Tax normalization and net worth tax deadlines

Through Decree 608 of April 8, 2019, the Ministry of Finance established the deadlines to make the declaration and payment of the wealth tax and the complementary tax normalization tax, created through Articles 35 and 42 of the Financing Law 1943 of 2018.

As we have already mentioned in previous editorials, the Government, based on the amendments made to Article 292-2 of the Tax Statute -ET- through Article 35 of Law 1943 of 2018, instituted an extraordinary wealth tax, which reactivated the one previously known as wealth tax (created with Article 1 of Law 1739 of 2014 for the years 2015, 2016, 2017 and 2018), which will be payable by individuals and national or foreign illiquid inheritances taxpayers of income tax and complementary tax, as well as foreign companies or entities that are not income tax filers in the country, but that as of January 1, 2019 own assets in the national territory whose value is equal to or greater than 5.000 million pesos, considering that the concept of equity is equivalent to liquid equity, which is calculated by taking the total gross equity of the taxpayer owned as of the same date, minus the debts payable by the same.

Additionally, by means of article 42 of the mentioned law, the tax normalization tax was revived as a complementary tax to income and net worth taxes, which will be charged to taxpayers who have omitted assets or nonexistent liabilities, that is, those assets that were not included in the national tax returns even though there was a legal obligation to do so, and the liabilities included in the returns without valid support.

Now, the Ministry of Finance, through Decree 608 issued on April 8, 2019, and considering that within the generating fact of the wealth tax there are omitted assets and nonexistent liabilities, which may be subject to the complementary tax of tax normalization, set the deadlines for filing the wealth tax return after the expiration of the complementary tax of normalization, establishing that the payment of the same shall be made in two (2) installments. In order to comply with the above, said decree adds articles 1.6.1.1.13.2.50 and 1.6.1.13.2.51 to Decree 1625 of 2016, in order to regulate the provisions previously discussed.

Deadlines to declare and pay the wealth tax.

Those taxpayers who in accordance with Article 292-2 of the ET are liable for the wealth tax, shall file the return corresponding to the taxable year 2019, between September 26 and October 9 of the same year, according to the last digit of the NIT, without taking into account the verification digit, in the form prescribed by the Dian for such purpose. In this sense, it must be taken into account that the payment of the tax shall be made in two (2) installments, as shown below:

First installment

“The payment of the first installment shall correspond to 50% of the wealth tax rate calculated on the liquid assets owned as of January 1, 2019.”

The payment of the first installment shall correspond to 50% of the net worth tax rate calculated on the liquid assets owned as of January 1, 2019, without taking into account the omitted assets or nonexistent liabilities as of such date, such payment shall be made by filling out the official payment receipt – form 490. It should be noted that the resulting net worth may be reduced by the first 13,500 UVT ($426,645,000 for 2019) of the equity value of the house or apartment -in case the declarant is an individual- (numeral 1 of article 295-2 of the ET). Likewise, the provisions of paragraphs 1 and 3 of article 295-2 of the ET (modified by article 37 of Law 1943 of 2018) must be applied to such assets.

Declaration and payment of the second installment

The amount to be cancelled in the second installment shall correspond to the total declared wealth tax, minus the value paid in the first installment. The income tax return must be filed within the deadlines indicated above, according to the last digit of the taxpayer’s NIT.

Declaration and payment of the complementary tax on tax normalization

For the case of taxpayers of income tax and wealth tax who have omitted assets or nonexistent liabilities as of January 1, 2019 or who decide to opt for the reorganization of their assets – other than inventories – proposed in Article 48 of Law 1943 of 2019, September 25, 2019 was established as the maximum term to declare and pay the tax normalization tax, in the form prescribed by the Dian for this purpose, regardless of the last digit of the NIT.

“the declaration of the complementary tax of tax normalization may not be corrected and its extemporaneous presentation will not be allowed”.

In necessary to highlight that, according to article 49 of the law in mention, the declaration of the complementary tax of tax normalization may not be corrected nor its presentation extemporaneous will be allowed.

Source: Actualize