October 17, 2019
Colombian Constitutional Court declares the 2018 tax reform unconstitutional
On 16 October 2019, the Colombian Constitutional Court declared Law 1,943, the 2018 tax reform, unconstitutional because of procedural flaws in Congress’s approval process. However, the Court decided that the tax reform will remain in effect until the end of 2019, giving Congress time to approve a new tax law that affirms the 2018 tax reform or introduce new measures that would amend the Colombian tax laws.
If a new tax reform law is not approved by Congress by 31 December 2019, the tax regime in force before the 2018 tax reform will apply beginning 1 January 2020.
Although the Colombian Government publicly announced that it will file a tax bill that is similar to the one approved in 2018, historically proposals have been subject to several changes during the approval process in Congress. Therefore, currently there is a significant degree of uncertainty for 2020 and onwards.
The Court did not address whether specific rules included in the 2018 tax reform were unconstitutional because the rules were either (1) already modified or repealed by another law or (2) not effective.
For additional information with respect to this Alert, please contact the following:
Ernst & Young S.A.S., International Tax and Transaction Services, Bogotá
Ernst & Young LLP (United States), Latin American Business Center, New York
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific