On November 26, 2019, the bill for the first debate of the tax reform was filed before Congress: Bill No. 278/2019 (House) and 227/2019 (Senate) "By means of which rules are adopted for the promotion of economic growth, investment, strengthening of public finances and the progressivity, equity and efficiency of the tax system, in accordance with the objectives promoted on the matter by Law 1943 of 2018 and other provisions are enacted".

Although the main changes introduced by the 2018 tax reform (“Financing Law”) are maintained, specific changes that could impact taxpayers have been identified:

1.    Termination by mutual agreement of administrative procedures and judicial conciliation. 

• The deadlines for the judicial-administrative conciliation are adjusted, indicating that the request may be presented until June 30th, 2020 and that the respective minutes must be signed no later than July 31st. Taxpayers with litigation-administrative processes can reconcile up to 80% of the total value of sanctions, interests when the process is in the sole or first instance before an Administrative Court or Administrative Tribunal. 
• The deadlines for agreeing to the termination of administrative processes by mutual agreement are adjusted, indicating that the request may be submitted until June 30th, 2020, and the DIAN will have until December 17th, 2020, to resolve the request. Taxpayers who have been notified before the entry into force of this law, special requirements, official liquidations, resolutions of review appeals, may settle 80% of penalties and interest.
• The possibility of signing payment agreements by the taxpayers who decide to take advantage of these processes is introduced. Payments may not exceed a term of 12 months, counted from the signing of the payment agreement. With the Financing Law, this mutual-agreement-termination only proceeds if it is paid immediately, without allowing to endorse some type of payment agreement. 
• Regarding judicial conciliation, it is specified that it not only proceeds in tax matters but also in foreign exchange and customs matters. 

2.    Favorability in the coercive collection stage.

• The deadline to apply this benefit is extended. The possibility of signing payment agreements is also added. Payments may not exceed a term of 12 months following the execution of the payment agreement. 
• Taxpayers with tax due at the time the new reform enters into force shall pay the ordinary bank interest plus two (2) percentage points. Additionally, it may request before the Tax Office the application of the favorability principle to apply a current penalty rate, if it is lower than the prior one used to determine the penalty that is being collected.

3.    Paragraph of Section 590 of the Tax Code is eliminated.

• The paragraph of Section 590 of the Tax Code is eliminated on the grounds that such provision is already contained in the Decree 2106 of 2019 "By which norms are established to simplify, suppress and reform unnecessary procedures, processes and procedures existing in the public administration".
• Section 48 of the Decree 2106 of 2019 adjusted the application of paragraph of Section 590 of the Tax Code, which allows taxpayers to pay all or part of the charged raised by the Tax Office by paying the ordinary bank interest plus 2 percentage points, thus avoiding the application of default interest and obtaining the reduction of the inaccuracy penalty. Nonetheless, the taxpayers are entitled to continue discussing matters with the Tax Office and eventually, with a Court of Law.

4.    Audit benefit (Special statute of limitations).

The Audit Benefit is extended to 2021. Additionally, it is clarified that this benefit will apply to taxpayers who have met the requirements to qualify for the benefit for the taxable year 2019.

The Audit Benefit reduced the Income tax return’s statute of limitations:

• From 3 years to 6 months, if the income tax increases at least 30% with respect to the previous taxable year.
• From 3 years to 12 months, if the income tax increases at least 20% with respect to the previous taxable year.

5.    Reduction of the Statute of Limitations.

The tax return's statute of limitation is reduced to 5 years: (i) Subject to the Transfer Pricing Regime; (ii) In which tax losses are generated or compensated. 

6.    Extension of tax return amendments.

The term to amend tax returns when increasing the tax in charge or reducing the credit balance increases from 2 to 3 years.

7.    Changes in Criminal offense

Amendments are introduced to the criminal offense: (i) Omission of assets or inclusion of non-existent liabilities; (ii) Tax fraud or evasion. 

The following stand out:

• Omission of assets or inclusion of non-existent liabilities:

  It is specified that the criminal action may be extinguished when the taxpayer files or corrects the corresponding return(s), as long as it is within the deadline provided in the Tax Code and, in any case, pays in full the due tax, tax penalties and interest.

  The prohibition to extinguish the criminal action was eliminated when the value of the officially proclaimed tax is greater than 8500 legal monthly minimum wages.

• Tax fraud or evasion:

  The foreseen pecuniary sanction is eliminated, and the criminal action may be initiated by special request of the DIAN’s Director, another competent authority, or his delegate or special delegates. 

  It is stated that the criminal action may be extinguished when the taxpayer files or corrects the corresponding tax return(s), as long as it is within the deadline provided in the Tax Code and, in any case, pays in full the due tax, tax penalties and interest. The prohibition to extinguish the criminal action was eliminated when the of the officially proclaimed tax is greater than 8500 legal monthly minimum wages.