Tax Bulletin No. 46

We are pleased to present our latest Tax Bulletin, where you will find the most relevant news on tax matters for April 2022. Among other topics, we reported on the Decree that modified the Income Tax Deduction for creative economy projects and on the registration of the electronic invoice as a security in the platform provided by the Colombian Tax Authority. We also recalled the obligation of companies in liquidation to report to the Tax Authority the corresponding information on transactions with third parties (exogenous information).  

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.

Regulations issued by the National Government regarding tax matters

New terms and conditions for the tax incentive applicable to “Economía Naranja” projects.

First, it should be noted that the activities that make up “Economía Naranja” (Orange Economy) in Colombia are part of the arts and tangible and intangible cultural heritage, cultural industries, and creative industries.

The Ministry of Culture issued Decree 624 of 2022 to amend Decree 1080 of 2015 about the tax benefits granted to these projects. The incentive consists of a 165% deduction of the investments of donations made to creative economy projects.

The Decree established that the call for proposals to select eligible projects through a contest would occur in the first four months of each year. To apply for the deduction, concerning Income Tax, the interested party must contribute resources to the projects approved by the Ministry of Culture, directly or through an autonomous patrimony. The taxpayer will receive a Certificate of Investment or Donation that may circulate in the secondary market.

An Integrated Risk Management System is developed and implemented in the Foreign Trade Single Window.

On April 28, the Ministry of Commerce, Industry and Tourism issued Decree 656 of 2022, which implemented an Integrated Risk Management System (“SIGR” for its acronym in Spanish) to enrich the risk profiles and selectivity of the entities that must carry out supervision and control tasks in foreign trade operations.

The purpose of the Decree is to mitigate customs or sanitary risks those associated with piracy and counterfeit trademarks, and illicit drug trafficking, which affect, among other aspects, national security.

The SIGR is a tool of the Foreign Trade Single Window (Ventanilla Única de Comercio Exterior -VUCE). The control entities of the customs regime must share and provide, permanently, the information related to import, import and transit operations.

Tax Rulings and Resolutions of the Colombian Tax Authority

The circulation of the electronic invoice as security is regulated.

On April 8 of the current year, the Colombian Tax Authority issued Resolution Number 000085 to regulate the registration of the electronic sales invoice as security; the system for the registration of the invoice is called RADIAN.

The Resolution established the requirements for the registration of the invoice and the procedure to enable the registration. The certificate of existence and traceability of the invoice was also introduced.

The implementation of RADIAN seeks to facilitate electronic factoring operations and the transmission or limitation of the rights contained in electronic invoices as securities. In this sense, it also established the events associated with the invoice registered in the RADIAN, such as the endorsement of the security.

The Colombian Tax Authority extends the due date for implementing the electronic payroll for small companies and those not obliged to issue an invoice.

On February 28 of the ongoing year, the Tax Authority issued Resolution No. 000028 of 2022, which modifies Article 1 of Resolution 00151 of 2021 and establishes a term for the first generation and transmission of the document that supports payroll payments.

The particular term concerns the first generation and transmission of the supporting document of payments originated in an employment relationship, to support the costs and deductions applicable to Income Tax.

Employers who are not obliged to issue electronic sales invoices must make the first generation and transmission of the supporting document of these payroll payments within the first ten working days of July 2022.

Likewise, employers with 1 to 10 workers must make this first generation and transmit of the payroll, corresponding to December 2021, January, and February 2020, within the first ten working days of May 2020.

It is essential to mention that if you are within these groups of employers and have already implemented the generation and transmission of the electronic payroll, these deadlines do not apply to you.

Tax treatment of employer share-based payments and vesting arrangements

Through Official Request No. 100208192-163 of February 9, 2022, the Colombian Tax Authority established that in the case of payments based on company shares (vesting) -regulated in Article 108-4 of the Colombian Tax Code- the withholding agent shall be the company that acts as the employer of the worker who will receive his payment in shares. Therefore, the company must comply with the provisions of such Article, that is, to practice the respective withholding tax for labor payments, and to make the payment of the corresponding social security contributions.

Even if the employer company decides not to take the deduction for payments to its employees, it will still have the legal obligation to practice the respective withholding according to Article 108-4 of the Colombian Tax Code.

Companies in liquidation are still under the obligation to report information regarding the transactions with third parties.

The Tax Administration, through Official Letter No. 100208192-334 of March 16, 2022, reiterated that if the liquidation process of a company is not completed, the exception to file exogenous information for the year 2021 will not apply. Therefore, Resolution No. 000098 of October 28, 2020, must comply with the terms and conditions indicated therein. If the final liquidation account was registered before the Chamber of Commerce in 2021, and the cancellation procedure is carried out in 2022, the exception operates from 2022. In that case, information regarding transactions with third parties (exogenous information) in 2021 must be reported under the terms and conditions indicated in the Resolution above.

Case Law of the Constitutional Court and Council of State

Withholdings on foreign payments of commissions for personnel supply services must be made on the value of the payment and not on the value of the commission.

The Council of State, in Ruling No. 24795 of 2022, established that the withholdings referred to in Article 408 of the Colombian Tax Code, made on technical service and technical assistance contracts or compensation for personal services must be applied to the total value of the payment, not on the portion corresponding to the commission. The above, since the rule does not distinguish percentages of specific profit.

Projects of Decrees and Resolutions 

The Implementation of the supporting document for operations made with those not obligated to invoice electronically would be postponed.

The Colombian Tax Authority published a draft Resolution that would amend Article 6 of Resolution 00167 of December 30, 2021. This Resolution would postpone the term for the implementation of the electronic generation and transmission of the supporting document of acquisitions made to parties not required to issue sales invoices. Subjects will have until August 1, 2022, to carry out the first electronic generation and transmission of this document, complying with the respective conditions and technical and technological mechanisms.