1. In compliance with Law 487 of December 24,1998, the Colombian government has been authorized by Congress to issue internal debt bonds known as "Peace and Solidarity Bonds"
2. The main purpose of these bonds is to obtain financial resources for peace projects and programs within the country.
3. The purchase of such bonds is mandatory during the years 1999 and 2000 for individuals holding a net worth exceeding COL$210,000,000 as of 31 December 1998 and for all companies.
4. The investment to be made in 1999 is assessed at a 0.6% rate over the net worth as of 31 December 1998.
5. The investment to be made in 2000 is assessed over the net worth adjusted by inflation as of 31 December 1999. The same rate of 0.6% applies.
6. For companies incorporated during 1999, investments shall be made only in the year 2000 and it will be assessed over the net worth as of 31 December 1999.
7. For assessment purposes, both individuals and companies are allowed to deduct from the net worth the percentage thereof which is represented in stock and contributions. Individuals are also allowed to deduct contributions to pension funds.
8. Individuals and companies for which investments in "Peace and Solidarity Bonds" are mandatory and that do not purchase them or do it after the deadline shall become subject to penalty interest.
9. The main terms and conditions of the "Peace and Solidarity Bonds" are the following, as per articles 1 and 2 of Law 487 of 1998:
- a. Negotiability: may be freely negotiated by endorsement and delivery thereof.
- b. Maturity: seven years as from the date of issuance.
- c. Interest: annual rate of 110% of the variation in the Consumer Index Price (CIP), payable annually from the date of issuance until maturity. Capital is paid at redemption.
- d. Bonds may be used to pay national taxes, as well as for prepayments, withholdings, interest and penalties related thereto.
- a. Interest earned from "Peace and Solidarity Bonds" are deemed to be non-taxable income or capital gains.
- b. Losses derived from the sale of titles are not deductible from income tax.
- c. The value of the bonds is excluded from presumptive income tax calculation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.