Entrepreneurship law: learn about tax benefits

Goods related to renewable energies went from excluded to exempt from VAT.

The Government will authorize micro-companies and companies obliged to keep accounting records to do so in a simplified manner.

Virtual tax inspection and virtual administrative inspection visits are included.

With the enactment of Law 2069 of 2020 or Entrepreneurship Law, national entrepreneurs have a new regulation that favors the creation and consolidation of new enterprises in the country.

From the point of view of the Minister of Commerce, Industry and Tourism, José Manuel Restrepo, this law is a key instrument in the reactivation, which seeks to reduce costs for entrepreneurs and micro-entrepreneurs.

“This law will promote MSMEs and will establish a regulatory framework that favors entrepreneurship and growth. The conditions are in place to activate the necessary mechanisms for this law to become one of the key tools for the recovery of the economy and the construction of an entrepreneurial nation,” he said.

For her part, Claudia Marcela Camargo, tax leader at BDO Colombia states that business leaders believe that the new financial regulations, as a result of COVID-19, including possible tax changes, will have a negative impact on their profitability in the next 12 months.

“That is why these types of initiatives such as the Entrepreneurship Law become a fundamental step for small and medium-sized companies to advance in their economic reactivation, which is crucial at this moment in the Colombian economy,” he says.

The Entrepreneurship Law presents some tax benefits with respect to the previous regulations. BDO Colombia analyzes the modifications presented by the law:

Modifications in the registration tax.

This tax refers to the fee paid on any act and/or contract that by law must be registered in the chamber of commerce or in the public instruments registry office.

The law establishes a modification in the rate ranges set by the departmental assemblies, through the chambers of commerce, for micro-enterprises:

–Foracts that do not involve the incorporation or increase of the premium in placement of shares, i.e., a capital surplus, a charge of between 0.3% and 0.6% is established.

–Foracts subject to registration that imply the constitution or increase of the additional paid-in capital, this will be a minimum of 0.1% and a maximum of 0.2%.

Likewise, it is indicated that no surcharges or surcharges of any kind may be added to the current legal rate of registration tax for micro-companies.

Simplified accounting for micro-companies

The law empowers the Government to authorize organizations categorized as micro-enterprises and obliged to keep accounting records to do so in a simplified manner, to issue abbreviated financial statements and disclosures, or for these to be subject to moderate level information assurance.

This will allow small and/or emerging companies to alleviate this burden, so that they do not have to spend money on accounting equipment, to be governed under the international accounting language and, in turn, will make it easier for them to have a cash accounting, taking into account the volume of their assets, income, number of employees, form of legal organization or their socio-economic circumstances.

“In cash accounting, only the money that comes out or goes in will be taken into account, as opposed to accrual accounting, which takes into consideration the moment in which the commercial transaction is made, being indifferent whether money comes out or goes in,” says BDO.

New goods exempt from VAT

Goods related to renewable energies such as energy inverters for solar energy systems with panels, solar panels and charge controllers for solar energy systems with panels are now exempt from VAT.

However, the right to bimonthly refund only applies to the producers of these goods and not to the traders of these goods.

VAT credit balances

In order to provide solutions in the midst of the sanitary emergency, the request for refund and/or compensation of VAT generated by the sale of exempt goods related to Decree Law 438 and 551 of 2020 was authorized.

Note: although Article 28 of Law 2069 of 2020 makes reference to Decree 552 of 2020, it would actually seek to allude to Decree 551 of the same year, which established a transitory VAT exemption for 211 medical supplies.

Likewise, once the sanitary emergency is over, VAT that has not been requested for refund and/or compensation may be imputed in the returns of the following periods.

Electronic and digital signature

A term of six months is given for the Government to regulate the electronic and digital signature in the country.

Although since Law 1111 of 2006 the Tax Statute, in Article 559, provides for the filing of petitions, appeals and other writings in personal and electronic form, the Dian has recently indicated that appeals can only be filed in person.

“It is expected that soon all types of electronic procedures will be allowed, including those made through power of attorney without the need for personal presentation. Additionally, virtual tax inspection, virtual accounting inspection, virtual administrative inspection visits, as well as surveillance and control will be included on a permanent basis,” indicates BDO.

Source: Actualícese