TAX BULLETIN NO. 48

We share with you the Tax Bulletin for the month of June 2022, with the most relevant regulations and decisions issued in tax matters during this month. In the Bulletin you will find, among other issues, the list of the most relevant concepts issued by the Colombian Tax Authority during this month, including the concept that clarifies the tax treatment that must be given to the profits paid by a branch located in Colombia to its parent company resident in the United Kingdom. Likewise, we cover the Decree that regulates article 257-1 of the Colombian Tax Code regarding the tax discount for scholarships to athletes.

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 

The rules contained in Decree 806 of 2020 are permanently adopted.

In accordance with Law 2213 of 2022, the National Government opts to permanently implement digital information and communication technologies in judicial proceedings and procedures before the ordinary, administrative, constitutional and disciplinary jurisdictions, including all proceedings of the administrative authorities and arbitration processes. The foregoing, however, does not exclude the possibility of requiring face-to-face attention to the courts. This decision sets the guidelines and steps to be followed in customs and tax matters, since the requirements, requests, administrative acts, responses and appeals in such matters will have to be adapted to what is proposed by this Law so that taxpayers and customs users can be recognized by the authority and thus obtain legal validity, unless another applicable regulation is expressly established.

Regulation of the tax discount for scholarships to athletes.

Decree 985 of 2022 regulates Article 257-1 of the Colombian Tax Code, which orders the regulation of contributions, either in cash or in kind, made by individuals or legal entities that are taxpayers of Income and Complementary Taxes to allocate scholarships for study and maintenance to athletes, provided that they are governed by the agreements of the Ministry of Sports, in respect of which the taxpayer will receive representative negotiable securities with the option to be used as a discount in their income tax returns.

Transportation costs are excluded from the customs value of imported goods.

According to Decree 1132 of 2022, transportation costs and related expenses can be excluded from the taxable base of the customs value of imported goods. The exclusion covers the transportation costs incurred  from the place of delivery of the goods abroad to the place where the import is finalized, and only for goods classified by the subheadings that refer to essential products of the final consumer, including those inputs necessary for the construction industry, which are identified by the following subheadings: 0713109000, 1108130000 1513110000, 1516200000, 1604141000, 1902300000, 1001190000, 1108140000, 1513211000 1517900000, 1702301000, 3917100000, 1001991090, 1201900000, 1514110000, 1518009000, 1702309000, 7213100000, 1005902000, 1302199900, 1514190000, 1602329000, 1805000000, 7214200000.

Tax Rulings and Resolutions of the Colombian Tax Authority 

Sunset review to determine the termination of antidumping duties on non-stainless steel casing pipe and tubing.

Resolution No. 150 of 2022, issued by the Ministry of Industry and Commerce, orders a sunset review to be conducted in order to determine compliance with the anti-dumping duties imposed by Resolution 0026 of January 5, 2012, which were extended by Resolution 1526 of August 14, 2017, and fall on imports of non-stainless pipes for tubing and production, classified by tariff subheading 7304.29.00.00, originating from the People's Republic of China. In this way, the government seeks to determine whether the measures taken in previous years have succeeded in correcting the injury caused by the dumping of such product. Likewise, it is established that the anti-dumping duties extended by resolution No. 1526 of 2017 remain in force while the aforementioned sunset review is carried out.

The calendar for the implementation of the five (5) UVT limit as the maximum amount of the P.O.S. ticket is established.

The Colombian Tax Authority, by means of Resolution No. 1092 of 2022, established that the issuance of a cash register machine ticket with P.O.S. system, as a document equivalent to an invoice, may not exceed the maximum amount of five (5) taxable value units (UVT per its acronym in Spanish), not including the amount of any tax, for each sale and/or service rendered.

The application of this maximum limit shall be made according to the following schedule:

The application of the cause of seizure derived from not complying with the import requirements from Free Trade Zone is clarified.

According to Concept No. 100208192-809 of June 2022 from the Colombian Tax Authority, the cause of apprehension No. 31 of Article 647 of Decree 1165 of 2019 may be applied in the following cases:

• The special import declaration is not filed through the Colombian Tax Auhority electronic computer services, or it is filed outside the term set forth in Article 526-3 of Resolution No. 046 of 2019.
• The release authorization is obtained outside the legal term.
• The authorization of the release is denied.

In that sense, to remedy the causes of apprehension described above, a declaration of legalization with payment of ransom must be submitted. It should be noted that if the release authorization is obtained before the goods leave the Free Trade Zone, the legal term stipulated in Article 526-3 of Resolution 046 of 2019 is not applicable.

Guidelines for the Importation of Functional Unit goods.

According to Concept 771 of 2022, the Colombian Tax Authority established that the units, elements or components that are part of the functional unit and seek to be imported, must comply with the requirements of articles 190 and 307 of Decree 1165 of 2019. Each unit must also be declared according to its particular tariff classification. It should be noted that, in these cases, in the description of the Customs Declaration it must be specified that such merchandise is part of the functional unit. On the other hand, if the merchandise is declared by means of a restricted disposition modality, the procedure for the termination of such modality shall be evaluated for the specific case, in order to establish the possibility of disaggregating the functional unit that is in the process of importation.

The Colombian Tax Authority clarifies the tax treatment to be given to profits paid by a branch located in Colombia to its parent company resident in the United Kingdom.

In Concept 599-903712 of 2022, the Colombian Tax Authority states that in accordance with the provisions of Articles 5 and 7 of the Double Taxation Avoidance Agreement signed between the United Kingdom and Colombia (hereinafter the "DTA"), it is understood that the term "permanent establishment" of this DTA includes branches. Therefore, the distribution of profits made by a branch located in Colombia to its parent company resident in the United Kingdom (beneficial owner) and which is related to the business activity carried out by such parent company through the branch in Colombia, will be treated as business profits, following the provisions of Article 7 of this DTA.

Case Law of the Constitutional Court and Council of State  

The nullity of the pro-development stamp that taxed acts and contracts subject to registration is ratified.

In Ruling 25349 of 2022, the Council of State defined the nullity of Article 6 of Ordinance 012 of 2009 of Risaralda by taxing with the pro-development stamp acts and contracts in which there is no real and effective intervention of a public official, as required by Article 175 of Decree 1222 of 1986.

The above conclusion derives from the fact that, in the granting of acts, business or contracts, with or without value, subject to registration in the registry office or in the chambers of commerce, a departmental official does not intervene and there is no such intervention when the department acts as the active subject of the tax.

Projects of Decrees and Resolutions   

Draft Resolution seeks to amend Form No. 160 "Annual Declaration of Assets Abroad".

The Draft Resolution of June 7, 2022 expects to modify box 41 referring to the net worth value of the Statement of Assets Abroad for the taxable year 2022, in order to require recording in national currency the net worth value of the assets held abroad, as established in articles 261 to 280 of the Colombian Tax Code. The above, due to the amendment made by Article 116 of Law 1819 of 2016 to Article 269 of the Colombian Tax Code, which refers to the fact that assets in foreign currency must be valued in national currency according to the representative market rate, without taking into account the credits or payments measured at the same rate of the initial recognition.

Project to establish the procedures and technical specifications of the information to be submitted through Colombian Tax Authority electronic computer services.

On June 14, 2022 the DIAN published a Draft Resolution by means of which it seeks to establish the following: i) the procedure for the filing of the Transfer Pricing Informative Declaration (Form 120), ii) the filing of the Local Report and the Master Report of the Supporting Documentation, iii) the notification of the Country by Country Report and (iv) the content and technical specifications of the information to be submitted through the computer services of the Special Administrative Unit of Colombian Tax Authority, for the taxable year 2021 and subsequent years.

By means of a Resolution, it is planned to regulate article 616-5 of the Colombian Tax Code, added by article 14 of Law 2155 of 2021.

The Social Investment Law (2155 of 2021) added Article 616-5 to the Colombian Tax Code, which authorizes the Special Administrative Unit of the Colombian Tax Authority to establish the invoicing of the Income and Complementary Tax, which constitutes the official determination of the tax.

In this sense, the Draft Resolution establishes what must be understood by invoice and how the invoicing mechanism would be implemented, who are the subjects receiving the invoice, and other procedural aspects to effectively comply with the article added to the Code.