We share our Tax Bulletin No. 24 from June 2020, with the latest decisions and opinions released by the Ministry of Finance and Public Credit, the Council of State and the Tax Authority, in connection with national and local taxes, and tax procedure.
Also, we share some of the latest decisions taken from the National Government, considering the health emergency declared through Decree 637 of 2020.
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.Normativity issued by the National Government and the Colombian Tax Authority under the economic emergency due to the effects of COVID-19
Information that must be submitted by the sellers or responsible of the VAT regarding the operations performed during the non-VAT days
By means of resolution no. 64 of June 18th, 2020, the Colombian Tax Authority pointed out the information that must be submitted by the sellers or responsible of VAT regarding the sales performed during the non-VAT days. Among the information requested by the Tax Authority is worth to mention, among other, the following:
| Information requested by the Tax Authority |
| Type of document of the purchaser | Number of units |
| Purchaser identification number | Goods sold |
| Name of the purchaser | Description of the goods sold |
| Type of invoice | Value of the units sold, and total value of the units sold with the exemption |
| Invoice number | Payment method |
| Place and date of the of the invoice | Purchase price |
2.Normativity issued by the National Government regarding tax issues during the month of June 2020
In addition to the regulations issued as a result of the economic emergency situation in our country, the National Government has also issued other tax regulations during this period, which we allow ourselves to highlight below:
Ministry of Finance and Public Credit issued several dispositions for taxpayers that perform investments in renewable energy sources
Through Decree no. 829 of June 10th, 2020, The Ministry of Finance and Public Credit regulated articles 11, 12, 13 and 14 of Law 1715 of 2014, and repealed several dispositions of Decree 1073. Regarding the tax incentives, the aforementioned Decree sets forth that, taxpayers who perform investments in renewable energy sources or energy efficient are able to deduct from their income tax return, an amount equal to 50% of the investment, as well as and accelerated depreciation of assets limited to a 20% annual rate. In addition, it is important to highlight, that the special deduction can be taken by the taxpayers in 15 years period but is limited to the 50% of the net income determined for the corresponding period, before applying the deduction.
Finally, upon the issuance of the mentioned Decree, the Mining and Energy Planning Unit (UPME per its acronym in Spanish) must certify the investments eligible for the incentives.
3. Tax Rulings
The Colombian Tax Authority analyzed the application of the most favoured nation clause contained in the Double Taxation Agreements (DTA) entered into by Colombia
Through tax ruling no. 3283 of February 17th, 2020, the Colombian Tax Authority issued a general tax ruling explaining the application of the most favoured nation clause incorporated in the DTAs entered into by Colombia. The above, bearing in mind the DTA entered into by Colombia and United Kingdom, in which technical and assistance services are no longer qualified as royalties. The application of this clause must be examined case by case, taking into account the content and wording of the DTA.
Simple Tax Regime taxpayer’s are not obliged to file before the Colombian Tax Authority a return informing the assets held abroad
By means of tax ruling no. 537 of May 11th, 2020, the Colombian Tax Authority indicated, that Simple Tax Regime taxpayers are not obliged to file a return informing the assets held abroad. The above, bearing in mind that pursuant to article 807 of the Colombian Tax Code, this obligation is only applicable for income tax taxpayers.
Medicine marketers are not responsible of VAT and, therefore, cannot discount the VAT incurred in common expenses
In tax ruling no. 407 of April 7th, 2020, the Colombian Tax Authority pointed out that, medicine marketers are not responsible of VAT and, therefore, cannot discount the VAT incurred in common expenses for the sale of such products. Pursuant to article 477 of the Colombian Tax Code, medicine producers are the only ones entitled to request a tax refund of the VAT paid to produce medicines and pharmaceutical goods.
Tax Authority clarifies the requirements for the application of the exemption provided in Decree 551 of 2020
By means of tax ruling no. 618 of May 28th, 2020, the Colombian Tax Authority indicated, that in order to apply the exemption provided in article 1 of Decree 551 of 2020, it is necessary that the import, sale and delivery of goods takes place in term established in aforementioned Decree, that is, during the term of the health emergency declared by the National Government.
Tax burden of the contributions made by the Colombian Government to the beneficiaries of the program to support formal employment - PAEF
Through tax ruling No. 665 of June 8th, 2020, the Colombian Tax Authority established, that the contributions made by the Colombian Government under the program to support formal employment (PAEF per its acronym in Spanish) will not be subject to withholding tax, debit tax (GMF) and VAT. Nevertheless, for income tax purposes, such contributions will be deemed as a taxable income, neutralized by the payroll expense incurred by the employer.
4.Case Law of the Council of State
Tax basis of the turnover tax for companies rendering surveillance services is also the overhead, contingencies and profits (AIU)
In a Case Law of February 26, 2020, the Council of State overturn the administrative acts issued by the Tax Authority of Bogotá, in which the entity aimed to determined the turnover tax of a surveillance service company based on its gross income. In this case, the Council of State clearly indicated, that the special tax basis provided for the liquidation of the VAT in surveillance services is also applicable to determine local taxed, therefore, the turnover tax must be liquidated bearing in mind the overhead, contingencies and profits (AIU per its acronym in Spanish).
5.Projects of Decrees and Resolutions
VAT on audiovisual services
On June 19th, 2020, the Ministry of Finance and Public Credit published the draft of decree that aims to regulate article 481 of the Colombian Tax Code. In addition, the draft of decree pointed out that, the responsible of VAT entitled to request a refund of this tax are the ones that render services related with the production of audiovisual and film works, among others.
Exempt income for forestry plantations
The Ministry of Finance and Public Credit published the draft of decree by means of which numeral 5 of article 235 – 2 of the Colombian Tax Code, which provides an exempt income for forestry plantations will be regulated. Besides certain definitions, the draft of decree also listed the documents and requirements taxpayers must fulfil in order to apply to the tax benefit.
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