Colombia; Cash-Free Zone?
There is a marked worldwide trend towards the elimination -or limitation- of the use of cash. This is due to the sum of several government policies of different types; national security (to discourage the economy of criminal groups and to avoid risks of robberies), public finances (due to the cost of printing, safekeeping and transporting physical money), ecology (due to the production of money with fibers and inks that biodegrade slowly), business welfare (time savings and control of the collection of cash consignments), public health (the use of cash can transmit diseases), public health (the use of cash can transmit diseases), public health (the use of cash can transmit diseases), and, of course, fiscal (the use of cash, since it leaves no trace of expenditures made and income received, lends itself to anonymous transactions, making it incompatible with automatic cross-referencing systems), among others. Countries such as Sweden, Denmark and the United States are leading this trend.
Colombia, in its effort to be part of the OECD, has sought -since 2010- to implement the limitation of the use of cash without obeying a comprehensive policy (the result of the sum of several policies such as those mentioned above) and consistent with the situation of the country, but simply a fiscal policy aimed at increasing the collection. This is how Article 26 of Law 1430/2012 (modified by Article 52 of Law 1739/2014), introduced a rule that conditioned - as of 2019 and progressively until 2022 - the recognition of costs, deductions, liabilities and deductible taxes made by the taxpayer, to the fact that such payments were made through the financial system (deposits, drafts, credit cards, checks to the first beneficiary, among others). This rule was declared exequitable by the Constitutional Court in judgment C-249/2015.
The Government, in its current tax reform project, intends to modify the aforementioned rule by accelerating the entry into force of the same, thus not beginning to be in force in 2019 but in 2018 and imposing such conditioning to individual payments over 67 UVT.
Colombia is not yet ready to take this step. There are sectors of the economy highly dependent on the use of cash such as mining, construction, agriculture, livestock and informal commerce. Imposing limitations of this nature on sectors that due to their own legitimate dynamics cannot be banked, and even more so anticipating the entry into force of these regulations by one year, goes against the constitutional principles of equity and legitimate trust. Likewise, even though the technology to make banking transactions by Internet and through cell phone applications (ApplePay, PayPal, SEQR, SamsungPay, among others), is constantly growing, not all Colombians who will become taxpayers, tax filers and those responsible for taxes have access to them. And those who do have access to them may -legitimately- not want to use them due to: (i) the higher cost of the product or service due to the means of payment (must have a bank account associated to a credit card and pay the cost of the transaction - either directly or as a higher price of the product/service), (ii) the lack of application of Colombian law on personal data protection policies to foreign companies, (iii) not expressly including the tax regulation - as a valid means of payment - these international transactional payment systems and (iv) these international transactional systems not being monitored by the Financial Superintendence.
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