Regime change in income tax

Decree 10-2012, Tax Update Law (LAT), establishes for income from lucrative activities two regimes for the payment of income tax (ISR) and they are that of the tax on profits and that of the simplified optional regime that is determines on gross income.

In accordance with article 50 of the LAT, when registering with the Tax Administration Superintendency (SAT) the taxpayer must indicate the regime in which it will apply; otherwise, the tax authority will register it in the income tax. This provision is consistent with the constitutional norms, because by leaving said regime as mandatory in cases where the taxpayer does not indicate his decision, among other constitutional guarantees, the principle of ability to pay is respected, because in the simplified option, the tax is paid on gross income, regardless of whether you have a profit or loss.

The Tax Update Law provides that the taxpayer can change from one regime to another and that right is exercised mainly in cases where the tax burden in which the taxpayer is registered is causing him to pay higher taxes. The law allows such a way of proceeding.

If you decide to change the tax on profit from lucrative activities and move to the simplified optional tax or vice versa, the LAT establishes that you must first inform the tax authority of this during the month of December. Said regulation is found in article 51 of the aforementioned legal norm, which regulates that it can be changed with prior notice to the SAT, as long as it is presented during the month prior to the start of the new annual settlement period. Said article continues to indicate that the change applies as of January 1 of the following year. Finally, it adds that whoever does not comply with the aforementioned notice will be subject to the corresponding sanction, according to the Tax Code.

Take note of the characteristics of the provision: a) The change can be made with prior information to the SAT; b) For it to operate, the legal norm establishes that as long as it is presented during the month prior to the validity of the new annual settlement period. The term must be observed, as it is indicated as long as a condition is being established that must necessarily be met for the change to take legal effect, so the time to do so is only in the month of December, for a main reason, because for the transfer to operate it is not necessary for the SAT to authorize it, since it operates fully from January 1. The Tax Administration does not issue authorization resolution because it is not a request, since the requirement is only to inform the SAT of the transfer; d) Finally, the indicated article when establishing that it is a condition to notify the tax authority in December and if said term is not met, the taxpayer will be subject to the corresponding sanction according to the Tax Code. At this point, it is our opinion that the law is not referring to a penalty for extemporaneous presentation of the notice, but that it could be the omission of the payment of the tax in the regime in which it was being taxed, due to the fact that when reporting the change after the deadline, the transfer would no longer take effect.

If you plan to change, it is necessary to inform the SAT in December, so as not to have fiscal inconveniences.

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