TAX BULLETIN NO. 53

We are pleased to share the Tax Bulletin with the most relevant regulations and decisions issued in tax matters during November 2022. Among other topics, we briefly summarize about the most recent decisions issued by the Council of State, particularly, in relation to declaring void the regulation related to the “inefficiency” of the VAT returns filed in different periods from the ones established in the Tax Law, also, about the concept issued by the Tax Authority (“DIAN”) about the new mechanisms for importers users of transformation and assembly warehouses.

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.

Tax Rulings and Resolutions of the Colombian Tax Authority

The value of the UVT is now fixed.

After the draft Resolution on the matter, the DIAN finally fixed - through Resolution 001264 of November 18, 2022 - the value of the Tax Value Unit applicable for the taxable year 2023, which remained at COP$ 42,412.

Government eliminated the “VAT-free” day.

Under Decree 2357 of 2022, The Minister of Finance eliminated the third “VAT-free” day that would take place on December 2, 2022. This decision was made considering that it was not clear whether these tax benefits are justifiable in terms of greater benefits versus the amount of administrative and preparation costs required for this day. They also argued that these days do not constitute substantial tax relief for individuals.

New facilitation mechanisms for importers.

The Colombian Tax Authority (“DIAN” for its acronym in Spanish) issued facilitation mechanisms for users of transformation and assembly warehouses to reduce costs and time in their operations. Consequently, these users are allowed to file an advanced type of import return and the modification return - by different sectional - through digital services, eliminating the manual process at the time of finalizing the S140 modality in the import regime. This modification allows operators to obtain the release of their merchandise at the place of arrival, without the need to submit their operation to customs transit, and assume the costs incurred for the transfer of their merchandise to the transformation and assembly warehouse.

Territorial limitations for the provision of services by customs agencies are clarified.  

According to DIAN Concept No. 1310 of 2022, the Customs Authority expressly states that customs agencies are not qualified to be qualified and act from a Free Trade Zone for services. The above is because Free Trade Zones, according to Article 6 of Decree 1165 of 2019, can only provide their services from the territory delimited as Free Trade Zone is based on the principle of exclusivity, which is the main basis for such qualifications and the benefits derived therefrom.

In that sense, it should be highlighted that customs agencies provide their services throughout the national territory if they are of levels 1 and 2, or in a specific jurisdiction of the Special Administrative Unit of DIAN as long as they are agencies of levels 3 and 4. Therefore, due to the administrative function and regulated by articles 34, 37, and 41 of Decree 1165 of 2019, customs agencies may not fully perform their control, review, and administration functions from an area delimited as a free zone. 

Termination of the Customs Transit regime in the Tumaco Special Regime Zone.  

DIAN Concept No. 1268 of 2022 establishes when the transit regime of certain goods within the Tumaco Special Regime Zone may be finished. In that sense, it is clarified that the limitation of the entry of the goods described in article 125 of numeral 10 of Resolution 46 of the year 2019, only applies if such products seek to enter directly from abroad to the National Customs Territory through the Tumaco Special Customs Regime Zone, in that the goods could obtain a transit authorization from the place of arrival to the Tumaco Special Customs Regime Zone, as long as in such zone there is an enabled warehouse that allows the termination of the customs transit operation. The above, considering that article 448 of Decree 1165 of 2019 establishes that the way to terminate a customs transit operation must be done in an authorized warehouse or the facilities of the user operator of a free zone.

Case Law of the Council of State

The State Council declares void the regulation related to the “inefficiency” of the VAT returns filed in different periods from the ones established in the Tax Law.

The State Council declared null and void the regulation established in paragraph 2 of article 1.6.1.3 of the Sole Regulatory Decree 1625 of 2016, which indicated that the returns that had been filed in periods different from those established by law have no legal effect. Therefore, the amounts paid may be taken as a credit to the balance payable in the returns of the corresponding period. Regarding this, the Council of State indicated that the National Government exceeded its regulatory power by providing a legal consequence not foreseen by the legislator in the Tax Statute on the matter.

In that sense, the intention of the legislator was only to establish the VAT periods and the conditions for filing VAT returns, without mentioning the effects of filing these returns in different periods. Therefore, the Government did not have the competence to pronounce and regulate these aspects that were not limited by law.

Possibility of the departmental authorities to proceed with the seizure and confiscation of goods during the customs authority inspection subject to excise tax and that do not have sanitary registration.

The State Council issued a decision indicating that according to articles 200 and 222 of Law 223 of 1995 -which regulates the seizure of goods for the consumption tax on liquors, wines, or aperitifs-, the departmental authorities are competent to seize the goods during the customs authority inspection when the excise tax is not paid or when the obligations established to the responsible taxpayers are not fully satisfied such as the registration and authorization of certain products before the Sanitary Authority INVIMA” when required.

Consequently, and for the case under study, since there is a provision that requires producers and distributors of alcoholic beverages to have the sanitary registration of the INVIMA, it is possible to contemplate as a sanction the seizure of goods subject to excise tax in case of failure to complete such requirement in charge of the territorial entities.

Projects of Decrees and Resolutions 

Government eliminates the “VAT-free” day.

Under the Draft Decree, The Minister of Finance intends to grant a new term for the state entities that are part of the General Budget of the Nation to execute the transfer and payment orders in favor of the final beneficiaries of the judgments awards or conciliations that were recognized as public debt as of August 31, 2022, by the Ministry.

To guarantee the principles of continuity and fiscal sustainability and to reduce the fiscal impact resulting from interest arrears, a new term is set until December 23, 2022.

Form No. 260 is enabled for tax obligations under the Simple Tax Regime.

Under Draft Resolution, the Tax Authority (“DIAN”) intends to enable Form No. 260 "Consolidated Annual Return" for the fulfillment of the tax obligations of taxpayers of the unified tax under the Simple Taxation Regime (“Régimen Simple” for the taxable year 2022. In this form, some modifications were made related to the instructions of filing, such as i) the instructions of box 172 "Fraction of the taxable year" and ii) adjusting the tables that illustrate the application of the proportionality concerning each of the penalties, in attention to the update of the value of the UVT.