cover image AMINEWS
June, 2013
 
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  Colombia - Agreements Negotiated  
     
  The Colombian government has been very active in negotiating agreements that enhance its economic expansion, improving incentives to attract foreign investments in a competitive and transparent way following the global trend. In addition to the recent tax reform, the following agreements were recently negotiated:

A Tax Information Exchange Agreement (TIEA) between Colombia and Curaçao will enable Colombia and Curaçao to exchange relevant information. Before it enters into force several steps must be completed within different governmental entities from both countries. The agreement must be approved by the Minister Council of the Government of the Netherlands as well as the Colombian Congress, and then reviewed by its Constitutional Court.

Last month, Colombia and the United States started negotiations to complete a TIEA to provide required tax information between agencies (DIAN and the IRS). The agreement implies that the DIAN could request information about Colombian citizens in the US, and in turn the IRS may seek information about the operations and activities of US tax residents in Colombia.

Colombia also negotiated a commercial trade agreement with the European Union. This agreement is part of Colombia’s policy of economic internationalization aimed at achieving increased growth and economic development through a permanent relationship with the largest trade bloc in the world.

The new Colombian policies and recent tax reforms make it of the utmost importance to use legal structures compatible with current legislation, including structures that take advantage of the tax benefits within the agreements between the various countries. Current negotiations and exchange of information agreements are the prelude to agreements to avoid double taxation, which in turn will enable us to offer our clients more structure options.

Amicorp invites you to discuss with your legal and tax advisors the vehicle that best suits your plans.
 
     
  Argentina - Currency Exchange Controls and the Beneficial Uses of a Private Trust  
     
  Early in 2002, Argentina adopted a single market for free exchange (MULC), applicable to all foreign exchange transactions. Exchange transactions may be carried out only by the entities authorized by the Central Bank of Argentina. Monthly limits were established on the amount of currency to be exchanged. In turn, it was established that all operations that do not comply with the provisions of the exchange regulations are considered illegal and fall under the Criminal Exchange Regime (Régimen Penal Cambiario).

Foreign exchange earnings of non-residents in Argentina entering the MULC are subject to the application of encaje, a mandatory deposit of 30% of the inflow at the central bank without payment of interest for the period of one year. There are exceptions to this rule; for instance, when the income is a capital contribution.

In 2010, regulations were introduced that limit access to the MULC. Regulations were established that tightened rules on the formation of assets abroad by residents. Further, in October 2011 it was established that the Federal Administration of Public Revenue (AFIP) was responsible for overseeing each currency purchase request. In January 2012, Argentina regulated the entry and exit of foreign currency for services, income and current transfers. By July 2012, along with the introduction of many other limitations, the purchase of currency for saving purposes was banned.

As a result of the reintroduction of exchange controls and restrictions on access to the foreign exchange market, alternative mechanisms have come into play. Examples include the purchase of government bonds with exposure in Argentina and their subsequent sale of the bonds in a foreign market where US dollars are deposited in an account outside of Argentina. This mechanism is called contado con liquidación.

Because of the restrictions on the entry of foreign exchange and the difference between the dollar value paid in MULC and the higher value obtained by the contado con liquidación, this mechanism has also been used in the opposite direction for pesos in Argentina. Called contado con liquidación inverso, this involves buying bonds against dollars abroad and their subsequent sale against Argentine pesos.

Contado con liquidación transactions comply with current regulations. For a transaction to be legal and valid a minimum of 72 working hours needs to have passed from the time of the completion of the transaction that resulted in the incorporation into the customer’s securities portfolio and the subsequent sale. The transaction can not be ordered by subjects incorporated, domiciled or resident in jurisdictions included in the Argentine list of low or no tax jurisdictions, or paraísos fiscales.

A private trust or fideicomiso privado formed in Argentina can have a bank account abroad. This enables the use of the mechanisms described above while complying with the applicable regulations.
 
     
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  For more information on beneficial uses of private trusts, or any other issues discussed above, please feel free to contact:
  Ana Onate Bello
Sales Manager

Amicorp Colombia S.A.S. (Bogota D.C.)
Email-ID: A.Onate@amicorp.com
Marcelo Telleria
Sales Manager

Amicorp Argentina (Buenos Aires)
Email-ID: M.Telleria@amicorp.com
     
     
 
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  Disclaimer

This document is prepared for general information purposes only. Amicorp Group does not provide tax or legal advice to its clients. Any opinions contained herein should not be construed or interpreted as advice provided by Amicorp Group.