Individuals: Credit card transactions will generate 4 x 1.000

Law 1943 of 2018 eliminated the GMF exoneration that operations carried out with credit cards had until the close of 2018, as well as the exoneration of financing companies when they disbursed monies to acquire goods delivered later in leasing contracts.

Article 87 of Financing Law 1943 of December 28, 2018 made an important modification to numeral 11 of Article 879 of the Tax Statute -ET, eliminating the exoneration from the tax on financial movements -GMF- that since December 2010 natural persons had been enjoying when using their credit cards, as well as the exoneration that financing companies had also been enjoying when making disbursements to acquire goods that were then delivered in leasing contracts (leasing).

The new version of the regulation no longer includes the texts of the second and third paragraphs of numeral 11 of article 879 of the ET, which cease to exist legally.

“as from January 1, 2019, when natural persons make consumptions or advances for any amount (and for any purpose) with their credit cards, such operations will be taxed with the respective GMF”.

Therefore, it should be understood that as of January 1, 2019, when individuals make consumptions or advances for any amount (and for any purpose) with their credit cards, such operations will be taxed with the respective GMF (which is currently charged at the rate of 4 x 1,000).

In practice, this new provision serves to discourage the special use that many individuals make of their credit cards, because although they have resources to make their purchases with cash or with their debit cards, what they do is to prefer the credit card (getting into debt with one-time payments, which do not generate interest), since its use does reward the individual with special loyalty incentives (such as the accumulation of miles of the LifeMiles program and other similar ones).

In addition, and as we reviewed in a previous editorial, the rule of paragraph 1 of article 871 of the ET is still in force, which states that if individuals decide to make excess payments to their credit cards and thus form “positive balances” (credit balances), what will happen when they make new consumptions or advances with such cards is that such operations will be equivalent to use such “positive balance” and, therefore, also generate the collection of the GMF.

GMF for financing companies

Likewise, if as of January 1, 2019 the GMF exoneration that financing companies that acquired assets that were then delivered in leasing contracts are eliminated, it must be understood that the collection of said GMF will begin to fall on the natural or legal person that will justly take the asset, as lessee in the mentioned contract.

“All taxpayers who file income tax returns under the ordinary regime may continue to take as a deductible expense 50% of the GMF paid during the year”.

Anyway, it is important to highlight that the new version of Article 115 of the ET, even after being modified with Article 76 of Law 1943 of 2018, continues to indicate that all taxpayers who declare income under the ordinary regime may continue to take as a deductible expense 50% of the GMF they cancel during the year. This deduction may not be used by those resident individuals who at the end of the year only use the pension tax credit or the dividend tax credit.

In addition, it is clear that such deduction cannot be used either by those individuals or legal entities that voluntarily decide to transfer to the new simple regime contemplated in articles 903 to 917 of the ET (modified with article 66 of Law 1943 of 2018), since in such regime no value can be deducted (taxation is calculated only on gross income).

Source: Actualize