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Mandatory Peso Conversion: Financial Reporting for Colombian Branches
Applicability of the Comparable Uncontrolled Price (CUP) Method in the Transfer Pricing Regime: When is it Applicable?
June 25, 2024
Is the VAT incurred on tangible assets deductible for companies operating in the mining and energy sector? This article provides an explanation.
September 17, 2024The transactions of a foreign branch of a Colombian company, operating with a different functional currency, must be recognized for tax purposes in Colombian Pesos.
According to article 868-2 of the Tax Statute and article 1.1.3 of Decree 1625 of 2016, all financial information must be presented in Pesos from its initial recognition. Branches, without their own legal personality, integrate their accounting with the head office, converting transactions into Pesos using the representative market exchange rate.
The latter does not imply that foreign branches do not prepare their financial information separately. In fact, according to paragraph 1 of IFRS 21, an entity may carry out activities abroad through branches, which allows them to present individual financial statements in a foreign currency. However, when integrating them with the parent company, they must use the Colombian Peso as the currency
