The treaty includes reduced withholding tax rates on passive income, permanent establishment rules and rules for taxing capital gains.On 19 November 2021, the governments of Colombia and Uruguay signed a double tax treaty (DTT). The DTT includes provisions that may reduce taxation on transactions and investments between both countries.Principal purpose test and anti-abuse rulesIn line with the Organisation for Economic Co-operation and Development’s (OECD) Base Erosion and Profit Shifting (BEPS) initiative, the preamble of the DTT states that its purpose is to eliminate double taxation on income without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance...