Colombia: Foreign exchange rule changes; opportunities concerning domestic transactions

Colombia: Foreign exchange rule changes

New rules issued by the Colombian central bank concern the registration, modification, and / or cancellation of foreign debt. The new rules (issued 10 February 2016) allow payments in foreign currency between residents in Colombia, and thereby can reduce certain administrative and financial costs relating to certain transactions.

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Summary

“Clearing accounts” are accounts opened in foreign banks and that are denominated in foreign currencies. These accounts must be registered with the Colombian central bank to allow residents of Colombia (whether individuals or companies incorporated in Colombia) to pay or receive foreign currency payments. The holders of these accounts are not required to go to a commercial bank in order to buy or sell currencies. 

New rules

The new rules include a change to the foreign exchange measures—a change that removes a previous prohibition on registering “clearing accounts” based on internal operations. Instead, it is no longer required that there must be a mandatory “channelization transaction”—import, export, debt guarantee, guarantee or derivative—for the account to be registered under the compensation mechanism.

Prior to these new rules, in order to register “clearing accounts” with the Colombian central bank, at least one foreign transaction (import, export, borrowing, etc.) was required. Domestic payments (i.e., between residents of Colombia) were considered payable in pesos and could not be recorded pursuant to the “compensation mechanism.”

The new rules establish that domestic transactions and operations (denominated in foreign currencies) qualify for registration under the compensation mechanism. Payments in foreign currency between Colombian residents may be allowed if both parties register the accounts under the compensation mechanism or have one previously registered account. 

KPMG observation

Under the new rules, there are specific account registration deadlines and obligations that must be satisfied by the account holder. It may be prudent to consider these requirements because of the possible opportunities that the new rules provide for taxpayers in Colombia. 

 

For more information, contact a tax professional with KPMG’s Latin America Markets Tax practice or with the KPMG member firm in Colombia:

Devon M. Bodoh | +1 (202) 533-5681 | dbodoh@kpmg.com

Alfonso A-Pallete | +1 (305) 913 2789 | apallette@kpmg.com

Zulay Pérez | + 571 618 8000 | zulayperez@kpmg.com

Vincente Javier Torres | + 571 618 8000 | vjtorres@kpomg.com

Camilo Andrés Rodriguez | + 571 618 8000 | camilorodriguez@kpmg.com

Isabel Cristina Delgado | + 571 618 8000 | isabeldelgado@kpmg.com

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