BDO Corporate Tax News

Colombia - Reminder to update the UBO tax registry

Legal entities in Colombia, as well as structures without legal personality and similar structures, are required to populate a database operated by the tax authorities with information on their ultimate beneficial owners (UBOs) and keep that information up to date or face penalties for failure to comply. A resolution issued by the Colombian tax authorities in 2021 (Resolution No. 000164) introduced the UBO information requirement with a view to preventing money laundering, terrorist financing, other criminal activities and tax evasion and helping to ensure the transparency of ownership of entities and other covered structures.

Article 631-5 of the Colombian Tax Code sets out the factors to determine the identity of the UBO of an entity:
  • Ownership or benefit from assets or income: An individual who, acting individually or jointly, holds, directly or indirectly, 5% or more of the capital or voting rights of the legal entity or benefits from 5% or more of the assets, income or profits of the legal entity.
  • Control over the legal entity: An individual who, acting individually or jointly, exercises direct or indirect control over the legal entity by any other means.
  • Management of the legal entity: If the UBO cannot be identified using the above criteria, the UBO will be the legal representative or individual with the highest authority in the management or direction of the legal entity.
For these purposes, control is defined as the power to take or impose relevant decisions in the administration, direction or management of the legal entity through direct or indirect ownership.

The taxpayer must report the following information about the UBO:
  • Name and surname;                      
  • Date and country of birth;
  • Nationality;
  • Country of residence, city, address, zip code and email;
  • Tax identification number and country of issuance, if any;
  • Percentage of participation in the company’s capital;
  • Percentage of profit on yields or profits;   
  • Date from which the individual has the status of beneficial owner;
  • Date from which the individual ceases to have the status of beneficial owner; and
  • Criteria for determining the beneficial owner.
The UBO registry must be updated any time there are changes in the shareholder composition, inclusion of a new UBO or change in the legal representative (if such individual has been reported as a UBO), which can arise, for example, as a result of a merger, spinoff, purchase and sale of shares or other transaction.

It is the responsibility of the taxpayer to identify its chain of ownership, review the data on a quarterly basis—the first day of January, April, July and October—and ensure the information is up to date. If changes are needed, the information must be updated during the relevant month; for example, if a taxpayer conducts an analysis in April and discovers that a sale in February modified a UBO, the update should be made during April. If there are no modifications, the registry need not be updated.

Failure to make necessary updates can result in the imposition of a penalty of one Tax Value Unit (about USD 12) per day of delay.

It is important to note that legal entities, structures without legal personality and similar structures incorporated as from 1 June 2023 must initially register in the UBO registry within two months after registration as a taxpayer.

Martha Reyes
BDO in Colombia
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