CALI, Colombia (Reuters) - The Pacific Alliance trade group said on Thursday it has reached a tax agreement for pension funds operating in the bloc's four nations in an effort to stimulate investment in infrastructure projects.
The alliance, which comprises Colombia, Chile, Mexico and Peru, was formed in April 2011, aimed at improving trade flows and bolstering investment.
Pension fund administrators in the four countries have about $450 billion to invest in sectors like highways and other infrastructure projects, Colombian Finance Minister Mauricio Cardenas told reporters at the Pacific Alliance summit in the Western city of Cali.
"We have completed negotiation of a double taxation accord ... that will allow a large segment of investors that are the private pension funds to invest in the countries of the alliance under a homogeneous tax parameters," Cardenas said.
The maximum tax rate charged on pension fund investment returns will be 10 percent, he said.
The agreement must be approved by the congress of each member nation.
The accord is aimed at strengthening investment flows and better managing country risk, Mexico's treasury secretary, Jose Antonio Meade, said.
"At the end of the day tax issues in their differences end up constituting obstacles for free investment flow," Meade said at a news conference.
The economies of the four member nations, if counted as a single country, would form the eighth-biggest economy in the world. The bloc has 52 observer states.
Reporting by Luis Jaime Acosta; Writing by Helen Murphy; Editing by Matthew Lewis