Food Regulation in Colombia

The regulatory landscape for food in Colombia has undergone significant transformation in recent years, especially with the implementation of Resolution 810 of 2021, subsequently modified by Resolutions 2492 of 2022 and 254 of 2023. These regulations establish specific requirements for nutrient declaration, the nutritional information table, and front-of-package warning labels for foods marketed in the country.

Nutrient Declaration

The nutrient declaration is an essential component of these regulations. This section requires food manufacturers to include detailed information about the nutrient content in their products. This includes macronutrients such as carbohydrates, proteins, and fats, as well as micronutrients like vitamins and minerals. The purpose of this declaration is to provide consumers with a clear and accurate view of the nutritional value of the foods they consume, facilitating informed and healthy decisions.

Nutritional Information Table

The nutritional information table complements the nutrient declaration by providing a structured and easy-to-understand format for presenting these data. This table must include information on energy value, total and saturated fat content, cholesterol, sodium, total carbohydrates, dietary fiber, total and added sugars, proteins, and certain essential micronutrients.

The modifications introduced by Resolution 2492 of 2022 and Resolution 254 of 2023 have refined the requirements for the nutritional information table, ensuring it is more comprehensible and useful for consumers. For instance, the size of the font and the format of the table have been specified, ensuring it is easily readable and accessible to all.

Front-of-Package Warning Labels

One of the most visible and debated aspects of these regulations is the front-of-package warning labels, represented by black octagonal seals. These labels are mandatory for products that contain high levels of certain components that can be harmful to health if consumed in excess, such as added sugars, sodium, and saturated fats.

The purpose of these labels is to quickly and effectively alert consumers about the potential risks associated with consuming these products. According to the regulations, foods that exceed the established limits for these nutrients must carry one or more warning labels on the front of the package.

Starting on June 15, 2024, all foods marketed in Colombia must comply with the provisions set out in Resolutions 810 of 2021, 2492 of 2022, and 254 of 2023. Products that do not meet these regulations must be removed from the market, except those with specific authorization to deplete existing labels.

The implementation of these resolutions presents significant challenges for food manufacturers and marketers, who must adapt quickly to these new requirements. It is essential that companies conduct a careful analysis of these regulations to ensure their labels comply with all applicable provisions.

In this context, having the right advice is crucial. At BéndiksenLaw, we have counseled multinational companies on food and additive regulations, helping them navigate the complex regulatory landscape in Colombia. If you need assistance to ensure compliance with these new regulations, do not hesitate to contact us.

Colombia – Junk Food Tax – LAW 2227 OF 2022 AND DIAN RULINGS

The 2022 tax reform introduced, with effect from November 1, 2023, a tax classified as healthy, called the tax on industrially ultra-processed edible products and/or with a high content of added sugars, sodium or saturated fats (hereinafter the “ICUI” for its acronym in Spanish).

REASONING IN THE BILL SUBMITTED TO CONGRESS

The ICUI does not pursue collection purposes, strictly speaking.

According to the reasoning in the bill sent to Congress:

“On the other hand, ultra-processed foods, also known as ‘junk food’, have been the cause of chronic non-communicable diseases, such as hypertension, obesity, diabetes and some types of cancer, generating an expense to the health system of approximately 25 trillion pesos per year (2.1% of GDP) (Portfolio, 2022).

“One way to reduce the negative externalities associated with the consumption of sugar-sweetened beverages and ultra-processed foods is to implement a consumption tax on these products. These types of taxes correspond to a Pigouvian measure, and are generally used to reduce the consumption of some goods that result in negative externalities on the health of the population, in order to reduce the expenses of the health system associated with the incidence of diseases derived from the consumption of sugary drinks and ultra-processed foods and improve the well-being of the population.”

As can be seen, the ICUI is planned to correct the negative externality derived from the consumption of junk food on the health of the population through two mechanisms: the disincentive to their consumption and the generation of public resources that contribute to financing the requirements of the health system derived from related diseases.

THE TAX STATUTE PROVISIONS

The ICUI is regulated in articles 513-6 to 513-13 of the Tax Code.

In accordance with these provisions, the main features of the ICUI are as follows:

The Tax Administration

The tax administration of this levy is the Directorate of National Taxes and Customs (“DIAN” for its acronym in Spanish).

Taxable Persons

The producer and/or importer of these products, as the case may be, are responsible for the ICUI.

Taxable Events

Except for exports and certain donations that are excepted, the ICUI taxes:

  • The production, sale, removal of inventories or acts involving the transfer of ownership free of charge or for consideration of these products.
  • The importation of the aforementioned edible products.

However, it should be noted that this tax is not levied on all such edible products, but only those that have added sugars, salt/sodium and/or fats as ingredients and their content in the nutritional table exceeds the following values:

To calculate the percentages established in the table, the procedure in Paragraph 1 of Article 513-6 of the Tax Code should be followed. Paragraph 1, in addition to establishing the procedure to determinie the values, makes an extremely important clarification, namely, that, in the case of imported goods, the values of sodium, sugar and/or saturated fat content in the nutritional table must be reported in the import declaration. In other words, it will be based on the values contained in line 90 of the import declaration that, at the time of nationalization, determination is to e made as to whether or not the payment of the ICUI is appropriate.

But, as an additional limitation, only goods of the following tariff headings and subheadings are subject to ICUI, to the extent that they contain sodium, sugars or saturated fats in accordance with the definitions referred to below:

Taxable Base

The taxable base of this tax is the sales price.

In the case of donations or removal of inventory, the taxable base is the commercial value.

In the case of imported godos the taxable base on which the ICUI is to be calculated will be the same as that taken into account to settle customs taxes, increased by the value of this tax.

In the case of finished products produced in free zones, the taxable base will be the value of all production costs and expenses in accordance with the integration certificate plus the value of customs taxes. When the importer is the buyer or customer in the national customs territory, the taxable base will be the value of the invoice plus customs. taxes

Tax Rate

The tax rate is determined as follows:

Triggering Events

The ICUI is triggered as follows:

Definitions:

Article 513-6 of the Tax Code contains the following definitions:

  • Ultra-processed products are industrial formulations made from substances derived from food or synthesized from other organic sources. Some substances used to make ultra-processed products, such as fats, oils, starches and sugar, are derived directly from food. Others are obtained through the further processing of certain food components, such as the hydrogenation of oils (which generates toxic trans fats), the hydrolysis of proteins, and the “purification” of starches. The vast majority of ingredients in most ultra-processed products are additives (binders, cohesives, colours, sweeteners, emulsifiers, thickeners, foamers, stabilisers, sensory ”enhancers” such as flavourings and flavourings, preservatives, flavourings and solvents).
  • Ultra-processed products are industrial formulations mainly based on substances extracted or derived from food, as well as additives and cosmetics that give color, flavor or texture to try to imitate food. They are high in added sugars, total fat, saturated fat, and sodium, and low in protein, dietary fiber, minerals, and vitamins, compared to unprocessed or minimally processed products, dishes, and meals.
  • Ultra-processed products are understood as having salt/sodium added to them; those to which any salt or additive containing sodium or any ingredient containing added sodium salts has been used as an ingredient or additive during the manufacturing process.
  • An ultra-processed product shall be understood as having fats added to it; those to which vegetable or animal fats, partially hydrogenated vegetable oils (vegetable shortening, vegetable cream or margarine) and ingredients containing added greases have been used as ingredients during the manufacturing process.
  • Added sugars are monosaccharides and/or disaccharides that are added during food processing or packaged as such, and include those contained in syrups, fruit or vegetable juice concentrates.
  • Processed and/or ultra-processed food product that have added sugars will be understood as those to which sugars have been added during the manufacturing process according to the definition of the previous paragraph.

Additional Considerations

  • Cancelled, rescinded or terminated transactions of the related to the products subject to the ICUI will result in a lower value of the tax payable, without giving rise to a refund.
  • The ICUI constitutes for the buyer a deductible cost in income tax as a higher value of the product, under the terms of article 115 of the Tax Code.
  • The ICUI does not generate deductible taxes on sales tax – VAT.
  • The ICUI must be itemized in the sales invoice, in addition to the sales tax -/VA itemized on the invoice.
  • The taxable period for ICUI will be bimonthly. The bimonthly periods are: January-February, March-April, May-June, July-August, September-October, November-December.
  • The deadlines to file the returns and pay the ICUI, other than the ICUI corresponding to imports, will be as follows:

The deadline to pay the taxes corresponding to the November-December 2023 two-month period will be extended from January 10th to the 23rd, 2024, according to the last digit of the TIN.

  • In the case of imports, the tax will be assessed and paid together with the settlement and payment of customs taxes, using forms 500, 505 and 690.
  • The ICUI return will not be filed in periods in which no transactions subject to these taxes have been carried out.
  • The penalty for non-payment of the ICUI is 20% of the value of the tax that has to be paid or 10% of the gross income that appears in the last tax return.

DIAN RULINGS

With respect to this tax, the DIAN has issued various rulings, among which we may highlight the following points:

  • The manufacturer of the inputs or ingredients used to manufacture the products subject to the ICUI is not liable for the ICUI, as would be the case – by way of example – of the producer of sugar, fats, oils and starches.  The foregoing, unless such inputs or ingredients, individually considered, correspond to ultra-processed sugary beverages (including concentrates, powders and syrups) or to industrially ultra-processed edible products and/or with a high content of added sugars, sodium or saturated fats in the terms defined by the Law.
  • The inputs or ingredients used to make industrially ultra-processed edible products and/or with a high content of added sugars, sodium or saturated fats are not taxed with the ICUI, unless such inputs or ingredients, individually considered, correspond to industrially ultra-processed edible products and/or with a high content of added sugars, sodium or saturated fats in the terms defined by law.
  • The taxable base of the ICUI on imports consists of the sum of the customs value, customs duties, other duties, taxes or surcharges levied on importation or on the occasion of importation and VAT.
  • It is essential that all the legal requirements are met for a product to be considered taxed with the ICUI, one of which is that the product is edible.  In this regard, the Dictionary of the Spanish Language contains the following:

(i) “Edible” is that which can be eaten.

(ii) “Eating” means “Chewing and swallowing solid food”.

Therefore, dietary supplements and reconstitution powders that are designed to be ingested in liquid form are not considered edible for the purposes discussed here. Therefore, they do not generate ICUI.

  • In relation to sodium, the legislator did not distinguish between added sodium and that which is naturally part of the edible product.

In relation to sugars and fats, only free sugars and saturated fats are taken into account. Therefore, for tax purposes, sugars and fats other than the above that are part of the edible product should not be taken into account.

To illustrate the above: If an edible product in its natural state has 299 milligrams of sodium per 100 grams and 2 milligrams of sodium per 100 grams are added to it, it would exceed the value from which the product is considered taxed with the ICUI (≥ 300 milligrams per 100 grams).

  • The definitions contained in Article 513-6 of the Tax Code on processed and/or ultra-processed products that “have added salt/sodium”, “have added fats” and “have added sugars” are not cumulative, although they may concur with each other; therefore, it will be sufficient for one of them to be present for purposes of the ICUI.
  • The information related to the ICUI must be included in the XML of the electronic invoice, under Code 35

As of December 1, 2023, discrimination (…) must be carried out under the terms set forth in the technical annex to electronic sales invoice version 1.9

  • Finally, although it is not a ruling per se, in a document related to the inflationary effects of the ICUI, the DIAN stated that the products taxed with the ICUI will be those that, as ingredients, have been added sugars, salt/sodium or fats sufficient to carry the front warning label established by the Ministry of Health.

CONCLUSION

The rules of the Tax Statute and the rulings issued by the DIAN, discussed above, leave open a good number of issues.

BéndiksenLaw has the experience and team to assist you with any concerns you may have regarding this lien. Contact us.

Jaime G. Béndiksen

BéndiksenLaw: A New Era of Opportunities with the U.S. Chamber of Commerce

BéndiksenLaw is proud to announce its recent membership in the U.S. Chamber of Commerce, a world-leading organization in advocating for business interests. With its motto of advocating, connecting, informing, and fighting for business growth and success, this affiliation marks a significant milestone for our firm.

The U.S. Chamber of Commerce, known as the largest business organization in the world, encompasses everything from small businesses and local chambers of commerce to leading industrial associations and global corporations. For BéndiksenLaw, joining this prestigious network means accessing an unparalleled platform of business connections, learning opportunities, and a stronger voice in advocating for trade and investment-friendly policies.

At BéndiksenLaw, we have always been committed to growth and innovation, and this new partnership with the U.S. Chamber of Commerce allows us to further expand our reach and capabilities. This step is an affirmation of our dedication to providing quality international legal services and our desire to drive economic growth and prosperity in both Colombia and the global stage.

We invite our clients and partners to discover how this new strategic alliance can benefit their businesses. Together, with the support and resources of the U.S. Chamber of Commerce, we are ready to face tomorrow’s challenges and blaze new trails in the world of international trade and investment.

Contact us to learn more about how we can help you make the most of this exciting new chapter for BéndiksenLaw.

Get ready for December! Obligations and key dates for Transfer Pricing in Colombia

In the complex Colombian business and tax world, Transfer Pricing plays a crucial role. Multinational companies engaging in transactions with each other must comply with this regime to ensure fair taxation. Here, at BéndiksenLaw, we break down the obligations and deadlines you need to keep in mind for the upcoming December 2023.

Transfer Pricing focuses on assigning values to transactions between related companies in different jurisdictions. In Colombia, these obligations apply to companies conducting operations with affiliated entities abroad, in free trade zones, or in low-tax jurisdictions.

Formal obligations: What should you do?

  1. Informative Return: Companies with assets exceeding 100,000 tax units (UVT) or annual income surpassing 61,000 UVT must file it.
  2. Local Report: If transactions with economic affiliates exceed 45,000 UVT or involve entities in low or no-tax jurisdictions, filing this report is required.
  3. Master Report: For taxpayers consolidating financial statements in multinational groups.
  4. Country-by-Country Report: Applicable to the parent company or corporate office of the multinational group, filing is necessary for those meeting certain conditions.

December deadlines: Act in advance

From December 11 to 22, based on the last digit of the Tax ID number (NIT), companies must submit master and country-by-country reports to the tax administration (DIAN), for fiscal year 2022. Ignoring these dates can result in penalties and legal issues.

Claudia González Béndiksen, partner at BéndiksenLaw, emphasizes, “Complying with these obligations is essential to ensure fair taxation and avoid penalties. Companies must stay informed about the requirements to contribute to a transparent and fair business environment in Colombia.”

Master Report – Fiscal Year 2022

Country-by-Country Report – Fiscal Year 2022

Act now! Ensure you meet these deadlines to maintain transparency and fairness in your business transactions.

Need guidance? Contact BéndiksenLaw today.

Sebastián Béndiksen’s Talk with the Media on International Arbitration in Colombia

After discussing the topic of international arbitration in Colombia, our managing partner and BéndiksenLaw have received notable mentions in various media outlets, including Diario La Economía, Valor Y Dinero, Economía en Serio, Revista Alternativa, Marcas y Estrategias and many others.

Don’t miss the opportunity to learn more about this relevant interview.

See the news (in Spanish) here:

Valor y Dinero: https://valorydinero.com/2023/10/06/el-arbitraje-internacional-en-colombia-y-el-caribe-fomenta-la-inversion-extranjera/

Diario La Economía: https://diariolaeconomia.com/economia-al-derecho/item/8190-arbitraje-clave-en-seguridad-de-inversionistas-por-controversia.html

Economía en Serio: https://economiaconedmer.com/economiaenserio/10/11/arbitraje-internacional-en-colombia-le-abre-paso-a-la-seguridad-juridica/destacados/2023/

Revista Alternativa: https://www.revistalternativa.com/noticias-economia/procedimientos-y-requisitos-del-arbitraje-internacional-en-colombia-42105

Marcas y Estrategias: https://marcasyestrategias.com/2023/10/20/procedimientos-y-requisitos-del-arbitraje-internacional-en-colombia-2/

Contact us for more information, we will be happy to address your concerns.

Promoting Future Lawyers: BéndiksenLaw in the Business Trial Competition

In the business sphere, the law establishes the bases that guide the operation and management of companies. Without a firm understanding of the legal framework, they could face challenges that hinder their trajectory to success. For this reason, events such as the Student Business Trial Contest, organized by the Bogotá Chamber of Commerce, are crucial as they provide a platform where the next generation of legal and business professionals can interact, learn and grow.

This year, we are honored to announce that BéndiksenLaw’s Managing Partner, Sebastián Béndiksen, will participate as a judge in the competition that will take place on Friday, October 27. With a distinguished track record in the corporate legal field, Sebastián Béndiksen represents BéndiksenLaw’s dedication, experience and commitment to excellence and continuing education. The participation of our managing partner as a judge underlines the importance that BéndiksenLaw places on the connection between academia and professional practice. This competition is an opportunity for students to experience the practical application of legal concepts in a business setting, while receiving valuable feedback from experts in the industry.

At BéndiksenLaw, we are proud to be part of initiatives that nurture knowledge and collaboration between the legal and business sectors. Our firm is committed to providing exceptional legal solutions that meet the unique needs of each client in today’s dynamic business environment. We invite you to learn more about how BéndiksenLaw can assist you with your legal needs and how our experience and collaborative approach can provide the legal support your firm needs to thrive.

Contact us today.

Weaving Global Networks: BéndiksenLaw at the 2023 International Business Meeting

The business world is a dynamic and constantly evolving field, where interaction between different actors is crucial for development and expansion. Along these lines, the 2023 International Business Meeting, organized by the Colombian-American Chamber of Commerce, stands as a privileged platform for meeting and collaboration between national and international companies. BéndiksenLaw, as an active member of this Chamber, participated in the event, represented by our managing partner, Sebastián Béndiksen.

AmCham Colombia, responsible for the event, has as its mission to promote trade relations between Colombia and the United States, and the 2023 International Business Meeting was a palpable manifestation of this objective. With the participation of more than 100 goods and services companies from more than 10 countries, the event offered a place for the formation of alliances, the discovery of new market trends, the strengthening of brand positioning, and the increase of knowledge in good business practices at national and international levels.

Sebastián Béndiksen’s participation not only represented BéndiksenLaw, but also marked the third time that our firm has been part of these significant encounters. These events reiterate our position and active commitment in international trade, highlighting the continuity and consistency in our contribution to strengthening trade relations between Colombia and the United States.

We invite you to explore more about how BéndiksenLaw can assist in navigating the complex legal landscape that accompanies international business relationships. Our firm is committed to providing exceptional legal counsel that enables businesses to operate with confidence on the global stage.

Contact us and find out how we can be the legal partner your company needs to thrive in the international arena.

Transparency and Ethics: The New Obligations for Foreign Non-Profit Entities in Colombia.

In an era where transparency and ethics in business take center stage on the global scene, Colombia is not far behind. On October 4, 2023, the Superintendence of Companies issued External Document 100-000004, establishing new obligations for Foreign Non-Profit Entities (ESAL in Spanish) that have permanent businesses in the country.

1. What is SAGRILAFT? The SAGRILAFT, or Self-Control and Comprehensive Risk Management System for Money Laundering and Terrorist Financing, is a set of policies, procedures, tools and actions that seek to identify, measure, control and monitor the risk of the entity being used as a vehicle for money laundering or terrorist financing. This system seeks to strengthen internal controls and establish mechanisms that allow for comprehensive risk management.

2. Transparency and Business Ethics Program (PTEE) The PTEE is a program that aims to promote an organizational culture based on transparency, integrity, and business ethics. This program seeks to ensure that foreign ESALs are governed by clean business practices, reducing the possibility of corrupt acts or acts that compromise the integrity of the entity.

3. Deadline for implementation Foreign ESALs with permanent businesses in Colombia that are already under the supervision of the Superintendence of Companies have a deadline of August 31st, 2024 to implement both SAGRILAFT and PTEE.

Why is it important for ESALs to meet these obligations? These regulations not only seek to protect the Colombian economy and the integrity of the financial system, but also to strengthen the trust and reputation of entities in the market. Proper implementation of these measures can generate added value in terms of trust and reputation.

If you are part of a Foreign Non-Profit Entity and are looking for guidance on how to adapt to these new regulations, do not hesitate to contact BéndiksenLaw. Our dedicated team is ready to advise you every step of the way and ensure that your entity complies with all applicable regulations. Contact us today!

Sebastián Béndiksen, Our Managing Partner, Reveals the Opportunities and Challenges of Trade between Colombia and Peru in Revista Semana

Our managing partner and specialist in corporate law, Sebastián Béndiksen, shares his insight with Revista Semana on the entry of Peruvian companies into Colombia and its impact on the growing economic and commercial integration between these two nations.

Find out more about this business expansion and its potential contributions.

Read the news (in spanish) here.