Pursuant to article 434b of the Colombian Criminal Code (“CCC”), a tax fraud offense will configure if whoever being obliged to declare does not file, or who in a tax return omits income, or includes non-existent costs or expenses, or claims tax credits, withholdings or improper advances, with the purpose of fraud or evasion, which generate a lower value to be paid or a higher balance in favor in tax returns, in an amount equal to or greater than one hundred (approximately USD 20.000).
The prison penalty goes from 36 to 90 months depending on the amount of the offence.
The criminal action will be extinguished for up to two occasions when the active subject of the conduct makes the respective payments of taxes, tax penalties and interest.
Yes. Pursuant to articles 434A and 434B of the Criminal Code:
i) The taxpayer who omits assets or declares a lower value of assets or declares inexistent liabilities, in the income tax and complementary tax return, for a value equal to or higher than 5,000 legal monthly minimum wages in force[1] (approximately USD 1.250.000 at the actual exchange rate), defined by official liquidation of the tax authority, shall incur a prison term of 48 to 108 months.
ii) Taxpayers who, being obliged to file a tax return, fails to file, or who in a tax return omits income, or includes non-existent costs or expenses, or claims improper tax credits, withholdings or advances for an amount equal to or higher than 250 minimum wages (approximately USD 62.500 at the actual exchange rate), could be subject to a criminal investigation.
[1] Minimum Legal Wage for 2022: COP 1.000.000, Approximately USD 250 at the actual exchange rate.
Yes, the imposition of a sanction for inaccuracy could trigger a criminal investigation in case the CTA proves that said inaccuracy is due to the inclusion of inexistent liabilities or omission of assets in the amounts cited. Additionally, article 402 of the Criminal Code indicates that the omission to transfer the withholding taxes collected by responsible agents would trigger a criminal action.
Criminal intention is not required. As described in the answers above, tax felonies are understood to be committed on an objective basis, which means no intention is considered. If the withholdings are not transferred to the tax authorities, or any of the other conducts are displayed, the taxpayer will be subject to a criminal action regardless of its intentions.
Only in case that the amendment to the tax return includes inexistent liabilities or omits the inclusion of assets. On the contrary, if the amended tax return does not include such items, it would not start a criminal action.
Please bear in mind that the criminal action will be extinguished by payment or compensation of the amounts owned, tax penalties and interest as the case may be.
Yes, it is allowed by the law but very uncommon in practice. The reason is that the DIAN (Colombian Tax Authority or "CTA") usually starts an administrative investigation/audit, and then, if it considers it necessary, the CTA will request the start of a criminal investigation to the Prosecutor's Office.
The statute of limitation period applicable to the tax offences is the longest imprisonment term of the felony. At Question 9 we explain the terms applicable for each fiscal felony.
Since the filing of a tax declaration in case the tax payer files the return or since the date of deadline to file the tax return in case that the taxpayer does not file the tax return.
The sentences for tax felonies are ruled in the Criminal Code as follows:
i. Article 402 Omission of the withholding or collection agent
- A term of 48 to 108 months of imprisonment. The sentence could be subject to time increases depending on the amount of the felony.
- A fine equivalent to double the amount not reported, but not exceeding the equivalent of UVT[2]1,020,000 (Approximately USD 9.691.020 at the actual exchange rate).
- The criminal action will be extinguished by payment or compensation of the amounts owed, tax penalties and interest as the case may be.
ii. Article 434A Omission of assets or inclusion of nonexistent liabilities.
- A term of 48 to 108 months of imprisonment. The sentence could be subject to time increases depending on the amount of the felony.
- The criminal action will be extinguished when the taxpayer files or amends the respective tax return or returns, as long as it is within the term to amend provided in the Tax Code and, in any case, makes the respective payments of taxes, tax penalties and interest.
iii. Article 434B Tax fraud or avoidance.
- A term of 36 to 60 months of imprisonment. The sentence could be subject to time increases depending on the amount of the felony.
- The criminal action will be extinguished when the taxpayer files or amends the respective tax return or returns, as long as it is within the term to amend provided in the Tax Code and, in any case, makes the respective payments of taxes, tax penalties and interest.
[2] UVT for 2022 is equal to COP 38.004 or Approximately USD 9.5 at the actual exchange rate.
In Colombia there is not criminal responsibility for legal entities. The responsibility for tax offences carried out by a Company are incumbent upon its legal representative as an individual.
Yes. It is a topic regulated in the tax reforms as "Normalization Tax". This initiative is applicable though a limited period of time after the enacting of a tax reform, and allows taxpayers to include omitted assets held locally or abroad or to erase inexistent liabilities, and pay a penalty known as "Normalization Tax". This mechanism excludes the application of a criminal action but, as said before, it is enforceable for a limited period of time. There is no "Normalization Tax" in force in Colombia.
Yes. If the taxpayer fulfills 100% of the tax obligation, as well as the sanctions and interest generated, the criminal action would be dropped.
No. Once the statute of limitation is in force the start of a criminal action could not re-open it.
No. In accordance with article 434b of the Criminal Code, if a case is submitted by the DIAN to the criminal jurisdiction, the Tax Authority losses its competence in regard to the tax dispute. If that is the case, the responsibility of the offender must be declared by the judge of the criminal jurisdiction and, afterwards, the tax due would be subject to collection by the Tax Authorities. In other words, the tax assessed might not be modified but the collection after a unfavorable criminal ruling would be competence of the Tax Office.
Yes. If the taxpayer fulfills 100% of the tax obligation, as well as the sanctions and interest generated, the criminal action would be dropped.
Individuals, which means the proxy or legal representative would have to answer to the Prosecutors office for tax felonies committed by the legal entity. In Colombia legal entities are not liable from a criminal law perspective.
Yes. The proxy or legal representative would have to answer to the Prosecutors office for tax felonies committed by the legal entity even if it’s a foreign individual.
Yes. The CTA would pursuit the Company economically through the issuance of an executive action, even if it the legal entity could not be charged with the felony.
There have been numerous amendments to the tax crime regulations. However, due to their difficult application, there has not been an increase in the number of investigations or convictions for these types of crimes.