & Royalties Article 11 &12 |
▪ 10% |
Capital Gains Article 13 |
▪ Taxable in the source country in the case where gains are derived from transfer of shares of a company deriving more than 50 percent of their value directly or indirectly from immovable property ▪ Taxable in the source country in the case where the recipient of the gains has at any time during the twelve month period preceding the transfer directly or indirectly owned shares or other rights representing capital of such company by 25 percent or more ▪ Taxable in the resident country (in all other cases) |
Income from Employment Article 14 |
▪ Taxable only in the country where service is rendered under employment |