On 27 December 2021, the tax administration of Colombia (DIAN) added a new regulation on the identification and declaration of Ultimate Beneficial Owner, through the Registro Único de Beneficiarios Finales (RUB) for tax purposes. (Resolution No. 000164, which entered into force on 15 January 2022).
This new resolution provides detail on who is required to provide information to DIAN, how the information is to be updated, and the criteria to determine a legal entity as Ultimate Beneficial Owner. It also lays out the conditions for effective implementation of Sistema de Identificación de Estructuras Sin Personería Jurídica (SIESPJ – the identification system for structures without legal entity status).
Ultimate Beneficial Owner identification
In Colombia, a legal entity’s ultimate beneficial owner is considered to be a natural person who owns 5% or more of the share capital or voting rights (directly or indirectly), and/or benefits 5% or more from the assets, revenue or profits. This can also be a natural person who controls the legal entity by any different means.
When the Ultimate Beneficial Owner is not able to be identified by this criteria, unless there is a natural person further up in the entity hierarchy, the entity’s beneficial owner is considered to be the legal representative.
Ultimate Beneficial Owner of an entity without legal status are considered to be the trustees, trustors, fiduciary or financial committees, beneficiaries or conditional beneficiaries, and/or any other natural person with effective or ultimate control or benefit from the entity’s assets, profits and results.
Entities without legal status created before 15 January 2022 are required to register with RUT (the Colombian online tax system) before 30 September 2022. Entities created after 15 January 2022 are required to register with RUT within 30 days of formation.
Ultimate Beneficial Owner reporting obligations
Legal entities, and various entities without legal status, are obliged to provide Ultimate Beneficial Owner information – whether they have profit motive or not, whether they have permanent establishment or not.
This includes entities incorporated or administered in Colombia, governed by Colombian law, or if the entity’s trustee (or equivalent) is a Colombia legal person/natural person with Colombian tax residency.
Penalties will be imposed on entities that fail to comply with reporting obligations or ignore DIAN’s requests from information. These penalties will be 0.5% of net income or 0.5% of gross assets of the taxpayer or declarant, corresponding to the year immediately before or the last declaration. Decentralised entities, political or diplomatic/consular organisations, and international organisations recognised by the Colombian government are exempt from reporting.
For more information on reporting requirements for your Colombian operations, including the information to be provided, simply get in touch with our tax team in Bogota.