COVID-19: Government adopts 4 tax measures

Through Legislative Decree 688 of May 22, 2020, the Ministry of Finance adopted transitory tax measures to face the effects derived from the economic emergency due to COVID-19.

The interest rate is reduced for debts resolved until November 30, 2020.

Through Legislative Decree 688 issued by the Ministry of Finance on May 22, 2020, the National Government adopted a series of transitory measures in tax matters to face the effects generated by the spread of COVID-19 in Colombia.

The above, in response to the state of economic emergency enacted by Decree 637 of May 6, 2020, considering that the effects derived from the circumstances that motivated such state directly affect the economic situation of the companies and therefore generates social and economic implications.

1. Transitory moratorium interest rate

Pursuant to Article 1 of Legislative Decree 688 of 2020, for tax obligations and those related to the general social protection system (which are subject to verification by the Special Administrative Unit for Pension and Parafiscal Management -UGPP-), which are paid until November 30, 2020, and for the payment facilities or agreements subscribed between May 22 and November 30 of the current year, the late payment interest rate indicated in article 635 of the Tax Statute -ET- will be liquidated at a daily interest rate equivalent to the current banking interest rate for the modality of consumer and ordinary credits, certified by the Financial Superintendence.

For the particular case of the taxpayers most affected by COVID-19 (see paragraph 3 of article 1.6.1.1.13.2.11 and paragraph 4 of article 1.6.1.1.13.2.12 of Decree 1625 of 2016), tax obligations that are paid or establish payment facilities or agreements, from May 22 and until November 30, 2020, the delinquency interest rate will be settled at a daily interest rate equivalent to 50% of the current bank interest rate for the modality of consumer and ordinary credits.

Such taxpayers most affected by COVID-19 are the following:

– Commercial air passenger transportationcompanies.

–Hotelsthat provide hotel services.

–Taxpayersthat have as their main economic activity:

o9006 – “Theatrical activities”.

o9007 – “Activities of live musical shows”.

o9008 – “Other live entertainment activities”.

Provided that they correspond to legal entities or large taxpayers (individuals and legal entities); that is to say, individuals not classified as large taxpayers were not taken into account in this group.

We analyze in depth the treatment of this new transitory rate of late payment interest, as well as the rates that will be in force until November 30, 2020 in accordance with the indications of Legislative Decree 688.

2. Abbreviated payment facilities

“Taxpayers who file their tax returns of taxes administered by the Dian during April 1 and July 1, 2020 and present arrears in the payment of these, may request payment facilities or agreements.”

Taxpayers who file their tax returns of taxes administered by the Dian during April 1 and July 1, 2020 and present arrears in the payment of these, may request facilities or payment agreements through the abbreviated procedure until August 6 of the current year. The Dian will have a term of 15 days following the presentation of the request for the payment facility to approve the facility or payment agreement of 12 months without the need of collateral.

Remember that in our editorial Dian enables virtual channels for requests for payment facilities and disbursements we present the different virtual channels for the filing of requests for payment facilities, as well as requests for disbursement of accounts and / or goods.

Among the conditions for payment facilities or abbreviated payment agreements are the following:

1.Interest shall be caused at the daily interest rate equivalent to the bank interest rate for the modality of consumer and ordinary credits, certified by the Superintendence of Finance, in accordance with the indications of Article 1 of Legislative Decree 688 of 2020.

2.The payment facility or agreement shall have a maximum term of 12 months as from the date of subscription.

3.The constitution of any type of collateral will not be required.

4.The taxpayer must submit a certification under oath signed by the legal presenter of the company, supported by financial studies, demonstrating the company’s cash needs that justify the agreement and the financial projections that will allow the payment of the tax obligation within 12 months.

Such certification will be sufficient evidence to demonstrate the need and origin of the payment facility and, therefore, replaces the need to denounce the assets referred to in the second paragraph of article 814 of the ET.

3. Non-compliance with the payment facility

“In case of non-compliance with the payment facility, the resolutions by which the payment facility or payment agreement is granted shall have executive merit”.

In case of noncompliance with the payment facility, the resolutions by which the payment facility or agreement is granted shall be enforceable under the terms of article 828 of the ET and in accordance with the coercive collection procedure, for the total amount of the tax obligation plus 100% of the penalties and interest on which such facility is based.

It is necessary to take into account that the interest will be re-settled at the rate established in article 635 of the ET.

If the non-compliance with the payment facility is associated to the withholding tax return, the return filed shall be considered ineffective in accordance with the provisions of article 580-1 of the ET.

4. Tax gabela for Dian debtors

Legislative Decree 688 of 2020 extended the deadlines for the filing of requests for conciliation of penalties and interest in administrative proceedings, termination by mutual agreement and tax favorability granted by the Government through articles 118, 119 and 120 of Law 2010 of 2019. Such requests may be filed with the Dian no later than November 30, 2020. The conciliation or termination act must be signed no later than December 31 of the current year.

For the case of conciliation of penalties and interests, the agreement must be submitted by any of the parties for approval before the administrative judge or before the respective administrative contentious corporation as the case may be.

Source: Actualícese