Income double-tax agreements and their relationship with foreign investment in Colombia

Foreign direct investment is considered a main factor in the economic growth of countries such as Colombia, since it allows to raise productivity, increase innovation and foster employment. One of the factors determining the final decision of the investor is the tax component, which is affected by double taxation. Previous studies argue that the current double-tax agreements in the countries act as a strategy in the increase of foreign direct investment; therefore, through the ordinary least squares methodology used, this study aims at evaluating the relationship between double-tax agreements regarding Income Tax and foreign direct investment in Colombia. The results indicate that said agreements do not have any effect on foreign direct investment.