Credit balances: Not all are subject to a refund.

Articles 815 and 850 of the ET indicate the conditions under which a credit balance is compensable or may be requested as a refund. However, these do not include the possibility that balances generated in excess of deductible VAT over the VAT generated, and which were caused at the same rate, may be requested as a refund.

As specified in articles 815and 850 of the Tax Statute -ET-, taxpayers who liquidate balances in favor in the purification of the private liquidation of their tax returns will have the possibility of requesting their compensation with debts for taxes, advances, withholdings, interest and penalties, as well as the refund of such amounts before the Dian. Likewise, such articles establish the specific circumstances under which those responsible for the sales tax -VAT- may carry out this process.

Offsetting and refund of credit balances in VAT returns

When balances in favor are settled in the VAT returns, the regulation establishes that only the following VAT taxpayers may request the compensation or refund of such amounts:

–Persons responsiblefor exempt goods and services, mentioned in article 481 of the ET.

–Producersof exempt goods (see article 477 of the ET), modified by article 11 of Law 1943 of 2018).

–Responsible forgoods and services taxed at the rate of 5% (see articles 468-1 and 468-3 of the ET).

– Responsiblepartiesto whom withholdings have been made.

In the case of the balances in favor originated in the excess of deductible tax for the difference in the applied rate, these may be requested in compensation by the producers of exempt goods and those responsible for goods and services taxed at the 5% rate, once they file their income and complementary tax return corresponding to the taxable period in which the balances in favor were originated; all this, within the term of one month, counted from the date of the filing of the income tax return. They may also be requested by the taxpayers to whom VAT withholdings have been made, which tax may be imputed in the return for the following tax period, or requested as a refund, in accordance with the provisions of article 815-1 of the ET.

Likewise, the aforementioned VAT responsible parties may request the refund of the balances in favor originated in the VAT return for the excess of deductible tax due to rate difference, once the income tax return of the respective taxable period in which such balances originated is filed, unless the responsible party is an authorized economic operator according to the provisions of Decree 3568 of 2011, for which the refund may be requested bimonthly (see article 481 of the ET).

“The producers of exempt goods, on their part, may request the balances in favor that have been generated during the first three (3) bimonthly periods of the year, starting from the month of July of the current year or taxable period.”

The producers of exempt goods, on their part, may request the balances in favor that have been generated during the first three (3) bimonthly periods of the year, as from July of the current year or taxable period, provided that they have filed the income tax return for the previous taxable period, if applicable.

In addition, the builders who acquire materials for the construction of social and priority interest housing will be entitled to a VAT refund or compensation. Such refund or compensation will be made in a proportion of 4% of the value recorded in the deeds of sale of the property, which value may not exceed the maximum amount of social interest housing (see paragraph 2 of Article 850 of the ET). It should be noted that the Dian may request at any time the supports that demonstrate the payment of VAT on the construction of housing.

Term for requesting and making the refund of credit balances

Taxpayers must file the request for the compensation or refund of credit balances within the two years following the due date for filing the tax return. In the event that prior to the process, the amount of the credit balance has been modified through an official liquidation, the part that has been rejected may not be requested, even if the taxpayer has challenged such liquidation, for which he/she must wait until a complete resolution of the validity of the credit balance has been made.

Likewise, the Dian will have a term of 50 days, after the date of the refund request filed by the taxpayer, to make the reimbursement of the amounts of the balance in favor. In order to comply with the above, the request must be filed in due time and form.

It is necessary to highlight that article 98 of the Financing Law 1943 of 2018 added paragraph 5 to article 855 of the ET, which establishes that the Dian may automatically refund the balances in favor to taxpayers that do not represent a high risk, in accordance with the risk system used by the tax administration, and provided that more than 85% of their costs, expenses and deductible VAT come from suppliers that issue electronic invoices.

Balances in favor not subject to refund

” Articles 815 and 850 of the ET do not include the possibility that the balances in favor generated in the simple excess of deductible VAT over the generated VAT, caused with the same rate, be requested in compensation or refund”.

Now, from what has been mentioned up to this point we can observe that articles 815 and 850 of the ET do not include the possibility that the balances in favor generated in the simple excess of deductible VAT over the generated one, caused with the same rate, are requested in compensation or refund, which gives to understand that taxpayers who have this type of balances will not be able to carry out the process of requesting a refund or compensation of such amounts before the Dian.

Source: Actualize