Tax audit in Colombia
What is tax audit in Colombia?
It is an institution carried out by a public accounting professional capable of attesting on the financial statement reasonableness, validating reports intended for government entities and monitoring the acts of administrators.
Tax audit in Colombia is responsible for monitoring economic entities to ensure the proper performance, transparency and suitability of economic transactions, their subjection to legal rules, as well as the effectiveness and efficiency of administrative management.
There is a greater responsibility in an external audit; it is subject to civil, criminal and legal consequences in Colombia according to the information contained in the opinions.
When are you obliged to have a tax auditor in Colombia?
In accordance with the law 43 of 1990 of the Commercial Code, tax audit in Colombia is a mandatory service for all branches and joint stock companies. Furthermore, tax audit is also mandatory for simplified stock companies that meet either of the following two conditions:
- At the close of 31 December of the previous year, the annual income is higher than 3.000 SMMLV (current legal minimum monthly wage), i.e. 2.633.409.000.00 Colombian pesos (about 630.000 euros) for the year 2020.
- At the close of 31 December of the previous year, gross assets are higher than 5.000 SMMLV, i.e. 4.389.015.000.00 Colombian pesos (about 1.050.000 euros) for the year 2020.
Even though the obligation is not fulfilled, it is appropriate to have the tax audit service in Colombia. This will help the company to elucidate improvement options regarding financial, accounting, tax, legal and administrative aspects, as well as to avoid engaging in sanctions.
How do we carry out the tax audit service in Colombia?
The control exercised by tax audit before the economic entity in Colombia is integral for all areas and transactions of the company.
Mainly there are three types of audit:
An opinion is issued on the company’s financial statements at 31 December of every year, prepared under the accounting rules and financial information accepted in Colombia.
Assessment of compliance with the legal-accounting standards applicable to the company, statutes and decisions of the highest corporate body. Review and signature of monthly statements, value added tax statements and annual income tax statements.
Its purpose is to conclude if the company’s internal control has been adequate to ensure the conservation and protection of business assets and third parties under its power.
Tax auditor in Colombia must determine in the report if financial statements are based on principles of general acceptance and if legal rules have been fulfilled. Furthermore, he/she must evaluate the efficiency and effectiveness level to achieve the objectives set out by the company, the good management of resources and the internal control system evaluation (ICS) to conceptualize their management.
Why use UR Global to conduct the tax audit service in Colombia?
UR Global Colombia has more than 8 years’ experience in Colombia, a consolidated local team of 30 people that manages 60 international companies; UR Global acts as tax auditor in 30 of them, as well as in other external companies.
Due to the presence of the company in Spain, it generates trust, proximity and close contact with its clients without leaving aside the guarantee and excellence in service provision. This is possible thanks to professionals specialized in the international company that decides to undertake projects at international level.
Frequently Asked Questions on tax audit in Colombia
It should be a fully trusted company because it safeguards the interests of partners and/or parties that compose the economic entity and thus the government’s interest addressed to the company, third parties, State and society.
It should be noted that the tax auditor roles in Colombia are much broader than in an external audit and the reasonableness of financial statements must be established and authorized with his/her signature.
Tax audit service acts as supervisory body of the accounting and financial processes in the company. Tax audit services of the company seek to analyze the tax and internal control processes in a comprehensive manner.
The tax auditor in his/her organization must carry out a comprehensive audit regarding procedures.
To be tax auditor in Colombia, the only requirement is to be public accountant.
Below we review the rules set out in that condition: the Article 13 of the Law 43 of 1990 notes that it is required to be public accountant to serve as tax auditor.