International tax law today: a view from Colombia

• Author: Mauricio Plazas Vegas
• Pages: 95-137

Studi Tributari Europei 1/2017

!

© Copyright Seast – Tutt i i d iri tti ri se rva ti!

!

95!

International tax law today:

a view from Colombia*

MAURICIO A. PLAZAS VEGA2

Table of Contents

1.The contents of international tax law – the importance of soft law and the

remnants of the relation of power 2. Methods to avoid double taxation as

provided for in the framework of international tax law 3. International tax

law from the perspective of indirect taxation

1.The contents of international tax law – the importance of soft law

and the remnants of the relation of power

Tod ay, in the co nt ex t o f g lo bal economy, economic opening and the

internationalization of business activities, the regulatory field of

international tax law is not confined to treaties that relate to direct taxation

as was the case a few years ago. Instead, this field has expanded and now

covers a purposeful fight against tax avoidance practices and the erosion of

income tax bases and the field of indirect taxation – which does so more

intently every day. The first of these is based upon the positive action by

OECD and the G 20 group, and an acute interest in bringing in every

country and especially developing countries to a sort of multilateral

commitment that should lead the way to a worldwide notion of tax justice.

The second one springs from the general trend of the growing importance of

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

*How to quote this article: M.A. PLAZAS VEGAS, International tax law today a view from

Colombia, in European Tax Studies, n. 1/2017 (ste.unibo.it), pp 95-137, DOI:!

10.6092/issn.2036-3583/8770.

1 Mauricio A. Plazas Vegas, Full Professor at the University of Rosario, Colombia.

!

Studi Tributari Europei 1/2017

!

© Copyright Seast – Tutt i i d iri tti ri se rva ti!

!

96!

indirect taxes, where the adoption of value added taxes by the majority of

Western countries and the export o f this model to Asia and Africa has been

fundamental. The making of economic trade blocs, the creation of the

Worldwide Trade Organization –WTO –, the repeated making of free-trade

agreements and the generalized trend of reducing customs duties and

making the global and regional exchange of goods and services as easy as

possible –all of these are facts and events that add to the importance of

VAT–; and so they provide numerous rules and principles that pertain to

indirect taxation to nurture the legal framework of worldwide taxation.3

It is worth noting that all these trends issue a call for those who study tax

law to go back to studying the tax law relationship; and this happens at

times where the issue of lots of recommendations and guidelines designed

to strengthen tax administrations of all countries stands out vividly, seeking

to ensure the complete and fair collection of taxes. Once again, rigor

requires us to examine the contrast of the legal relationship and the relation

of power, because we must impede that arbitrary and excessive action by

the tax authorities is sponsored at the expense of the fundamental rights of

taxpayers – just in the name of this crusade that seeks to attain

international tax justice. Discretionary powers, reckless action and the

violation of the principle of good faith, of the presumption of innocence, of

personal information rights and of the right of defense and of due process of

law were dark passages of history, all of which occurred under the paradigm

of the relation of power and the exorbitant powers of tax officers. And these

events cannot in any way arise again under the new winds of international

taxation.

Having set out this quite necessary and timely qualification, we can now

proceed to mention the most relevant aspects of current international tax

law:

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

3 See RAMÓN VALDÉS COSTA, Institutions of Tax Law, Buenos Aires, Editorial Depalma,

1992, pages 34 and 35.

Studi Tributari Europei 1/2017

!

© Copyright Seast – Tutt i i d iri tti ri se rva ti!

!

97!

*The commitment of nations – which becomes more evident as each

day goes by – to unite efforts against tax evasion and to impede the erosion

of taxable bases and the shifting of profits to low or zero tax jurisdictions.

All of this has brought about bilateral and multilateral treaties on the

exchange of information and the collection of evidence to enforce

international tax audit efforts. In this matter, Colombia has been making

progress decidedly, by adhering to the Multilateral Convention on Mutual

Administrative Assistance in Tax Matters4, the making of bilateral

information exchange treaties – of which the one we entered into with the

United States5 is an example –, and the inclusion of stipulations to the

effect in double taxation treaties entered into by Colombia to avoid double

taxation in point of patrimony and income taxes. These are treaties the

country has signed since 2005, the year in which we signed our treaty with

the Kingdom of Spain.

*The special interest of the OECD6 in setting, disseminating and

enforcing precise guidelines against the erosion of taxable bases, especially

in developing countries, so that these guidelines are used as reference

points in information exchange and double taxation treaties and also in

domestic laws.

*In this context, the adoption, by OECD, in 2013 – with the

endorsement of the G 20 group as voiced out at the meetings of 2013 in St.

Petersburg, 2014 in Brisbane and 2015 in Antalya7 –, of a series of

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

4 Which was approved in Colombia by Law 1661 of 2013. The treaty was declared to be

constitutional by Decision C – 032 of 2014 of the Constitutional Court – with Colombia’s

adhesion to the convention ensuing.

5 This treaty – entered into on March 30, 2011, was approved by Law 1666 of 2013 and was

declared to be constitutional by Decision C – 225 of 2014

6 The Organization for Economic Cooperation and Development.

7 The G-20 group comprises the European Unión, Germany, Canada, United States, France,

Italy, Japan, the UK, Russia, Saudi Arabia, Argentina (on behalf of Mercosur), Australia,

Brazil, China, South Korea, India, Indonesia, Mexico, South Africa and Turkey. It holds annual

meetings to discuss economic and fiscal matters. The top officers of the Treasury and

Finance Departments and of the Central Banks of the member countries attend the meetings,

with Heads of State attending occasionally.