Tax Bulletin No. 34

Regulation issued by the National Government regarding tax issues

The Ministry of Finance and Public Credit issued regulatory decree of the first job deduction.

Through Decree 392 of April 13^th of 2021, the Ministry of Finance and Public Credit defined the conditions under which the first job deduction will apply. In accordance to the Decree, it will be considered as first job of a individual under the age of 28 years when there is no affiliation to the Social Security System. Additionally, for the company intendent to make use of this deduction, it is mandatory to prove that the new jobs represent an increase in the payments that companies made to the workers of the fiscal year in which the deduction in income tax is requested, in relation to the payments made in December of the immediately previous fiscal year.

See here complete document of Decree 392 of 2021.  

Extension of the installments to pay the income tax of micro and small companies.

By means of Decree 374 of April 9 ^th of 2021, the Ministry of Finance and Public Credit lay down the new date that the micro and small companies have to consider in order to pay in two installments the income tax. In this sense, the taxpayers must pay the tax in the months of June and November of 2021, according to the last digit of the Tax Identification Number.

See here complete document of Decree 374 of 2021.

The Ministry of Finance and Public Credit issued a decree modifying the percentage of advance payment of income tax of 2021.

Through Decree 375 of April 9^th of 2021, the Ministry of Finance and Public Credit ordered the modification of the percentage of the advance payment of the income tax for fiscal year 2021, which must be determined by major taxpayers of income tax that are part of the groups of economic activities listed in the decree. According to the regulation, they will apply in their income tax return of 2020, a percentage of zero percent (0%) as advance payment of income tax for fiscal year 2021.  

To know the complete list of the economic activities that are the object of this decree, click here

Tariff code for COVID-19 vaccines

Throughout Decree 373 of 2021, the Ministry of Commerce, Industry and Tourism unfolded tax heading 3002.20.90, creating tariff code 3002.20.90.10 which identifies COVID-19 vaccines, in order to identify these vaccines and facilitate its import.  This decision was based on the need to distinguish these vaccines from others and to generate statistics for the competent control entities and the Government.  

See here the complete document of Decree 372 of 2021

COVID-19 import by privates.

Considering the world health crisis, the Colombian Government in search of overcoming the pandemic through a general immunization, issued Resolution 507 of 2021, which authorizes privates to import vaccines against COVID-19 as long as the following requirements are met: 

1. Request the modification of the Sanitary Authorization for Emergency Use- ASUE - before the INVIMA to be included as importers, different from the holder of the Authorization.  
2. Guarantee the storage conditions established by the manufacturer of the vaccines. 
3. Comply with the regulations regarding traceability and final disposal of biological waste. 
4. Assume the costs of the vaccines and their importation.  
5. Comply with the norms regarding labels, packaging, and inserts.  
6. Assume the conditions negotiated for importation.  

See here the complete document of Resolution 507 of 2021.

Tariff of 0% for oxygen import

Through Decree 423 of April 23^rd of 2021, the Colombian Government established a tariff tax of 0% for oxygen and oxygen concentrators import. This rate will be in force as long as the declaration of health emergency due to COVID-19 is declared by the Ministry of Health and Social Protection of Colombia. As soon as the validity of this tariff ends, the applicable tariff will be the one established in Decree 2153 of December 26^th of 2016 or regulations that modify it.

See here the complete document of Decree 423 of 2021.  

The Ministry of Finance and Public Credit issued a decree modifying the Colombian customs regime by promoting foreign trade.

On April 7^th, the Ministry of Finance and Public Credit issued Decree 360 of 2021, which modifies the Colombian Customs Regime contemplated in Decree 1165 of 2019. Through these modifications, the National Government seeks to promote the country's foreign trade, simplifying processes and reducing requirements currently required. The main changes introduced are:

• Customs procedures modifications.
• Customs sanctioning regime modifications.
• Some of the grounds for loss authorization or registration given by DIAN are removed. The possibility of remedy some of these grounds is introduced.
• Some legal definitions are clarified.
• Matters relating to the valuation and origin of goods are also clarified.
• Adoption of electronic notification as the preferred form of notification.

Likewise, this decree regulates the new customs users introduced to the Colombian Customs Regime, the so-called Simplified Customs Users, who are those importers or exporters who: (i) have an optimal qualification and risk management, (ii) have no debts enforceable by the DIAN, (iii) have not been subject of improper refunds or compensations and (iv) have not been subject to final sanctions in tax, customs or exchange matter; are appointed ex officio with such status by the Tax Administration.

Even though this regulation was issued at the beginning of April, it will only come into force in the Colombian legal system on May 8^th.

See here the complete document of Decree 360 of 2021.

Tax Rulings

Wages deduction for the months of April and May of 2020 with partial Pension’s contributions.

Through Tax Ruling No. 0590 of April 21^st of 2021, the Colombian Tax Authority clarified that taxpayers must be allowed to deduct wages or payments to independent workers for the months April and May of 2020, on which partial pension contributions were made.  The missing contributions will only de deductible in the fiscal year in which the entire payment of the pension contribution is made.

See here the complete document of the Tax Ruling No. 0590 of April of 2021.

Deduction of the indemnification for justified or unjustified dismissal in a labor contract.

By means of Tax Ruling No. 108 of March 26^th of 2021, the Colombian Tax Authority pointed out that the deduction of the indemnification for justified or unjustified dismissal must be analyzed as indicated in the article 107 of the Colombian Tax Code, which set forth the general requirements to request deductions. The above means that the indemnification must be necessary and proportional, as well as have a causal connection with the income- generating activity. Additionally, it is necessary to follow the rules established by case law of November 26^th, 2020, in which the Council of State established several requirements for the deductions of expenses.

See here the complete document of the Tax Ruling No. 108 of March of 2021.

Tax treatment of crypto assets for income tax purposes

By means of tax Ruling No. 0232 of January 19^th of 2021, The Colombian Tax Authority indicated that, in legal terms, the crypto assets or cryptocurrencies are intangible assets whose exploitation or disposal can generate national income provide such intangible assets are located in Colombia. In addition, the Colombian Tax Authority pointed out the following scenarios which could triggered a withholding tax as a result of the disposal of a crypto asset:

1. Disposal or exploitation of a crypto asset in which the beneficiary of the payments is a Colombian tax resident.
2. Disposal or exploitation of a crypto asset in which the beneficiary of the payments is not a Colombian tax resident but such assets are located in Colombia.

Finally, it is important to mention that in case that the disposal or the exploitation of the crypto asset is not carried out in Colombia, the withholding tax will not be applicable since no national income was received.

See here the complete document of Tax Rulling No 0231 of January of 2021

Case Law of the Constitutional Court and Council of State

Double Taxation Agreement between Colombia and Italy is declared constitutional by the Constitutional Court.

Trough Judgment C-091 of 2021, the Constitutional Court declared that the Double Taxation Agreement entered into by Colombia and Italy complied with the procedures required by law for its approval. Therefore, the Constitutional Court considered that its normative content fully conforms the Political Constitution of Colombia.

See here Judgment C-091 of 2021 of the Constitutional

Revenues from financial yields are taxed with turnover tax at the rate of taxpayer principal activity.

By means case law of February 11^th, 2021, the Council State indicated that although the revenues from financial yields itself does not constitute an activity taxed with turnover tax, it must be taken into account within its tax basis in the event they came from an activity taxed with turnover tax. In this sense, the financial yields must be taxed at the rate applicable to the tax basis of the main activity carried out by the taxpayer.

Projects of Decrees and Resolutions 

The Ministry of Finance and Public Credit will present a draft of resolution regarding the obligation of authorized financial entities to collect national taxes administered by the Colombian Tax Authority.

The above-mentioned project states that all the payments of national taxes administrated by the Colombian Tax Authority, which are received through electronic channels by the authorize financial entities to collect national taxes, must be consigned in the course of one (1) calendar day from the day following the date of payment.  

See here the draft of resolution.