Tax Treaty Case Law around the Globe 2025

1. Introduction

The imposition of a withholding tax on technology and skills imports was established in Colombia in 1975. The rationale for imposing it was that resident companies were constantly importing technology and skills and deducting the costs for those services, consultancy, and assistance as business costs. This situation created a significant decrease in revenue that could be allocated for activities performed in the country as the providers of those services and skill-transfers were not paying taxes in Colombia. This would be compensated with the withholding tax on payments for technology and skills. The 1975 legislator considered that this was a fair situation given that Colombia was likely to import more technology and skills in the future and considering the need to obtain revenue from the activities that received those new skills and technologies. This thinking was materialized in an addition of sections 7 and 8 to Art. 24 of the Colombian Tax Code. It established a list of Colombian-sourced income and a special withholding rate for payments to non-residents for technical services, technical assistance, and consultancy in Art. 408 of the Colombian Tax Code.

The import...