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Breaking News About Tax Matters Presented by Regulatory Entities in Colombia During February

Article presented by the firm of auditors and business consultants Alfredo López y Cía.  
Member of Allinial Global 

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  • The Council of State Contentious-Administrative Chamber

The section four ruled that the ICA, in commercial activities, states that this tax is effective in the municipality  upon which the price and the goods to be sold are agreed and it is based on the  principle of territoriality of the tax, and reassert the jurisprudence uttered by the same, in the following articles: Exp. 22817 dated 23 November 2018, Exp. 22614 dated 26 September 2018, Exp. 21681 dated 8 June 2016, of Exp. 18413 dated 29 September 2011 and Exp. 14852 dated 19 May 2005. It also states that, “the place where the commercial activities of sale of goods is carried out should be the one where the essential elements of the contract are specified, that is, the price (and within this, the form of payment) and the goods that are sold, regardless of the place where the orders are made.” Similarly, this regulation states that the destination of the goods or the place where the sale contract is signed are not factors determining the establishment of carrying out the commercial activities.

  • Clarification of Simplified Stock Companies issues

Another issue relevant to shareholders’ responsibilities in simplified stock companies (Sociedades de Acciones Simplificadas, “SAS”) was clarified by the superintendency of companies where the law states that shareholders of the SAS are not responsible for the obligations incurred by the company.

Article 2 of the Law 1258 of 2008 states that they would form a legal person other than their shareholder(s) once the SAS are registered in the commercial register. Therefore, following the provisions of the second paragraph of Article 1 of the same rule, except as provided in Article 42 of the law mentioned above on lifting the corporate veil, the shareholder(s) will not be responsible for the labor conditions, tax, or other obligations incurred by the company.

  • Tax matters: Realization of income and payments based on shares

Regarding the realization of income and payments based on shares, the tax treatment applicable to payments based on shares is based on an employment relationship that is being executed. The income will be recognized when the option to acquire shares is exercised. If these shares are received as part of the employee’s compensation, the income will be recognized at the time they are delivered, when the employee appears as a shareholder of the company, or the entry is made into the account, whichever comes first. The realization of the income must be taken into account to determine the withholding tax.

  • Tax matters: Sales Tax, Exempt Tax under Legislative Decree 551 of 2020

The Directorate of National Taxes and Customs (“Dian”) responds to the query on the validity and conditions of the VAT exemption for the importation and marketing of medical equipment and supplies.

The provisions of Legislative Decree 551 of 2020 came into force on 15 April 2020, as of its publication in Official Gazette No. 51,286, and are not applicable retroactively. The Decree establishes a temporary exemption for the import and sale in the national territory of 211 types of goods and medical supplies necessary and essential for the prevention, diagnosis, and treatment of the Coronavirus COVID-19.

For the VAT exemption to be applicable, those responsible must comply with the procedure established in Article 2 of Decree 551. Failure to comply with these requirements will lead to the non-application of the tax treatment of exempt goods. What is established in the Decree does not only apply from its publication date in the official gazette. Compliance with the requirements established in the standard must also be carried out for the exemption to be applicable.

  • Deduction for difficult-to-collect debts

originated in a mandate contract without representation between financially related parties. The deduction for debts that are difficult to collect in a mandate contract is applicable for the principal where the debtors are hired by the agent. The liquid income for recovery of deductions originates in the materialization of any of the economic events described in Article 195 of the tax statute.