Tax Bulletin No.20

We share our Tax Bulletin No. 20 from February 2020, 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.Normativity

1.1. On January 31^st of 2020, the Colombian Tax Authority issued Resolution No. 00009, which regulates the tax rates and tax basis for the fuel tax applicable since February 1^st of 2020. The tax basis and tax rate will depend on the gallon or cubic meter and quality of the fuel.  

1.2. By Resolution No. 000013 of February 12 of 2020, the Colombian Tax Authority indicated the forms taxpayers must use for the national fuel tax return and the national carbon/energy tax return. To fulfil their tax duties, taxpayers will have to present the corresponding returns through forms numbers 430 and 435 using the electronic services and the electronic signature accepted by the Tax Authority.

1.3. By means of Resolution 4 of 2020, the Colombian Tax Authority pointed out the procedure and application of the section 869 to 869-2 of the Colombian Tax Code (CTC) related to the abuse of tax law. In order to reshape the abusive transaction, the Tax Authority shall issue a public document that taxpayers should respond during the three (3) months later to the notification.

2.Tax Rulings

2.1. Tax Ruling Number 27630 issued by Colombian Tax Authority on November 6^th, 2019

• In accordance with Tax Ruling No. 27630, the Colombian Tax Authority explained that advance payments made during the execution of an agreement will not be taxed with Value Added Tax (VAT), as long as such advance is aimed to cover the initial costs in which the contractor may incurred for the execution of the agreement. In addition, such advance will not be subject to withholding tax.

2.2. Tax Ruling Number 28222 issued by Colombian Tax Authority on November 13^th, 2019

• The Colombian Tax Authority explained, trough Tax Ruling Number 28222 that, according to the section 631-5 of the CTC, there are two different ways to identify the final or effective beneficiaries of the collective investment funds. The first one regarding the effective control over the national company or the quality of the direct or indirect beneficiary, and the second one regarding guidelines of SARLAFT.

2.3. Tax ruling Number 28569 issued by Colombian Tax Authority on November 18^th, 2019

• In terms of the Tax Ruling Number 28569, the Tax Authority indicated that income recognized as a result of the exchange difference will be subject to self-withholding tax. The tax basis will be difference between the market rate (TRM) at the obligation initial recognizing and the market rate (TRM) applicable at the moment when the payment is made.

2.4. Tax ruling Number 28230 issued by Colombian Tax Authority on November 13^th, 2019

• By means of Resolution 4 of 2020, the Colombian Tax Authority pointed out that in order for taxpayers to take the 50% of turnover tax as a tax credit on the income tax return, the following requirements must be met: (i) the tax must be effectively paid during the taxable year and; (ii) it also have to be directly related to the economic activity of the taxpayer. Additionally, the remaining percentage paid can´t be treated as a deduction on the income tax return of the taxpayer.

2.5. Tax ruling Number 004 issued by the Colombian Tax Authority on February 4^th, 2020

• The Tax Authority indicated thought Tax Ruling Number 004 that, if the deadline to present amendments related to the tax returns has expired before December 27th of 2019, the changes introduced by Law 2010 of 2019 will not modify the term of two (2) years taxpayers have to voluntarily correct their income tax return, term that will be counted upon the date the taxpayer has to filed its tax return.

2.6. Tax ruling Number 27300 issued by the Colombian Tax Authority on November 1^st, 2019

• The Colombian Tax Authority explained, thought Tax Ruling Number 27300 that, the invoicing system of the joint ventures (consortium and temporary unions) could be made by (i) the joint venture, (ii) separately by each member of the consortium or temporary union, or (iii) jointly between all the members.

3.Case law of the Council of State

3.1. In the case law of October 16^th, 2019 (File 22895), the Council of State indicated that, the registration of the exportation of services agreements with undetermined amount is not subject to any temporary limitation and the taxpayer wouldn´t have to fill a request for the extension of the agreement registration.

3.2. In the case law of November 4^th, 2019, the Council of State explained that, the Municipal Council is available to defined tax issues that were not identified in the national law. In addition, the principle of legal reserve is not breached when the tax elements of the public lighting tax are established by the Municipal Council.

4. Projects of Decrees and Resolutions

4.1. The Colombian Tax Authority issued a draft of resolution that provides the form number 110 in order to present the income tax return or income and equity return for nonresident entities and individuals, corresponding to the taxable year 2019 and part of the taxable year 2020.

4.2. The Colombian Tax Authority issued a draft of resolution that aims to regulate the VAT exception of goods mention in section 25 of Law 2010, 2019. According to the resolution draft, the VAT exception will be applicable in July and October of the taxable year 2020.