International Tax Planning to Optimize Transfer Pricing in Colombia

In a globalized world, companies with operations in multiple countries face unique challenges in terms of tax compliance. One of the most critical areas is transfer pricing, which refers to the prices at which companies within the same group conduct any type of transaction among themselves, such as the purchase and sale of products or assets, provision of services, granting of loans, among others. Adequate international tax planning is key to optimizing these transfer prices and ensuring both efficiency and regulatory compliance.

What is Transfer Pricing?

Transfer pricing refers to the prices at which transactions are conducted between companies that belong to the same corporate group but operate in different jurisdictions. This mechanism is essential for the correct distribution of income and expenses among the various entities of a corporate group, ensuring that they are reflected fairly and in accordance with the tax laws of each country.

The Importance of International Tax Planning

Effective international tax planning allows companies not only to comply with local and international regulations but also to optimize their tax burden. In Colombia, the regulatory framework for transfer pricing aims for transparency and fair tax contributions, aligned with OECD practices. However, without an adequate strategy, companies may face significant tax adjustments and penalties.

A well-planned transfer pricing strategy can offer several benefits, such as the reduction of legal and financial risks, tax optimization, and improvement in business and financial planning. By staying up-to-date with tax regulations, companies can avoid costly penalties and litigation. Through an effective strategy, it is possible to achieve an efficient tax burden, thereby maximizing the profitability of the corporate group.

At BéndiksenLaw, we understand the complexity of the global tax environment and offer specialized services in transfer pricing. We analyze your company’s current transfer pricing policies and suggest adjustments to align them with recommended international practices. Additionally, we assist in preparing all necessary documentation to comply with Colombian regulations and reduce the risk of tax adjustments.

If your company operates internationally and seeks to optimize its transfer pricing strategy, contact BéndiksenLaw. Our experts are ready to help you navigate the complexities of the international tax environment and ensure that your company complies with all regulations while maximizing its tax efficiency.

Meet BéndiksenLaw Colombia’s New Head of Tax

Seeking to provide a more complete and comprehensive service to our clients, we are proud to announce that our founding partner, Jaime G. Béndiksen, will head the Tax Practice area of ​​our Colombia office. Throughout his more than 50-year professional career, Mr. Béndiksen has accumulated extensive experience in the tax law area, advising a wide variety of clients in Colombia, Mexico and the U.S. which is why we are confident that his appointment will allow us to further strengthen and consolidate our office in Colombia. For this reason, we present his resume below:

Education

Mr. Béndiksen graduated in 1970 from Universidad Nacional Autónoma de México (Mexico City), receiving an LLB, also received a Masters in Comparative Jurisprudence (diploma) from New York University in 1974 and a JD from ICFES in Colombia in 1982.

Jurisdictions

Admitted to practice in Mexico and Colombia (South America).

Practice

Practiced with the law firm of Baker & McKenzie from 1970 through 2011, elected international partner in 1977.  With this firm he practiced from 1978 through 1992 in Colombia.

Founding partner of BéndiksenLaw.

Practice Areas

Mr. Béndiksen has over 50 years of experience in Mexican and Colombian tax law in general, with emphasis in tax treaties, competent authority proceedings, international tax planning, supply-chain restructuring, oil exploration, production and services, taxation of software, wealth management, mergers and acquisitions, permanent establishments, cross-border transactions, transfer pricing, employee stock plans and value-added tax.  In tax litigation he has secured landmark decisions on complex tax issues, overturning previous tax court positions.

Public Service

Advisor to the Colombian Tax Administration (DIAN) in 2000-2001 to introduce transfer pricing in Colombia, illustrating the DIAN on this area of tax law and its benefits of the system, drafting the first statutory provisions, drafting the bill submitted to Congress and persuading Congress of the benefits to Colombia in approving the system.

Expert Witness

Has acted as an expert witness on Mexican tax law for the US Internal Revenue Service (IRS).

Also acted as expert witness on Mexican tax law in a US arbitration proceeding between two US multinational entities.

Coordinating Counsel for Multinational Clients

Mr. Bendiksen has extensive experience serving as coordinating counsel for multinational clients, first as Head of the Tax Practice Group at Baker & McKenzie Mexico, and, since 2011, at BéndiksenLaw.

Publications

Writes widely on domestic and international tax topics.  Among many other publications, Mr. Béndiksen:

  • Wrote the Colombia/Mexico national reports for the International Fiscal Association Annual Congresses in Amsterdam (1988), Delhi (1997) Mumbai (2014).
  • Has published several pieces in the Colombian Tax Law Institute Magazine (Revista del Instituto Colombiano de Derecho Tributario).
  • Has written two reports for the Colombian Tax Law Institute (Instituto Colombiano de Derecho Tributario) Annual Tax Law Conferences. 
  • Co-authored the section on Mexico in CCH’s “International Transfer Pricing Laws”. 
  • Directed and co-authored CCH’s “Mexican Tax Guide”. 
  • Was the editor of “Practical Mexican Tax Strategies” published bi-monthly by World Tax Executives, Inc./Thomson Reuters. 
  • Co-authored the Mexico country profile for the Global Tax Guide, published by BNA International.
  • He is a correspondent in Mexico for Tax Notes International.

Presentations

Frequent speaker at local and international fora, on domestic and international tax matters, including:

  • American Bar Association.
  • Asociación Nacional de Industriales (ANDI).
  • Bloomberg BNA.
  • Bogota Chamber of Commerce.
  • Calgary Oil.
  • Canadian Tax Foundation.
  • Colombian Tax Law Institute (Instituto Colombiano de Derecho Tributario).
  • Council for International Tax Education.
  • D. C. Bar.
  • Executive Enterprises Institute.
  • International Fiscal Association, Annual Congresses of Amsterdam (1988), Delhi (1997), Uruguay (2012).
  • Petroleum Equipment Suppliers Association.
  • The Society of Trust and Estate Practitioners (STEP).
  • Tax Executives Institute.
  • Universidad de los Andes.

Recognitions

  • Consistently listed in the Guide to the World’s Leading Tax Advisers, published by Euromoney Publications of London. 
  • Ranked regularly as a leading advisor on Mexican tax matters in the annual poll of 1000 corporate tax directors conducted by International Tax Review.
  • Named as one of the top tax lawyers in Latin America by Latin Lawyer.
  • Recognized as a leading individual on cross-border structuring matters by International Tax Review. 
  • Recognized as “Tax Advisor of the Year” by “Defensa Fiscal”, a specialized Mexican tax publication, in 2005.
  • Recognized regularly by Chambers & Partners in its Global Guide as one of the best tax lawyers in Mexico, dubbing him as “a phenomenal tax lawyer, especially in consulting and litigation”, adding “He is a leader in the field and ‘highly skilled and responsive’ according to clients”.   
  • Regularly listed by Who’s Who Legal, published by Law Business Research, Ltd.
  • Listed yearly as a recommended lawyer by PLC Which Lawyer?
  • Regularly ranked as a Top Tax Lawyer in Mexico in Chambers Latin America Guide.
  • Chambers and Partners top 5% of lawyers globally.

Memberships

  • Member of the International Fiscal Association (IFA), where he was President of the Colombia chapter. 
  • Member of the Precedents and Legislation Committee of the International Fiscal Association (IFA), Mexico Branch.
  • Member of the Transfer Pricing Committee of the International Fiscal Association (IFA), Mexico Branch.
  • Honorary member of the Colombian Institute of Tax Law (Instituto Colombiano de Derecho Tributario) since 1992.

Languages

Spanish, English, Italian

In case you need legal counsel on tax matters, do not hesitate to contact us.