Government extends deadline for large taxpayers to file income tax returns

By means of Decree No. 520 of April 6, 2020, the National Government provided changes in the filing date of income tax returns and complementary tax returns of legal entities, and therefore, it modifies the due dates of the annual declaration of assets abroad. Additionally, it provided for options to determine the balance of the payment of the first and second installment of taxpayers.

The changes were as follows:

Modification of the deadline for filing the income and supplementary tax return for the taxable year 2019:

1. Large taxpayers:

Prior to the issuance of the Decree, large taxpayers of income tax and complementary tax filed their return with the payment of the second installment, between April 21 and May 5, 2020 (dates modified by Decree No. 435 of March 19, 2020), depending on their last digit of the NIT.

With the change, the maximum date for filing the return together with the payment of the third installment is between June 9 and June 24, 2020. For this type of taxpayers there are no changes in the tax payment dates.

It is worth mentioning that the second installment will correspond to 45% of the balance payable for the taxable year 2018, so it is of material importance to consider the behavior of the year 2018 versus the year 2019, so that, if the amount payable for the year 2018 is higher than that of the year 2019, it is convenient to file the income tax return for the taxable year 2019, thus avoiding the payment of the second installment on the basis of the previous year.

II. Legal entities and other taxpayers of income and complementary taxes:

For other legal entities (other than large taxpayers), the time of filing the income tax return and complementary taxes is modified, to be filed with the due dates of the second installment, which were modified by this Decree as follows:

1) the due date will be determined in accordance with the last two digits of the NIT (previously with the last digit); and

2) the due date is anticipated between June 1 and July 1, 2020 (previously it was between June 9 and June 24).

III. The method for determining the amount of the first and second installments is established as follows:

Large taxpayers:

Other legal entities:

According to what has been stated, in the case of large taxpayers, it is pertinent that each company performs the exercise and determines which of the options is more beneficial for the cash capacity of the entity at different times.

Although the rule does not expressly provide the procedure for the determination and payment of the first installment for the case of newly incorporated entities in 2019 or for those that showed a balance in favor in the previous period (year 2018); we consider that in such cases the entity should determine the payment of the first installment with the estimate or projection of the income tax of the taxable period. The dynamics would be like the one currently used by large taxpayers for the payment of their first installment, which is before the tax return.[1].

The following is an example of some possible situations that could arise: 

IV. The schedule of deadlines for the filing of the annual declaration of assets abroad for large taxpayers and legal entities is modified.:

In line with the above, the Decree modifies the deadlines for filing the informative declaration of assets abroad with the new deadlines for filing the income tax and complementary tax return.

[1] In this regard, it may be consulted what was stated by the Fourth Section of the Council of State in Ruling No. 13979 of January 26, 2006.