We share our Tax Bulletin No. 16 from October 2019, 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.
1.1. On October 7th of 2019, the Ministry of Finance and Public Credit issued Decree 1807 of 2019, which regulates the exclusion of VAT for goods introduced and commercialized in the states of Amazonas, Guainía, Guaviare, Vaupés y Vichada. Furthermore, the Decree set forth the documents that the purchaser has to deliver to the seller as support of the transaction.
1.2. On October 7th of 2019, the Ministry of Finance and Public Credit issued Decree 1808 of 2019, which aims to regulate the tax basis for the calculation of the withholding tax in respect to labor income. According with the aforementioned Decree, voluntarily contributions to the General Pension System will be revenues not deemed income for tax purposes, as long as the contribution does not exceed the limit of 25% of the yearly labor income. In addition, in any case, the value of such contributions must not exceed 2.500 Tax Value Units ( approx. COP$ 85.675.000).
1.3. On October 1st, 2019, Colombian Tax Authority issued Resolution 064, which modifies the deadlines for the registration and implementation of the electronic invoice. The most significant amendment regarding the deadlines pointed out in Resolution 20 of 2019, corresponds to the extension of the time-limit for the implementation of the electronic invoice as of the registration date in the IT service of the electronic invoice. In fact, such term goes from three (3) to five (5) or six (6) months depending of the economic activity of the taxpayer under the CIIU code.
1.4. By Resolution 000070 of October 28th of 2019, the Tax Authority indicated the taxpayers obliged to submit exogenous information for fiscal year 2020. Individuals and corporations must fulfill with this obligation between April and June of 2021, depending of last two digits of the Tax Identification Number (NIT).
2.1. Tax Ruling No. 901543 issued by Colombian Tax Authority on July 26th, 2019
In accordance with Tax Ruling No. 901543 and section 424 of Colombian Tax Code (CTC), the sale of personal computers is taxed with VAT as long as its value exceeds the amount of 50 Tax Value Units (approx. COP$ 1.713.500). Furthermore, the Tax Authority pointed out that, Decrees 567 and 379 of 2007 are not longer in force, bearing in mind that they were not included in Regulatory Decree 1625 of 2016.
2.2. Tax Ruling No. 14729 issued by Colombian Tax Authority on June 7th, 2019
By means of Tax Ruling No. 14729, the Colombian Tax Authority pointed out that, the first 12.500 UTV received as life insurance compensation are revenues not deemed income for tax purposes. If the life insurance compensation exceeds such value, it will be subject to capital gains tax at a rate of 10%.
2.3. Tax ruling No. 20426 issued by Colombian Tax Authority on August 16th, 2019
The Colombian Tax Authority explained, trough Tax Ruling No. 20426 that, bearing in mind that companies with place of effective management in Colombia are considered as national companies, they eligible to apply to the Colombian Holding Regime (CHC).
2.4. Tax ruling No. 17784 issued by Colombian Tax Authority on July 10th, 2019
In terms of Tax Ruling No. 17784, the assets of the taxpayer subject to the normalization tax must be included in the income return for fiscal year 2019. The Tax Authority also pointed out that non-existent liabilities should be excluded for economic purposes of the income tax return.
3.Case law of the Council of State
In the case law of July 25, 2019 (File 21703), the Council of State indicated that losses generated in the alienation of shares through a trust agreement cannot be treated as a deduction for income tax purposes. The above, bearing in mind that section 153 of Colombian Tax Code expressly forbid the deduction of losses arisen in the sale of shares.
4.Case Law of the Constitutional Court
By case law of June 12, 2019 (File 12595), the Constitutional Court determined that changes in the shareholder composition is a legitimate cause to lose the tax benefits set forth in law 1429 of 2010.
5.Projects of Decrees and Resolutions
5.1. Given the declaration of the unconstitutionality of law 1943 of 2018 (Tax Reform), on October 7th, 2019, Colombian Government submitted for the approval of the Colombian Congress, the bill that will replace the last tax reform. Except for minor changes, the bill is almost the same that was approved last year.
5.2. The Colombian Ministry of Finance and Public Credit issued a draft of decree that aims to regulate the Colombian Holding Regime (CHC). In addition, the draft of decree established the requirements and procedure that must be fulfilled in order to apply to this regime.