The Colombian government issued Decree 627 on 26 March 2014. This Decree regulates the thin capitalization rules (article 118-1 of the Tax Code) that were brought in as part of the recent tax reforms and takes effect from the date of publication. The Decree introduces an amendment to numeral 3 of article 3 of Decree 3027 of 2013 to clarify that the non-deductible interest for tax purposes is computed by dividing the excess debt by the average amount of the debt, rather than by the maximum amount of debt as has previously been required.
