The MINCIT (Ministerio de Comercio, Industria y Turismo – Ministry of Commerce, Industry, and Tourism) published for comments the draft decree regulating article 151 of Decree-Law 410 of 1971 and establishing accounting mechanisms to mitigate the accounting effects of the change in the income tax rate for the taxable period 2021.
What are the main measures provided for?
1. Accounting treatment of deferred taxes
In compliance with current accounting standards, when deferred tax assets and liabilities must be measured using the tax rates expected to apply in the period in which the asset is realized or the liability is settled, the rate approved at the end of the reporting period must be taken into account, recording the accounting effect in the respective statement of income.
2. Possibility to classify the value of the deferred tax in the balance sheet
The value of the deferred tax derived from the change in the income tax rate, generated by the amendment to Article 240 of the Tax Statute introduced by Article 7 of Law 2155 of 2021, which is recorded in the respective income statement for the period 2021, may be reflected in the company’s equity in the respective balance sheet.
3. Treatment of the distribution of dividends corresponding to the taxable period 2021
To distribute dividends of the companies corresponding to the taxable period 2021, the highest corporate body may distribute dividends considering the result of the period, allowing in the dividend distribution project to add the value of the deferred tax expense derived from the change in the income tax rate, which is generated by the amendment of article 240 of the Tax Statute, introduced by article 7 of Law 2155 of 2021, provided that the entity has profits from previous years in its equity.
What are these new measures aimed at?
The Colombian Government has adopted different actions to contribute to the reactivation of the country’s economy, strongly affected by the COVID19 pandemic. Within the framework of these measures, it promoted the enactment of Law 2155 of 2021, which seeks, based on a set of fiscal measures, to contribute to the reactivation, employment generation, protection of the business fabric, and support to the most vulnerable population, within a framework of macroeconomic stability.
As a result of the aforementioned, it is necessary to adopt the pertinent actions in an agile manner to facilitate the implementation of the law without affecting the cash flow of the country’s companies and, in this way, guarantee the correct adaptation of the business activity to the provisions of the new legal text, the compliance with the principles of the tax system and provide legal certainty.
To date, this bill is under consultation and has not yet been approved.
Source: ICEF 14/10/21