We share our Tax Bulletin No. 5 from September to October 2018 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. Tax Rulings
1.1 Tax Ruling No. 1534 issued by Colombian Tax Authority on September 6th, 2018
- In accordance with Tax Ruling No. 1534, only income derived from the performance of the activities listed in section 4 of the Decree 2147 of 2016, carried out by Free Trade Zone Users, are taxed with income tax at 20% rate (preferential tax rate). The Tax Ruling indicates that Industrial Free Trade Zone Users can face penalties if they carry other activities that are not specifically allowed in the abovementioned decree.
1.2 Tax Ruling No. 19.585 issued by Colombian Tax Authority on July 27th, 2018
- By means of the Tax Ruling No. 19.585, the Colombian Tax Authority points put that registered Importation of Technology, Patent and Trademark Contracts/Agreements that were modified, or the term has expired have to be registered once again. The party that has entered into this kind of agreements can deduct from its income taxable base expenses paid for the execution of the agreement as long as the party registers the modification of the agreement or the new agreement. If the party fails to register the agreement, it cannot deduct the expenses, or it can only take as deductible the expenses incurred after the registration of the agreement.
1.3 Tax ruling No. 21.652 issued by Colombian Tax Authority on August 26th, 2018
- The Colombian Tax Authority explains, trough Tax Ruling No. 21652, the tax burden derived from the payment of possible damages or loss of future earnings. For income tax payers, the payment for possible damages is considered as a non-taxable income whereas the payments made due to loss of future earnings are considered as taxable income as this payment increases the taxpayer’s equity.
1.4 Tax ruling No. 15.839 issued by Colombian Tax Authority on June 16th, 2018
- In accordance with Tax Ruling No. 15.839 the International Financial Reporting Statements (IFRS) must be used for tax purposes to determine the income, costs, expenses, assets, liabilities and net equity. Nonetheless, fiscal provisions will be used for tax purposes if they provide a specific tax treatment regarding the elements.
1.5 Tax ruling No. 01650 issued by Colombian Tax Authority on August 8th, 2018
- Through Tax Ruling No. 01650, the Colombian Tax Authority indicates the tax treatment applicable to cryptocurrencies. In accordance with the document, cryptocurrencies are assets that may increase the taxpayer equity when sold.
2.1 The Council of State indicates -through judgment 81,881 issued on August 1st, 2018- that regular deductions and VAT discounts from the income taxable base are allowed if the taxpayer has kept the invoices that support the deduction or discount. In the event the taxpayer does not have the corresponding invoice, he cannot take from the taxable base the deduction or discount.