Tax news – 2024-07-17 04:27:22

2024-07-17 04:27:22

Within the framework of Colombian tax regulations, agency contracts and their corresponding electronic invoicing are aspects that generate various concerns among taxpayers. Recently, the DIAN has issued a key concept that clarifies the obligations and procedures to be followed in these contracts, highlighting the need for the agents to issue invoices and certify the costs and expenses to the principal.

HUILA DAILY, TAX CONSULTATION

By: José Hilario Araque Cárdenas, tax advisor and consultant.

Juan Diego Araque Durán, lawyer specializing in tax law.

In turn, the Superintendency of Companies has issued a ruling on the compensation of accumulated losses and accounting adjustments under IFRS, and the new pension reform law introduces significant changes in the withholding of social security contributions. This article offers a detailed analysis of these provisions, providing clarity and guidance to taxpayers and tax law professionals.

1. BILLING IN MANDATE CONTRACTS. Dian Concept No. 423 (003634) June 06, 2024.

WHAT DO WE MEAN WHEN WE TALK ABOUT BILLING IN MANDATE CONTRACTS?

First of all, according to article 2142 of the Civil Code, a mandate is a contract where one party, called the principal, entrusts another party, called the agent, to carry out or perform a specific task or function. The mandate may be with or without representation, depending on what is agreed in the contract and the task itself.

In mandate contracts, the generation of the electronic invoice corresponds to the agent and not to the principal.

Secondly, the Dian, in response to questions that taxpayers normally raise with the tax administration, has pointed out the following regarding the issue of electronic invoicing in mandate contracts:

1. In Unified Concept No. 106 of August 22, 2022 regarding electronic invoicing and those obliged to issue it, pursuant to article 1.6.1.4.9. of the Single Regulatory Decree 1625 of 2016, that in Mandate contracts, in all cases, the invoices must be issued by the agent and, if the agent acquires goods and services in compliance with the mandate, the invoice must be issued by the third party supplier also in the name of the agent, it being the agent then, who must certify to the principal the cost or expense for the income tax return and the deductible VAT.

• He also recalled, regarding the certification that the agent is required to issue to the principal, that section 2 of article 1.6.1.4.9. of Decree 1625 of 2016 provides:

“For the purposes of supporting the respective costs, deductions or deductible taxes, or refunds to which the principal is entitled, the agent must issue the principal a certification stating the amount and concept of these, which must be signed by a public accountant or tax auditor, according to the legal provisions in force on the matter.”

• The Dian concludes that, in accordance with the regulations established in regulatory decree 1625 of 2016, regardless of the manner in which the agents make purchases on behalf of the principal according to the terms agreed in the mandate contract, in all cases, a sales invoice and certification must be issued in case the latter needs to support costs, deductions and/or deductible taxes.

• The Dian also pointed out that, in the face of the possibility of issuing a single sales invoice for global purchases of goods and/or services made by the agent from the same supplier, there is no provision in the current regulations that govern the obligation to invoice that prohibits it, provided that each of the requirements contemplated in article 11 of Resolution 000165 of 2023 are met, among which is the discrimination of each of the goods and/or services provided, in the terms indicated in numeral 8 of the aforementioned regulation.

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For the clarification of our readers, we remind you that article 8 of Dian Resolution 000165 of 2023 (by which the billing system is developed as a regulatory power) refers to persons not required to issue a sales invoice and/or equivalent documents; and article 11 refers to the requirements that the electronic sales invoice must contain pursuant to the provisions of articles 617 and 618 of the Tax Statute.

• They also asked the Dian about the special deduction contemplated in numeral 5 of article 336 of the tax statute (added by Petro’s first tax reform), which refers, nothing more and nothing less, to the special deduction of 1% of the purchases of goods and services, a deduction that begins to apply with the presentation of the income tax return for the taxable year 2023, calendar that begins next August, where the following fundamental aspects are specified to be entitled to this special deduction: (i) It is for natural persons residents who declare income in the general schedule (ii) That it is the acquisition of goods and services in the year 2023, (iii) That the acquisition of the good or service is supported by an electronic sales invoice with prior validation.

• The above allows us to conclude that this deduction is not applicable in the case of acquisitions made under a mandate contract, since in these cases it is clear that the acquisition is made by the agent on behalf of the principal, and the invoice must be issued in the name of the latter, which leads to the conditions indicated in article 336 of the Tax Code not being met for its origin.

• COMPENSATION FOR ACCUMULATED LOSSES.

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We refer to letter No. 1115-070880 of April 4, 2024 from the SUPERINTENDENCY OF COMPANIES.

The Superintendency of Companies is consulted about the possibility of offsetting the negative value of the adjustments for the adoption of the NCIF with accumulated profits as of December 31, 2023.

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The Super responds:

“…The Highest Corporate Body must approve the disposition of profits, either for the purposes of their distribution to partners or shareholders or for the purposes of absorbing losses from previous periods”

“(…) Accumulated losses must be offset first by the application of the occasional or statutory reserves created especially for this purpose. If the company has not created such reserves, it must use the balance in the legal reserve. If the balance in the legal reserve is not sufficient to absorb the losses, the balances in the retained earnings and the profits for the year may be used.”

“Additionally, IFRS accounting frameworks advise that both adjustments resulting from first-time adoption arising from events and transactions prior to the transition date, as well as adjustments for changes in policies and correction of errors and the transfer of revaluation surpluses and the remeasurement of other items, among others, must be recognized directly in the retained earnings caption or, if appropriate, in another category of equity.”

The balances recognized in retained earnings other than retained earnings or earnings for the year may be used to absorb losses provided that these have been effectively realized and the appropriations required in our jurisdiction have been previously made.

“The above provisions are also applicable to negative balances arising from the effects of conversion to IFRS…”

• PENSION REFORM LAW: Retention of social security contributions.

The recently approved pension reform law provides that it is the responsibility of employers or contractors of services within the Comprehensive Social Protection System for Old Age, Disability and Death of Common Origin to pay their contribution and the contribution of the workers or contractors of services in their service in the Contributory Pillar.

This new obligation will fall on service providers, consisting of deducting the withholding tax at source for mandatory social security contributions. For it to become operational, it will be necessary to issue a regulation that defines whether the withholding applies only to professionals who provide services and whether its application extends to providers of personal services or also to self-employed workers and other details.

By the way, in past years we had regulations on this matter through Decree 1273 of 2018, a system that was never applied, but it was provided for in article 135 of Law 1753 of 2015, which created the withholding of contributions with respect to payments for personal services related to the functions of the contracting company, imposing on both public and private contractors the duty to directly withhold the contractors’ contribution, but Law 1955 of 2019 repealed the figure, such that the withholding source for social security contributions has never operated.

The opinions are the responsibility of the partners of Araque Asociados Tax and Legal Consultants. We base our opinions on the understanding of current regulations and on the knowledge of tax law, and may not be shared by the tax authorities. Contact us at www.araqueasociados.com Questions and suggestions in the email: [email protected]. Personalized attention: Carrera 5 No. 14-32 offices 5, 7 and 8 Pasaje de la Quinta de Neiva, Huila, telephones 321 452 3315

The Superintendency of Companies issues a ruling on the possibility of offsetting the negative value of the adjustments for the adoption of the NCIF with accumulated profits as of December 31, 2023.

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