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05 December 2018

Colombian tax authority changes its position on the characterization of cloud computing services

On 7 November 2018, the Colombian tax authority issued Opinion No. 32620, concluding that not all cloud computing services are technical services, and a case-by-case analysis is required to determine whether cloud computing services are technical services.

This new opinion supersedes Opinion No. 065 of 6 February 2018, in which the tax authority determined that cloud computing services are technical services for tax purposes.

According to Opinion No. 32620, if a cloud computing service is automated (i.e., there is no human intervention), the service should be deemed as a general service provided from abroad and not as a technical service. If the cloud computing service requires some human intervention that involves the application of specialized knowledge (not conveyed to the recipient of the services), the service is a technical service.

Technical services are subject to a 15% withholding tax and the service agreement must be registered with the tax authorities to claim the deductibility of the service expense. General services rendered from abroad are not subject to tax in Colombia.

For additional information with respect to this Alert, please contact the following:

Ernst & Young S.A.S., Bogotá
  • Luis Sánchez | luis.sanchez.n@co.ey.com
  • Andrés Millán | andres.millan.pineda@co.ey.com
  • Zulay Arévalo | zulay.arevalo@co.ey.com
Ernst & Young, LLP, Latin American Business Center, New York
  • Juan Torres Richoux | juan.torresrichoux@ey.com
  • Ana Mingramm | ana.mingramm@ey.com
  • Enrique Perez Grovas | enrique.perezgrovas@ey.com
  • Pablo Wejcman | pablo.wejcman@ey.com
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
  • Jose Padilla | jpadilla@uk.ey.com
Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific
  • Raul Moreno, Tokyo | raul.moreno@jp.ey.com
  • Luis Coronado, Singapore | luis.coronado@sg.ey.com

ATTACHMENT

Document ID: 2018-6408

 
 

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