National Development Plan and voluntary pension contributions

The draft of the National Development Plan 2018-2022, called Pact for Colombia, Pact for Equity (PND), was approved in first debate by the joint economic commissions of the Congress of the Republic, a project that will pass to the plenary sessions of the Senate and House of Representatives. Among the new articles proposed to be included in the PND, is the one related to interpret article 235-2 of the Tax Statute (E.T.), modified by Law 1943 of 2018 (Financing Law), indicating that: "the exempt income of natural persons includes those of articles 126-1, 126-4, 206 and 206-1 of the Tax Statute and those recognized in international agreements, from January 1, 2019, inclusive".

Let us recall that the draft Financing Law initially submitted by the National Government to the Congress of the Republic proposed the repeal, among others, of article 126-1 of the E.T., which established that voluntary contributions to voluntary pensions would be considered exempt income, provided that the requirements established in that same rule were met. In this way, and if such repeal was approved, it was foreseen to harmonize article 235-2 of the E.T. by modifying it so that it would establish in a taxable manner the income that is considered exempt, understanding that voluntary contributions to voluntary pensions would no longer have such tax benefit.

However, the final text of Law 1943 of 2018, far from what was initially proposed, kept in force Article 126-1 of the E.T. and therefore, the tax benefits applicable to voluntary contributions to voluntary pension funds, which will continue to be considered exempt income under the terms established by such rule. However, in a contradictory manner, the Financing Law did not modify the approach initially considered for Article 235-2 of the E.T.

The existence of the figure of tacit repeal cannot be lost sight of, which takes place "when the new law regulates a certain fact or phenomenon in a different manner from the previous law, without expressly indicating which provisions remain without effect, which implies that only those that are incompatible with the new regulation lose their validity" [1]. Thus, the subsequent regulation (art. 235-2 of the E.T., modified by Law 1943 of 2018) would repeal those previous regulations that are incompatible with it (art. 126-1 modified by Law 1819 of 2016).

It is for the foregoing that the National Government found it necessary to interpret article 79 of Law 1943 of 2018, which amended article 235-2 of the E.T. In this way, the article intended to be included in the PND would allow providing clarity regarding that voluntary contributions made to voluntary pension funds continue to be considered as exempt income up to an amount that, added to the value of the contributions to the Savings Accounts for the Promotion of Construction (AFC), does not exceed 30% of the labor income or tax income for the year, as the case may be, and up to a maximum amount of 3,800 UVT per year. 

It should be taken into account that the jurisprudence has held that the rules included in the National Development Plan Law that are intended to "fill the gaps and inconsistencies presented by previous laws (...) or to exercise the general legislative power recognized to the Congress of the Republic, without any relation to the objectives and goals of the planning function" (Vr. Constitutional Court sentences C-377 of 2008, C-394 of 2012, among others) violate Article 158 of the Political Constitution.

Therefore, and in accordance with the provisions of Article 339 of the Constitution, it is important to emphasize that, although the instrumental rules that make up the NDP are an economic, social or ecological policy tool commonly used by the State to achieve its goals[2], the National Government should not seek to amend regulatory inconsistencies through its National Development Plans; on the contrary, it should strive to conduct a more rigorous study of the organic laws that are enacted on tax matters.

[1] Cfr. Articles 71 and 72 of the Civil Code, Article 3 of Law 153 of 1887, Rulings C-159 of 2004, C-823 of 2006 and C-775 of 2010.

[2] Cfr. Council of State Contentious-Administrative Chamber, Fourth Section, Decision of August 9, 2018, C.P. Julio Roberto Piza Rodríguez.