Colombia

Taxable period

For CIT purposes, the taxable period is the calendar year, with no exceptions being admissible.

Tax returns

CIT return filing due dates are set by the government every year. Usually, they fall in the month of April.

Payment of tax

For CIT purposes, corporate taxpayers are divided into ‘large taxpayers’ and ‘other taxpayers’. Large taxpayers pay their estimated outstanding CIT liability (outstanding after deducting applicable WHT from the estimated final liability) in three instalments over the year in which they file their annual CIT return (usually in February, April, and June). The due date varies according to the last digits of its NIT (Number of Tax Identification).

Other taxpayers pay their estimated outstanding CIT liability in two instalments over the year in which they file their annual CIT return (usually in April and June). The due date varies according to the last digit of its NIT.

Tax audit process

The audit cycle corresponds to the taxable period, which for the case of CIT is one year.

Statute of limitations

The standard statute of limitations is three years from the due date or the date in which the return has been filed if extemporary.

Returns where losses are incurred will have a statute of limitations of five years.

The statute of limitation for returns where losses are used or subject to the transfer pricing regime will be five years from its filing due date or from the latest filing date.

VAT and WHT statute of limitation is linked to the CIT return.

The new statute of limitations (three years or five years) should not impact filings made prior to the end of 2019.

Topics of focus for tax authorities

While there are no specific topics to be observed by the tax authorities when performing an audit, usually they look at the formal compliance requirements, the correct application and deductibility of cost and expenses, and the inclusion of all assets of the taxpayer.

Note that income taxpayers subject to taxation on a worldwide basis are required to present an annual return to disclose and identify any form of assets held outside Colombia.

Anti-abuse regulations

Colombian regulations establish some anti-abuse provisions, which allow the tax authority to disregard the transactions considered not to have a valid commercial or business purpose and which tend to modify, reduce, eliminate, or defer the applicable tax consequences.

Under the anti-abuse provisions, the tax authority is allowed to re-classify the nature of the transaction performed by the taxpayer and to assign the tax consequences applicable to the ‘real’ transaction.

There are special proceeding rules that must be applied if the Colombian Tax Authority defines that a taxpayer has incurred abusive practices. Such proceeding includes issuing an official requirement stating the reasons why the administration considers the taxpayer’s practice as abusive and it will only require at least summary/slight/hint evidence. The taxpayer will have a term of three months to reply to the assessment. If the argument is not satisfactory for the administration, another official statement must be issued where the Colombian Tax Authority explains the amendments that must be made to the taxpayer returns and which is, in the authorities opinion, the ‘real’ transaction.

Electronic invoices

Section 616-1 of the Colombian Tax Code provides that taxpayers required to file and pay VAT and or excise tax are expected to use electronic invoices as of 1 January 2020 to support deductible expenses. 

The Colombian Tax Authority is authorised to regulate the requirements regarding sales invoices and equivalent documents. Electronic e-invoicing system is applicable to payroll expenses and transaction with entities and individuals not obligated to issue e-invoicing in Colombia, among others.