VAT credit balances and refunds

Article 850 of the ET establishes that taxpayers or responsible parties who liquidate balances in favor in their tax returns may request a refund. In this editorial we analyze the aspects to be taken into account in the case of VAT taxpayers.

According to paragraph 1 of Article 850 of the Tax Statute -ET- and Article 1.6.1.21.12 of Decree 1625 of 2016, the refund of balances in favor generated in the VAT return may only be requested by those responsible for the goods and services indicated in article 481 of the ET, producers of exempt goods referred to in article 477 of the ET and producers and sellers of motor vehicles for public passenger transport, cargo transport, among others, provided for in paragraphs 4 and 5 of article 477 of the ET, as well as those responsible for goods and services taxed at the 5% rate of articles 468-1 and 468-3 of the ET, and those to whom VAT withholding at source has been made (see our editorial Producers of exempt goods may request the refund of balances in their favor as from July).

It should be noted that when those responsible for the goods and services of articles 477 and 481 of the ET additionally carry out taxed and/or excluded operations, the refund will only proceed for the deductible VAT directly associated with the production of the exported or exempt goods and services, in accordance with article 490 of the ET. However, for purposes of the refund of the balances in favor of those responsible for VAT it is important to take into account certain details that will influence this process.

Conditions for the refund

–To havethe RUT formalized and updated, and not to have any suspension or cancellation from the time of filing the request in due form until the administrative act defining such request is issued. It should be noted that this condition applies both for the title of the balance in favor and for the legal representative or attorney-in-fact.

The filing of the request for refund must be made within the term of three years of finality counted from the expiration of the term to file the tax return.

– Tohavethe RUT formalized and updated, and not to have any suspension or cancellation from the time of filing the request in due form until the administrative act defining such request is issued. It should be noted that this condition applies both for the title of the balance in favor and for the legal representative or attorney-in-fact.

– Tohavean updated certificate of existence and legal representation.

Documentation required

The request for refund of credit balances must be accompanied by certain documentation specified in articles 1.6.1.1.21.13 and 1.6.1.1.21.15 of Decree 1625 of 2016, as follows: General documentation.

–In the case oflegal entities, a certificate issued by the competent authority certifying their existence and legal representation no more than 1 month before. When those who hold the status of legal representative or tax auditor at the time the request for refund is filed are not the same who signed the returns subject to refund, the historical certificate must also be attached where the names of the persons competent to sign such returns appear.

–Copyof the power of attorney duly granted when acting by proxy.

–Guaranteein favor of the Dian, granted by banks or insurance companies when the applicant avails himself of the option contemplated in article 860 of the ET.

–Copyof the receipt of payment of the premium corresponding to the policy granted by banking entities or insurance companies.

–Proofof ownership of the bank account. This must be issued by an entity supervised by the Financial Superintendence of Colombia. Additionally, it must verify that the date of issuance is not older than 1 month.

Special documentation

Article 1.6.1.1.21.15 of Decree 1625 of 2016 establishes the special documentation that must be attached to the request for refund of balances in favor liquidated in VAT returns.

Below we present a summary of the formats that must support the special requirements when it comes to refunds from producers of exempt goods, exports, VAT withholding and suppliers to international trading companies.

Term to return balances in favor

Pursuant to article 855 of the ET, the tax administration will make the refund of credit balances in the following terms:

–Within15 days following the date of the filing of the request in due form, when the applicant meets the requirements to access the automatic refund.

–Within20 days following the date of the timely and duly filed request for refund when the responsible party presents a guarantee in favor of the Nation.

–Within30 days following the date of the timely filing and in due form in the case of producers of exempt goods indicated in article 477 of the ET, for those responsible for goods and services taxed at the 5% rate of articles 468-1 and 468-3 of the ET, and for those responsible for VAT on exempt goods with bimonthly refund rights of article 481 of the ET who hold the status of authorized economic operator.

–Within50 days following the correct filing of the application, for the other cases.

Payment of the refund

“if the amount of the refund is equal to or less than 1,000 UVT ($36,308,000 for 2021), the respective payment will be made to the checking or savings account indicated in the bank certification”

It is important to note that if the amount of the refund is equal to or less than 1,000 UVT ($36,308,000 for 2021), the respective credit will be made to the current or savings account indicated in the bank certification.

Otherwise, if the refund is higher than this amount, the payment will be made through tax refund certificates -Tidis-. The issuance of these titles will be made automatically in the entity indicated in the refund request or in the attached bank certification.

VAT return with credit balance requires accountant’s signature.

Let us remember that the second paragraph of numeral 6 of article 602 of the ET establishes that VAT returns must be signed by a public accountant, whether or not he/she is employed by the company, when there is a balance in favor, provided that the responsible party is obliged to keep accounting books.

However, if the VAT return of a person obliged to keep accounting books is filed without the signature of the accountant, the Dian must issue a decision within 3 years after its filing in order for it to be considered as not filed. If the Dian does not pronounce on the matter during this period, the return will be considered as validly filed.

Source: Actualícese