To pay taxes: Constitutional Court overturned tax incentives decreed by the national government

With a vote of five in favor and four against, the high court rejected the reliefs that had been decreed in the framework of the economic emergency. In Bogotá, according to the Ministry of Finance, 1.5 million people have benefited from these aid.

In virtual session, the Constitutional Court struck down four of the ten articles of Decree 678 of 2020, which established measures for tax, financial and budgetary management of territorial entities, offering tax relief to millions of Colombians amid the economic and social emergency that the country decreed due to the pandemic.

Among the measures of the decree there were financial support and aid for taxpayers, people who had fines in some territorial entity and withholding agents. According to the Court, the measure was taken because during this time of pandemic the State needs to generate greater monetary liquidity, that is, to have a greater balance in public deposits.

With a vote of five in favor and four against, the Court made the decision to overturn these tax benefits that were granted to debtors. The decree allowed to pay a part of its debt, without interest or penalties, as follows: until October 31, 2020, 80% of the capital would be paid; between November 1 and December 31, 90% of the capital, and between January 1, 2021 and until May 31, 2021, 100% of the capital would be paid.

Among those who would have benefited from this support were taxpayers who were delinquent in taxes, who had debts from 2019 and previous years, including those who had not yet made their return.

Other beneficiaries would be those who presented arrears in payment of fines for non-tax obligations (prior to May 20, 2020), such as those generated by the National Code of Citizen Security and Coexistence; that is, environmental appeals, disciplinary offenses, infractions of traffic regulations, among others.

In the case of Bogotá, according to the Ministry of Finance, this benefit would help 1.5 million people who had debts with the District.

In the same vote, the Court also overturned article 6 of the decree, which gave mayors and governors the power to defer payment of tax obligations during the pandemic.

The Government established in the decree that said amounts could be deferred in 12 monthly installments, without interest, “with the last installment corresponding to the month of June 2021”.

With a vote of eight in favor and one against, the Constitutional Court also struck down article 9 of the decree, which established the dissaving of the National Pension Fund of the territorial entities (FONPET).

“Territorial entities that have achieved coverage equal to or greater than 80% of their pension liabilities in the central sector, may request, regardless of the sources of said sector, the resources that exceed said percentage that they have in the FONPET registered on 31 December December 2019, to be allocated by the owner entity for the expenses incurred within the term of 2020, ”the document explains.

The power given to the governors and mayors to carry out additions, modifications, transfers and other operations in budgetary matters, and which rested in article 2 of the decree, was also declared unenforceable.

As for the rest of the regulations of Decree 678 of 2020, the Constitutional Court gave its endorsement with a vote of nine to zero.