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DIAN: Moratorium interest rate for debt settlement
In order to counteract the negative effects generated by COVID-19 on the economic stability of taxpayers, Legislative Decree 688 of May 22, 2020 established the temporary reduction of the moratorium interest rate for the settlement of debts with the Dian.
The quarantine and social distancing measures that the Colombian Government has been forced to implement due to the arrival of COVID-19 in the country and its rapid expansion throughout the national territory, have had a visible effect on the country’s economy.
What is the context in Colombia today?
As it has been perceived, many companies had to close their doors due to this contingency that nobody foresaw in their risk matrices, and given the sudden interruption of economic activity; many countries around the world, including Colombia, have had to adopt extraordinary measures in order to save lives and at the same time try to reduce the dramatic drop in economic activity.
Among the strategies that have been implemented in Colombia is the fiscal support focused on the most affected households and companies, such as the implementation of the VAT refund, the Paef, the solidarity income program, among others.
Now, all the reasons already mentioned and others that motivated the declaration of the state of economic, social and ecological emergency directly affect the economic situation of the companies, force the reduction of jobs and increase the negative social and economic implications, forcing the national government to continue looking for alternatives to alleviate the internal crisis generated in the country.
According to the World Bank, in its report entitled The economy in the times of COVID-19, which was published in April 2020, the Colombian gross domestic product will fall by at least 2% by the end of 2020, given the difficulties generated by the sanitary emergency inside the country.
Furthermore, in line with what was expressed by Fedesarrollo in its Editorial document : dual shock and possible effects on the Colombian economy, released on March 26, 2020, the projected unemployment rate for our country could reach 15.4 % because of the pandemic, which is 4.9 % more than the balance left in 2019.
Economic growth, unemployment rate and poverty scenarios.
*Source: Fedesarrollo
Therefore, through Legislative Decree 688 of May 22, 2020, the national government decided to temporarily lower the default interest rate referred to in Article 635 of the ET, and also to develop abbreviated payment facilities for those who have debts with the Dian or the UGPP.
Behavior of the Dian interest rate before Decree 688 of 2020
Since the entry into force of Law 1819 of 2016 and to date, subsection 1 of Article 635 of the ET indicates that the interest rate to be taken into account by the Dian when settling the default interest on obligations administered by the tax directorate corresponds to the usury rate in force determined by the Financial Superintendence of Colombia, for consumer credit modalities, minus two points (previously it was settled with the same usury rate, without subtracting any percentage).
Temporary reduction of the interest rate with the Dian.
“the base interest rate will no longer be the usury rate minus two points, but the current bank interest rate for consumer and ordinary loans.”
Now then, as we announced lines back, Article 1 of the indicated Legislative Decree 688 made a transitory modification, indicating that those taxpayers who access the facilities or sign agreements with the Dian from May 22 of the current year, when the decree came into effect, and until November 30, 2020, will be able to access a preferential settlement methodology in which the base interest rate will no longer be the usury rate minus two points, but the current bank interest rate for consumer and ordinary credits, certified monthly by the Financial Superintendence of Colombia.
The decree establishes two groups of taxpayers:
Classification of taxpayers for access to the reduced interest rate of Decree 688 of 2020.
Group 1 – Taxpayers especially affected by the sanitary emergency:
– 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.
This special group will settle its debts with the tax authorities with a daily interest rate equivalent to 50% of the current bank interest rate for consumer and ordinary credits, certified monthly by the Financial Superintendence of Colombia.
Group 2 – Other taxpayers: all other taxpayers will settle their obligations with the tax authorities, using the aforementioned current bank interest rate, but in full.
Although the benefit is much more explicit for the entities of group 1, the others also have a significant reduction, since the usury rate previously used was 1.3 points higher than the one that will apply for the following months.
The following chart shows the rates granted for each type of taxpayer and shows, by way of comparison, the rate for the month of May that each of them will be able to use.
Reduced interest rate applicable to each type of taxpayer
History of delinquent interest rates
As stated in the previous lines, we have that any process of cancellation of debts that is carried out with the Dian at present and until November 30, 2020, will pay interest on arrears with a current rate and not with a usury rate reduced by two points.
We recalculated the rates that have been in effect month by month during 2020, and the following were the variations we obtained:
Given that, regardless of the date of origin of the debt, the taxpayer will be able to settle its interest with the current rate and not with the default rate (if it acts before November 30, 2019), we have prepared a history of the default interest rates versus the current interest rate (since December 2014) that will apply temporarily to settle debts with the Dian.
Being consistent with the above, a taxpayer from what we have called group 2, who had a debt with the Dian from April 2020 to date, will no longer calculate his debt with monthly rates of 26.04% in April and 25.29% in May, but with 18.69% and 18.19%, respectively. This shows a 7.35% decrease in the April rate and a 7.10% decrease in the May rate.
In conclusion, this new regulatory provision represents a relief for those who keep debts with the Dian, since, regardless of the date on which the obligation arose (before or after May 22), all debtors will be able to pay less interest on arrears if they agree to cancel their commitments before November 30.
Source: Actualícese
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