Tax Bulletin No. 1

We are pleased to share our first Tax Bulletin from the 1^st to the 15^th of July 2018 with the latest decisions and opinions released by the Council of State and the Tax Authority, in connection with national and local taxes, and tax procedure.

The complete Bulletin is found only in Spanish in the below PDF, because of many domestic tax terms we are unable to translate for you. However, please find below the main subjects we will be speaking of in the Bulletin. If you are interested to find out more information, do not hesitate to contact us.

1. DIAN press releases

1.1   In Press Release No. 153 of May 31^st, 2018, DIAN announced “Grandes Contribuyentes” will be required to issue electronic invoice as of September 1^st, 2018. Nonetheless, if taxpayer have filed petitions for extension of this term based on technological obstacles, electronic invoice will be mandatory as of December 1^st of 2018.

1.2   In June 28^th, 2018, DIAN announced a free invoice service on its web page for small and medium enterprises (SME) to generate electronic invoices, tax debit and credit notes to extend electronic invoice advantages to these SME.

2. Judicial Decisions

2.1   The Council of State, in a decision of May 3^rd, 2018 (File No. 21.376), pointed out that the joint debtor of a taxpayer is only liable if he was linked to the tax assessment process since the beginning, to guarantee the joint debtor’s constitutional procedural rights. If the notification of the tax assessment is omitted with respect to the joint debtor, any execution notice to the tax payer will not be enforceable to the joint debtor.

2.2   In Decision of May 24^th, 2018 (File 21.555), the Council of State determined that ordinary net income for the recovery of deductions (renta líquida por recuperación de deducciones) was not part of the tax base of CREE Tax during 2013 and 2014 fiscal periods. The decision clarifies that considering that the recovery of deductions was included as CREE tax base by law 1739 of 2014, this special revenue is only taxed since the year 2015, not before.

2.3   In a Decision of May 3^rd, 2018 (File 21.865), the Council of State declared that the “audit benefit” (beneficio de auditoria) was not applicable to VAT and withholding tax returns. Therefore, the special statute of limitations applicable under the rules of the audit benefit applies only to the income tax return.

2.4   The Council of State in a Decision of May 10^th, 2018 (File No. 22.572), said that the carryforward of the Corporate Net Loss of CREE Tax obtained in the years 2013 and 2014, was possible in 2015 CREE tax return.

3. Tax Rulings

3.1   Tax ruling No. 276 of March 6^th, 2018: DIAN pointed out that payments made to foundations and associations are not subject to withholding tax on income derived from services regarding their main purpose as established in the bylaws.

3.2   Tax ruling No. 287 issued on March 6^th, 2018:  DIAN stated that a withholding tax of 15% may apply on revenue originated in the sale of real estate property located in Colombia by a foreign investor if the payer is a withholding tax agent pursuant articles 406 and 415 of the CTC. As well, the special income tax return for foreign investors (form 150) will have to be filed whenever the foreign investment is liquidated.

3.3   Tax ruling No. 556 of April 24^th, 2018: DIAN established that the preferential tax rate (9%) for “hotels revenue” is only applicable to new, expanded or renovated hotels incorporated as of January 1^st, 2017.