Simplified Procedure to Claim Income Tax and VAT Balances in Favor 

The Ministry of Finance published Decree 535 of 2020, which establishes a simplified procedure for the reimbursement or compensation of balances in favor of Income Tax and Value added Tax ("VAT") amid the COVID-19 outbreak.

According to the Decree, the simplified procedure implies that requests for the reimbursement or compensation that are duly filed within the health emergency, will be decided by the Tax Office within 15 working days after their submission.

In general, the procedure will be applicable until the health emergency is in effect and with respect to taxpayers who are not considered "risky for tax purposes".However, the Decree clarifies that the Tax Office has broad powers to inspect each of the reimbursement or compensation processes once the suspension of terms caused by the emergency ends.

It should be noted that the provisions of paragraph 5 of Article 855 of the Tax Code shall not be applicable to the simplified procedure, i.e., that more than 85% of the costs or expenses and/or input VAT come from suppliers that issue electronic invoices.

On the other hand, the Decree specifies that until the health emergency lasts, it will not be mandatory to attach the list of costs, expenses and deductions for the compensation or reimbursement procedure. However, once the contingency is over, the respective document must be attached within 30 calendar days under penalty of being fined by the Tax Office for not sending information as provided in Article 651 of the Tax Code.

With respect to the reimbursement or compensation requests that are under current review, the Decree states that those that are in the pre-reimbursement investigation phase will be returned to the competent unit at the Tax Office to begin the simplified reimbursement and/or compensation procedure.

Finally, the Decree explains that requests for reimbursement or compensation that are being processed through the simplified procedure at the end of the health emergency will continue under this special procedure.


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