Income tax return for taxable year 2018: Cedulation System

With the entry into force of Law 1943 of 2018, the cédulas used in the tax returns of individuals were modified, but such change will only apply for the taxable year 2019. Below, we point out the cédulas to be used in the income tax return for the taxable year 2018.

As from the tax reform of the Financing Law 1943 of 2018, the purification of income will be made independently based on three cédulas (general, pension, and dividends and participations), according to the indications of article 29 of the law in mention, by means of which article 330 of the Tax Statute -ET- was modified. However, it is necessary to take into account that such changes will only be applicable to the income tax return corresponding to the taxable year 2019 (i.e., those returns to be filed during 2020), therefore, individuals obliged to file the income tax return for the taxable year 2018 () must use the ceding system implemented by Law 1819 of 2016 in the purification of their annual income, depending on the origin of the same, in accordance with what is indicated in article 26 of the ET.

The following are the main qualities of each of the cedulas in which the income of the natural person must be classified:

Let us recall that, until the taxable year 2017, in the cédula of earned income exclusively values for untaxed income, exempt income and even deductions could be subtracted, but it was not allowed in any case to subtract values for costs and expenses, which affected the self-employed who were forced to use such cédula. However, by means of Ruling C-120 of November 14, 2018, Article 336 of the ET (modified with Article 1 of Law 1819 of December 2016) was declared partially unenforceable, as it violated the principle of tax equity by preventing self-employed workers from being able to subtract costs and expenses derived from their economic activity.

“in the income tax return for the taxable year 2018, the self-employed taxpayers may subtract in the work income tax return the costs and expenses that are related to the income producing activity.”

The above means that in the income tax return for the taxable year 2018, self-employed taxpayers may subtract in the work income tax return the costs and expenses that are related to the income-producing activity.

Source: Actualize