Tax breaks for insolvent companies

The Dian will apply reductions of penalties, interest and capital on tax obligations administered by the entity that are in charge of companies affected by COVID-19. Decree 939 of 2021, which regulates the benefit, establishes different options of terms and amounts.

Decree 939 of August 19, 2021, which partially regulates Legislative Decree 560 of 2020, empowers the Dian to reduce penalties, interest and capital, thus protecting the country’s productive apparatus and employment.

“The Dian may make reductions of penalties, interest and capital on those obligations for taxes administered by the entity that are in charge of companies affected by COVID-19.”

The Dian may reduce penalties, interest and capital on those obligations for taxes administered by the entity that are in charge of companies affected by the COVID-19 and that are immersed in a process of insolvency nature under the insolvency regime.

The tool will help the company to continue operating and preserve the jobs it generates. The rule that regulates the benefit establishes different options of terms and amounts. Thus, interested parties may choose the most appropriate alternative according to their particular case.

How to access these tax benefits?

To access these prerogatives, the debtor taxpayer may file the request for the reduction of interest, penalties and capital, as the case may be, before the nominator of the bankruptcy process, be it the Supersociedades, the civil judge of the circuit or the chambers of commerce, with the objective that the Dian has knowledge and access to the information presented by the debtor.

The obligations recognized in the insolvency process will be the object of the reductions, discriminating the concept, year, period and the values of capital, penalty and interest. Additionally, the request must be accompanied by the list of claims subject to graduation and qualification of claims with the explanatory report of the causes of insolvency and the draft agreement to catch up in the payment of the obligations.

What if the company was already in insolvency proceedings?

If taxpayers were already under insolvency proceedings prior to the issuance of Legislative Decree 560 of 2020, they may request the application of the reduction of capital, penalties and interest only on the balance of the obligations subject to the new agreement.

The above implies the modification and renegotiation of the agreement initially agreed among creditors, for its subsequent confirmation by the insolvency judge, when appropriate.

Level of discounts

From the point of view of the director of the Dian, Lisandro Junco, this measure is a support for the companies that were forced to reorganize at the time of the pandemic. “Being in a reorganization process, they can reactivate, recover and be preserved as sources generating employment,” he told the media. Regarding the level of the rebates, it is strictly linked to the time provided in the agreement for the payment of the obligation; the shorter the time, the greater the reduction, besides guaranteeing the prerogatives to the creditors that support the debtor’s financing, explains Junco.

It should be noted that this treatment does not apply to indirect taxes, such as VAT and the national consumption tax, as well as withholding tax, among others, nor to discounts made to workers or contributions to the social security system.

Capital, interest and penalty rebates that may be applied to tax returns for which tax is payable.

Rebates on fines and penalties for taxpayers who have pending payment of independent penalties or fines, without these being associated to tax.

Source: Actualícese