Abbreviated refund of credit balances: New clarifications

Through Legislative Decree 807 of June 4, 2020, the Ministry of Finance provided new indications on the process of refund and/or compensation of credit balances established in Decree Law 535 of 2020.

In addition, transitory modifications are made to Article 855 of the ET.

Two days before the end of the state of economic emergency decreed by the National Government through Decree 637 of May 6, 2020, the Ministry of Finance issued Legislative Decree 807 of June 4, 2020, through which it provides new indications on the abbreviated process of refund and/or compensation of balances in favor established in Legislative Decree 535 of 2020, in addition to setting transitory modifications to Article 855 of the Tax Statute -ET-.

Below, we detail the provisions pointed out by the Government regarding these processes. Let’s see:

Abbreviated procedure for the refund and/or compensation of balances in favor.

“until June 19, 2020, income taxpayers and VAT taxpayers who are not classified as high risk in tax matters will be authorized to refund and/or offset balances in their favor”.

Article 1 of Decree Law 807 of 2020 amended subsection 1 of Article 1 of Legislative Decree 535 of 2020 to establish that, until June 19, 2020, income taxpayers and VAT taxpayers who are not classified as high risk in tax matters will be authorized the refund and/or compensation of balances in favor through the abbreviated procedure, which must be resolved within 15 days from the date of the filing of the request.

Let us recall that the previous version of Article 1 of Decree 535 of 2020 established that the refund and/or compensation process of balances in favor would be in force as long as the state of sanitary emergency decreed by the Ministry of Health remained in force. However, Legislative Decree 807 stated that this abbreviated refund may only be made until June 19 of the current year.

Additionally, the paragraph of Article 3 of Decree Law 535 was amended to state that the refund or compensation requests that are being processed through the abbreviated procedure as of June 19, 2020 will end with the abbreviated refund procedure, including those that were rejected and are filed in the month following their rejection, in accordance with the provisions of paragraph 1 of Article 857 of the Tax Statute -ET-.

Requirements for the automatic refund of tax credit balances

Article 3 of Decree Law 807 of 2020 modified in a transitory manner literal b) of paragraph 5 of article 855 of the ET, to indicate that as from June 22 and until December 31, 2020 the Dian may automatically return the balances in favor in income and VAT to taxpayers and responsible parties to whom 25% of the costs, expenses or deductible VAT come from suppliers that issue electronic invoices.

Costs and expenses that at the time of calculation are not susceptible to be supported by the electronic invoice mechanism, such as amortization, depreciation and payroll payments, will be excluded from the 25%. Likewise, the import declaration will be considered as support for costs and expenses.

Term to resolve requests for refund and compensation of credit balances.

Taxpayers who request the refund and/or compensation of credit balances, but do not have the condition of the new transitory version of paragraph b) of paragraph 5 of article 855 of the ET, will have the request for refund of credit balances resolved within 50 days following the date of the request filed, without the requirements of paragraph 5 of the article in question being applicable. However, the process of investigation prior to the refund, provided for in article 857-1 of the ET, may be carried out.

Source: Actualize