It is no secret that the sanitary emergency caused by Covid-19 has created the need for liquidity for all persons, companies, including territorial entities and the State itself. For this reason, 5 months after the pandemic was declared in Colombia, the government issued Decree 678 of 2020, which establishes measures for the tax, financial and budgetary management of the Territorial Entities, within the framework of the economic and social emergency caused by Covid-19. Such as establishing benefits to taxpayers in relation to taxes, fees, contributions and fines pending payment.

In October of the same year the Constitutional Court pronounced through the sentence C-448 of 2020 and established that this part is unconstitutional, throwing down the benefits that it brought, this is why the national government this year bets again on these benefits seeking a transitory reduction of penalties, interest rates so that debtors who have the possibility to pay their debts with a very important reduction.

It is for this reason that through the so-called social investment law which is nothing more than a tax reform which seeks to bring the defaulters up to date and thus the entities collect an important amount, as things are in economic matters it would be very difficult to collect without this important incentive, which would bring the taxpayers up to date and the state would collect a significant amount to cover its deficit.

But what is this benefit about?

This is what the approved text tells us "For the obligations administered by the National Tax and Customs Directorate as well as for taxes, fees and contributions of the territorial order, which are paid until December thirty-first (31), 2021, and for the payment facilities subscribed with the DIAN and the territorial entities until December thirty-first (31), 2021 with respect to the obligations that are in arrears in payment as of June thirty (30), 2021, and whose noncompliance has been caused or aggravated as a consequence of the pandemic generated by the COVID-19, the penalties and the moratorium interest rate shall be reduced and liquidated in the following terms: The penalties, including those that are settled in independent administrative acts, and their updates shall be reduced to twenty percent (20%) of the amount provided for in the customs, exchange or tax legislation."

The moratorium interest rate established in Article 635 of the Tax Statute, will be liquidated daily at a daily interest rate that is equivalent to twenty percent (20%) of the current bank interest rate for the modality of consumer and ordinary credits, certified by the Financial Superintendence of Colombia.

This benefit may be significant, since penalties and interest are sometimes higher than the tax itself. For example, today an interest rate is paid for debts with the state of 23.79% effective annual, the benefit provides to pay 20% of the bank interest which would be only 3.43% per year,

Saving to catch up...

* qualified accountant, specializing in gambling industry