VAT Offsetting: Will start earlier due to COVID-19

Through Decree 419 of March 18, 2020, the Ministry of Finance regulated the criteria for the recognition and payment of compensation in favor of the most vulnerable population.

This program would start in April, as a measure to mitigate the economic vulnerability of households affected by COVID-19.

After having published a draft decree through which the guidelines for the regulation of Article 21 of Law 2010 of 2019 were proposed, finally on March 18, 2020 the Ministry of Finance issued Decree 419, which established the criteria for the recognition and payment of VAT compensation in favor of the most vulnerable population of the national territory referred to in the aforementioned article.

Thus, Decree 419 of 2020 states that the National Planning Department -DNP- will apply the targeting methodology, taking into account the selection of each territorial entity, for the prioritization of the departments, municipalities and districts where the compensation will be implemented; as well as the characterization of the beneficiary households to establish the vulnerable population that will be favored with the refund of this tax.

The decree in question also clarifies that prior to the entry into operation of Sisbén IV, the selection of beneficiaries will be made taking into account those households benefited with the program Familias en Acción or Protección Social del Adulto Mayor, which have entered them according to the selection criteria of Sisbén III.

Let us recall that the Vice Minister of Finance, Juan Alberto Londoño, explained that such initiative could have a fiscal cost of 2.2 trillion pesos, indicating, in turn, that the VAT refund could range between $65,000 and $70,000 per person.

“President Iván Duque, among the economic measures announced, confirmed that the start of the VAT refund program for the most vulnerable population will be brought forward.”

On the other hand, it should be recalled that after the declaration of the state of health emergency, President Iván Duque, among the economic measures announced, confirmed that the start of the VAT refund program for the most vulnerable population, which was scheduled to begin in January 2021, in a pilot framework, for about 100,000 families, will be brought forward.

With this regulation, the purpose is to start this program in April of this year, as a measure to mitigate the economic impact that the most vulnerable households will face due to the pandemic generated by the COVID-19, better known as coronavirus (see Decree 417 of March 17, 2020).

In accordance with the above, on March 22, 2020 the Ministry of Finance issued Decree 458 to appoint the DNP as in charge of issuing the resolution with the list of beneficiaries of the VAT compensation, and as responsible for applying the targeting methodology. However, it will be the Superior Council of Fiscal Policy -Confis- who will determine the amount of such compensation.

Additionally, the National Administrative Department of Statistics -Dane- shall provide the information collected in censuses, survey and administrative records to the State entities responsible for adopting measures for the control and mitigation of the coronavirus.

Source: Actualícese