Colombia and South Korea signed a tax treaty and a financial cooperation agreement on Tuesday.
Finance Minister Oscar Ivan Zuluaga and Education Minister Cecilia Maria Velez signed the deal on behalf of the Andean state, while Korean ambassador Hong Seong Hoa was the Asian republic’s signatory.
Tuesday’s signature of the tax pact follows internal approval procedures by both states. The two states had in fact agreed the text of the Agreement to Avoid International Double Taxation in November 2009. Under the agreement, both governments will ensure that individuals and companies in either country will not be taxed twice on the same revenue.
The signature of the Financial Cooperation Agreement will activate a series of loan facilities on terms favourable to the Colombian government. In a press release, the Colombian finance ministry announced that South Korea will lend to the South American country, so it can develop projects of “high social impact.”
The first two such programs will aim to promote IT and telecommunications through a $30m capacity building project and the construction of a $10m research center.
While the total value of the loan deal was not revealed, the finance ministry disclosed that the facility would have a 40-year term, a ten year grace period and an annual interest rate of 0.2 per cent.
These two agreements are the latest to emerge from ongoing negotiations between the two countries. They follow the signing of an investment promotion agreement on July 6. The talks are building up to a full free trade agreement between Bogota and Seoul.