UK and Colombia signed an agreement on avoidance of double taxation November 2, which is designed to support trade and investment by setting the upper limit of income tax on cross-border income.
The agreement was signed by the Financial Secretary of the Treasury, Jane Ellison, and Colombian finance minister Mauricio Cárdenas.
Income which was received through the international border, potentially exposed to tax in two countries, giving birth to the problem of double taxation. Agreement on avoidance of double taxation ensures that it is fixed, and the income earned in one country is taxed only once, not twice. Eliminating the risk of double taxation will give greater confidence for employees and companies between Britain and Colombia about which taxes they pay and where. The agreement will reduce barriers for international trade and investment, and promote growth and jobs. Also, an agreement of avoidance of double taxation includes provisions to help both countries work together to solve evasion and tax avoidance.
The agreement provides that dividends accruing to the pension fund under certain circumstances, dividends will be subject to income tax at a rate of zero percent. If the recipient owns at least 20 percent of the company paying the dividends, the tax rate will be limited to five percent. Otherwise, the tax rate on dividend income will be limited at fifteen percent.
For interest income withholding tax will generally be limited to 10 percent. Licensing also will be tend to rate 10 percent, providing the necessary conditions.
Financial Secretary of the UK Treasury, who signed an agreement with Finance Minister said, that agreement between Britain and Colombia underscores their overall commitment to expand trade and investment between their two countries. As well as encouraging growth and job creation, this transaction will allow both governments work together to fight against overseas tax evasion and avoidance.