Decree 535 of 2020: Refunds of income tax and VAT credit balances

In the midst of the economic slowdown generated by COVID-19, it was established that applicants that are not qualified as high risk will be refunded in only 15 days.

The Dian continues without prescribing the forms 210 and the one corresponding to the annual SIMPLE return.

On April 10, 2020, the National Government, under the economic emergency declaration established by Decree 417 of March 17, 2020 to face the COVID-19 pandemic, decided to issue Decree 535 (with the signature of all the ministers), in order to establish an abbreviated procedure in the application process for the refund of income and VAT credit balances, in order to improve the cash flow of taxpayers.

Indeed, although Article 855 of the Tax Statute -ET- establishes that the Dian may take up to 50 days to return a balance in favor (a term that may be reduced to only 10 days, if the requirements of paragraph 5 of said Article 855 of the ET and Decree 1422 of August 2019 are met), Article 1 of the new Decree 535 of April 10, 2020 provided the following:

“Until the sanitary emergency declared by the Ministry of Health and Social Protection remains in force, due to the pandemic derived from the COVID-19 coronavirus, taxpayers and those responsible for income tax and complementary taxes and sales tax -VAT- who are not qualified as high risk in tax matters shall be authorized the refund and/or compensation of the respective balances in favor through abbreviated procedure within fifteen (15) days following the date of filing the refund and/or compensation request timely and in due form”.

And in its article 2 it provided:

“Article 2. List of costs, expenses and deductions. As long as the sanitary emergency declared by the Ministry of Health and Social Protection remains in force, due to the pandemic derived from the COVID-19 coronavirus, it shall not be necessary to attach the list of costs, expenses and deductions for the processing of requests for refund and/or compensation in the income tax and complementary taxes.

Paragraph. Taxpayers requesting the refund and/or compensation of the balances in favor referred to in this Legislative Decree shall submit the list of costs, expenses and deductions within thirty (30) calendar days following the lifting of the sanitary emergency or its extension, without the need for a special information requirement. Failure to send the information referred to in this paragraph shall be subject to the penalties set forth in article 651 of the Tax Statute, notwithstanding that the tax administration may issue the administrative acts as the case may be.”

Dian continues without prescribing the form 210 for the taxable year 2019 and the form for the annual return of the simple regime

Although the above measure is entirely plausible, it turns out that the Dian has only complied with issuing form 110 for income tax returns for the taxable year 2019, but continues without issuing form 210 for that same taxable year.

“the Dian is preventing resident individuals and illiquid successions from being able to start filing their Form 210 taxable year 2019 returns with their respective balances in favor.”

Therefore, the Dian is preventing resident individuals and resident illiquid successions from being able to start filing their declaration of form 210 taxable year 2019 with their respective balances in favor. And others who want to declare and pay from now on so that their 6 or 12 months of the audit benefit contemplated in article 689-2 of the ET start running earlier are also prevented if the Dian does not release the form 210.

So, if the 110 is already ready, why isn’t the 210 ready? In this regard, it is important to note that it was in May 2019 when it was published (with Resolution 0035) a form 210 of fraction of year 2019, which was adapted to the changes of Law 1943 of 2018. But On March 12, 2020 it was announced, with a draft resolution, another totally new form 210 that violates many superior rules of the Tax Statute and Decree 2264 of December 13, 2019.

The new form 210 proposed by the Dian is so wrong that, although the ET says that the new general form is a single form that does not have to be divided into sub-forms (something that was complied with in the form 210 of fraction of year 2019, which was published in May of the same year), at the end it is suggested to divide the general form into sub-forms and establishing, for example, that working income could not be applied to compensations of excess presumptive income of previous years. This is totally arbitrary, since such offsets are included in the general tax return, regardless of the type of income reported therein.

Therefore, we continue to depend on the Dian to do its job in a timely and correct manner in relation to the issuance of form 210 for the taxable year 2019.

Likewise, it is possible that some of the taxpayers that moved to the simple regime during 2019 have been, at the same time, producers of VAT exempt goods, which filed during February 2020 their annual VAT return 2019, forming balances in favor.

In this sense, there is a big gap in the regulation, since article 850 of the ET says that this balance in favor of the VAT of 2019 can only be requested as a refund when the “income and complementary tax return” of that same taxable year 2019 has been filed first. But this cannot be applied to those who moved to the simple, since they no longer file this type of return.

Consequently, another regulatory decree is urgently needed to establish that such balances in favor of the 2019 VAT will be returned when they first file their annual return of the simple regime. And if that is established, then again it becomes urgent that the Dian also prescribe the form for the annual SIMPLE return for the 2019 taxable year, otherwise, in the midst of the COVID-19 economic crisis, it will be blocking those taxpayers who have balances in favor in their 2019 annual VAT return.

Source: Actualize