1. Council of State and its position regarding non submitted income tax self-withholdings.

The ruling by the high court about the case of a taxpayer who did not calculate income tax self-withholdings while being obliged to do so in the inspection process, the tax authority (DIAN) requested him to submit said self-withholdings even though he had already submitted the income tax return, including all the taxable income, and paying the corresponding tax.

The Council of State concluded that the tax administration could only claim daily delay interest and the respective fine since self-withholding payment cannot be required when the income tax return to which these would be included has already been submitted. 

See: https://jadelrio.com/Boletines/Colombia/Flash38/1.SEN-Exp-026209-23.pdf 

2. Council of State ruling regarding the possibility of charging deductible VAT. 

On August 3rd, 2023, with a presentation by Magistrate Milton Chaves, the fourth section of the Council of State announced the requirements so that VAT can be charged as deductible in taxpayers' returns.  

The Court mentioned what is contained in article 488 of the Colombian Tax Code, which notes that only taxes originating from operations that constitute a cost or expense intended for taxable income are deductible. The Council of State ruled, clarifying the relationship that the deductible VAT must have with the taxable operations:

“It is not the case, as the administration understands, that the expenditure must be directly linked to the income generated by the operation, assimilating it to the concept of cost since the discount of the tax paid in those expenses related to the maintenance of the economic activity is also applicable.”

The DIAN's position would be rejected that the VAT resulting from expenses that have an indirect relationship with the income-producing activity of the company could not be considered recoverable.

See: https://jadelrio.com/Boletines/Colombia/Flash38/2.SEN-Exp-026585-23.pdf 

3. Invalidate to the DIAN Official Letter that indicated that during the COVID health emergency, the terms to amend the returns would not suspend.

The Council of State, in ruling No. 26136 of August 31st, 2023, stated the nullity of the official letter issued by DIAN 00208221-1118 of September 15th, 2020, since it did not make an exhaustive analysis of the exceptions to the suspension of terms contained in Resolution 030 of 2020 and its modifications.

Due to the above, it was appropriate to submit amends to the returns referred to in articles 588 and 589 of the Colombian Tax Code since the terms were suspended.

See: https://jadelrio.com/Boletines/Colombia/Flash38/3.SEN-Exp-026136-23.pdf 

4. The technological component in the contract with the parent company does not per se indicate the importation of technology.

In ruling 26095 of July 6th, 2023, the court ruled on administration and management contracts about which, in the court's opinion:

“They cover multiple activities to support areas of the company whose services should not be divided to be valued individually, but rather relate to integrated benefits for the same purpose of management and advice on best practices that will allow benefits for the Company.” 

The court concludes that: “To fulfill these tasks, the plaintiff must use the technological means that were also provided by the parent company, in no way converts the service agreement into an import contract of technology.” 

See: https://jadelrio.com/storage/Boletines/Colombia/Flash%2038/4.CEst_Sec4_26095_20.pdf 

The content of this newsletter is merely informative, that´s why it cannot be used under any circumstances as advice on the matter described in it. If you need advice on any of the aspects discussed, our team of professionals will be willing to assist you. contacto@jadelrio.com