Transfer prices were an instrument included within the multiple tax reforms made to the Tax Statute, their main function is to legitimize the purchase operations and transfers of goods and services between economically related companies. Today in Gestiones Empresariales López & James learn the fundamental details about this tool present in Colombian legislation and regulated in article 260 of the Tax Statute.

The objective of transfer prices is essentially to monitor the operations of sale or transfer of use of any type of goods for the national and international market between companies that are economically linked, with the aim of avoiding any irregularity or evasion that may arise . This mechanism acquired special relevance in Colombia, with the recent entry of our country into the OECD, an organization that requires a transfer pricing regime from its member states.

As an example and to give greater clarity to the matter, if a multinational that may or may not have a presence in Colombia sells goods or services to a subsidiary company duly established in the country, it must set transfer prices, that is, previously set the value of said services, so that the tax authority, in our case the DIAN, can verify that the prices do not violate the arm’s length principle, verifying that these are not lower than the prices that would normally be offered for the same services between companies that they do not depend on each other.

Thus, it is frequent the case of multinational companies with subsidiaries in Colombia that, due to ignorance of this rule, risk receiving sanctions from the DIAN, since all companies that are taxpayers of income and complementary taxes, that have links in the abroad or in free zones and have carried out operations for the purchase and sale of goods or services with entities that qualify as economically linked will be part of this regime and the penalties vary between 75 to 80,000 UVT depending on the offense.

A novelty that the legislation brings to this area and that can save its beneficiaries several headaches, is the elaboration of advance price agreements, these are carried out with the DIAN and have the objective of entering into prior agreements that allow determining the price or profit margin of the different operations that they carry out with their related parties, this with the aim of facilitating the presentation of income and complementary taxes for those who take advantage of it, since it will be certain that the prices set have already been approved by the DIAN.

Remember, Gestiones Empresariales López & James is willing to advise you on the matter of transfer pricing, in relation to which documents must be presented, on which dates and also on how to access the advance price agreements with DIAN. Likewise, we are also willing to collaborate in any other area that requires our experience, since our team of legal, tax and accounting consultants is willing to offer advice through their virtual channels at any time through the email contact @ or by calling our landline in Bogotá (571) 7498261. For more information, visit

About the Author:

Carlos Méndez is a lawyer, he is part of the team of Gestiones Empresariales López & James Bogotá and has experience in tax and labor law issues.

Languages: Spanish, English and Japanese.

Bogota D.C. October 10, 2020.