The Colombian Government has also been actively negotiating with the Office of the U.S. Trade Representative in order to be eligible to take advantage of the benefits and incentives of the Andean Basin Initiative. However, the surcharge is deductible the following taxable year, which does reduce the overall net tax impact. The surcharge will be in effect for five years. It is to be expected that remittance taxes will be ultimately eliminated. Inflation Adjustments Commencing with the 1992 fiscal year, assets and liabilities must be adjusted on a monthly basis for inflation.
Tax planning is critical.
Exempt goods have been reduced, as have the goods that do not fall under the general tariff. Additionally, most of the service industry will be taxed as of 1993. Offshore Technical Service or Assistance Technical service or assistance contracts rendered offshore are no longer considered on-shore income. Total compensation salary structures can be agreed to, whereby no further benefits of any kind accrue in favor of the employees. Employees hired after 1990 have a different severance system which is considerably less onerous for employers.