TAX MEASURES TAKEN ON COVID-19 BETWEEN APRIL AND MAY, 2020.

COLOMBIA TAX MEASURES TAKEN ON COVID-19 BETWEEN APRIL AND MAY, 2020.

Date: 05/12/2020

Version: 1.0 THE POWER OF BEING UNDERSTOOD

AUDIT | TAX | CONSULTING

Colombian Tax Measures during COVID-19 The Colombian Government, has issued several regulatory Decrees and Administrative Acts of National and Territorial matter, in order to attend the COVID – 19 crisis.

In relation to the tax matters, the Government has granted different benefits and reliefs to know as follows:

Throughout April and May, the following decrees and Official notices were issued to control and manage the COVID-19 crisis: 1.

Decree 535 of April 10th, 2020 Simplified process for the refund of taxes

The scope of the Decree covers all public and private sector employers, dependent and independent workers, retired individuals.

The relief involves a reduction of the pension contribution down to 3% only for the months of April and May, whose payments must be made in May and June, respectively.

The authorities created a simplified process for the refund of taxes within 15 days. The process can be done electronically. Eligible taxpayers are the ones qualified as non-risk taxpayers.

2.

4.

Decree 560 of April 15, 2020 Tax Benefits in a Covid – 19 Insolvency Regime

Official Notice No. 000003 of April 14th, 2020 The Tax Authority will provide payment alternatives for taxpayers As part of the tax benefits set forth in the insolvency regimes: -

Affected entities will not be subject to withholding or self-withholding at the source as Income (until Dec. 31, 2020).

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Affected entities are not obliged to calculate presumptive income for the year 2020.

Within the provided benefits, taxpayers who had breached a payment agreement, will be able to re-negotiate it in case of incapacity of payments due to Covid - 19.

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They will be exempt from paying income tax advance payment for taxable year 2020.

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They will be subject to a VAT withholding tax at 50% rate

3.

Under this regime, The Colombian Tax Authority (DIAN) may reduce sanctions, interests and the tax itself.

The Tax Authority established the payment alternatives for taxpayers contemplated within the recent tax reform (Law 2010, 2019) and article 814 of the Colombian Tax Code.

Decree No. 558 of April 15, 2020

Reduction of the Pension Contribution to the Social Security System for two (2) months

5.

Decree No. 576 of April 15, 2020

7.

Cash flow to the health sector through the gambling industry

For improving the flow of resources to the health sector, from May to December 31, 2020, the distribution and transfer of resources from gambling industry will be carried out in the following month after the collection and not every six months under the application of the provisions of Law 1643 of 2001.

6.

Decree No. 573 of April 15, 2020

Decree No. 568 of April 15, 2020 A special contribution is created, called “COVID-19 solidarity tax”, which will last from May 1 to July 31, 2020.

The tax is triggered for wages that exceed $10,000,000 pesos for public employees. It applies as well to pension allowances that exceed said amount.

8.

Decree No. 579 of April 15, 2020

Benefits for lease agreements with housing and commercial purposes

Strengthening of the Agricultural Guarantee Fund

The commissions paid within the guarantee service granted by the Agricultural Guarantee Fund -FAG - to face the consequences of COVID19, are excluded from VAT, until December 31, 2020.

The invoices that are issued must incorporate a legend that establishes “service excluded Decree 417 of 2020.”

The withholding rate of the payments made to the account corresponding to the commissions that the FAG grants for the service of guarantees, focused solely and directly to face the consequences of COVID-19, will be 4% until December 31, 2021.

Eviction actions ordered by a judicial or administrative authority whose purpose is the restitution of real estate occupied by tenants, including those cases in which the lease term and / or its form of payment has been agreed for daily, weekly periods, fraction less than a month, under any of the modalities contemplated in article 4 of Law 820 of 2003 are suspended between April 15 and June 30, 2020.

The annual readjustment of fees that had to be paid during the period from April 15 to June 30, 2020 is deferred.

9.

Decree 551 of April 15, 2020 VAT exemption on medical supplies

The Colombian Tax Authority (DIAN) maintains its powers of inspection, which will be exercised after the lifting of the State of Emergency.

11.

The exemption from sales tax -VAT is established, on import and sales in the national territory without the right to return and / or compensation of 211 medical goods and supplies, among which are:

Circular No. 000013 of April 18, 2020

The DIAN defines guidelines to guarantee the attention and provision of electronic notice services by the entity.

• Protective glasses.

• Latex and nitrile gloves.

12.

RESOLUTION No. SDH-000215 APRIL 20, 2020

•Sterile gloves.

Industry and commerce tax in Bogota

• N95 mask.

• Filter masks Total body protection: Robes, caps, sterile surgical clothing.

• Surgical fields, operative field, sheets, covers, biological suit, leggings, and metatarsal protectors).

• Face protector: Masks or visors.

• Disposable covers.

• Bio-protection suits (jumpsuit, tops, and pants).

• Guedel.

In order to ensure efficient tax compliance of the withholding agents of the Industry and Commerce tax, the dates for the tax payment and established that taxpayers must pay by all virtual or face-to-face means in the banking entities authorized for this purpose, periods 2 and 3 (March-April, May-June) of the 2020 period, on July 17, 2020.

13.

RESOLUTION No. 03525 of April 25, 2020 Notary Services

10.

Circular No. 00005 of April 16, 2020

Guidelines for the simplified process for the refund of taxes Notary public services will be enabled from Monday to Friday in a 5-hour day.

Notaries located in warm and temperate climate zones will have a schedule from: 8 AM to 1 PM. The simplified refund process for taxpayers not classified as "high risk" is foreseen. It is exempt from the obligation to present the relation of costs and expenses.

14.

Resolution No 38 of April 30, 2020 Electronic Notices

• Preventive Isolation:

This resolution regulates how the Colombian Tax Authority (DIAN) will practice electronic notices by sending a copy of the administrative act to the email address that the Administrator has reported in the RUT or the registered electronic judicial address.

15.

Decree No. 637 of May 6, 2020

Extension of the State of Economic and Social Emergency

From May 11 to May 25, 2020, the mobility of people and vehicles in the national territory is totally limited, with the exceptions provided by Law. • Suspension of domestic transport by air: Domestic transportation by air will only be allowed in the event of a humanitarian emergency, transportation of cargo and merchandise, acts of God or force majeure.

• Execution of Isolation Measures: Governors and mayors are ordered so that, within their constitutional and legal competences, they adopt the instructions, acts and orders necessary for the execution of the mandatory preventive isolation measure for all inhabitants.

Through Decree 637 of May 6, 2020, the Government issued an extension of the State of Economic, Social and Ecological Emergency for thirty (30) calendar days throughout the national territory.

This same Decree provides that during the duration of the health emergency due to the COVID-19 pandemic, public and private sector entities will ensure that their employees or contractors whose presence is not essential in the workplace, develop the functions and obligations under the modalities of telework, work at home or other similar.

This Decree enables the National Government to exercise the powers of article 215 of the Political Constitution as well as to adopt by means of Legislative Decrees, all those additional measures necessary to ward off the crisis and prevent the extension of its effects.

The public service of land, cable, river and maritime passenger transport, postal services and parcel distribution will be maintained in the national territory that are strictly necessary to prevent, mitigate and attend to the Sanitary emergency.

16.

Decree 636 of May 6, 2020 17.

Decree No. 639 of May 8th, 2020 Employment Support Program

Through Decree 636 of May 6, 2020, the following public order measures are established:

requirements, which are the corresponding translation and apostille.

19.

The National Government will support the payroll payment as to maintain the formal employment system functioning.

Decree 126 of May 10th, 2020

Preventive and temporary measures taken on Bogota, D.C.

The program will delivery a monthly payment for a value of COP $351.121 (which is 40% of the minimum salary) to the affected companies during May, June and July, for each employee notwithstanding its salary status.

The following extraordinary measures are going to take place in Bogota during the month of May,

To apply for the benefit, the requirement is to be a corporate entity that had diminished its income by 20% in comparison to 2019.

The mandatory use of masks, the physical distancing policy, special aware and prevention zones, a strategic security plan and others.

The requirement its done before financial entities to whom the entity has its payroll affiliation.

The entities within the isolation exception, allowed by the Government to operate in streets will follow the security and health protocols needed to address the Covid-19 crisis.

18.

Resolution No. 40, of April 30th, 2020 Tax Register ID

Special schedules and time frames were established for the involved economy sectors.

The suspension of administrative and judicial terms will continue from May 11th, to May 25th, 2020.

Through Resolution No. 40 of April 30th, 2020, the Colombian Tax Authority issued simplified guidelines for the record of the Tax Register ID. of foreign investor and foreign services provide for VAT purposes.

In case you have any further questions in relation to tax compliance, please free to contact our partners of the tax team:

Part of the measures included the filing simple copies of the required documents such as the Power of Attorney and the Certificate of Entity’s Incorporation in the origin language and without the corresponding apostille.

Sergio Viveros Partner | TAX & Legal RSM Colombia |T: +57 (1) 7034060 | C: +57 320 4915013 | E: sergio.viveros@rsmco.co

Then, the interested entities will have a term of sixty days (60) after the lift of the State of Emergency to file the documents with the formal

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Saúl Garzón Rivera Partner| TAX & Legal RSM Colombia

T: +57 (1) 7034060 | C: +57 3138705893| E: saul.garzon@rsmco.co |

The situation around COVID-19 is developing and changing every hour. Please find the most up-to-date information in our coronavirus-section in our website.