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Colombia Enacts Decree To Support Struggling Firms

Wednesday, August 25, 2021

The Colombian Government has issued Decree 939 of August 19, 2021, which enables the tax agency to revise an assessment for potentially viable companies that are facing insolvency, where doing so may save the company and jobs.

The Decree, which amends Decree Law 560 of 2020, is for companies already engaged in insolvency proceedings. It will give the tax agency increased flexibility to negotiate payment of tax debts, and to reduce penalties and interest due where appropriate.

Companies will be required to submit an application to request the renegotiation of tax debts, interest, and penalties. Those taxpayers agreeing to settle their dues quickly will benefit from the greatest reduction. For instance, those companies agreeing to pay within up to three years will benefit from a 40 percent reduction in the amount payable and an 80 percent reduction in interest, penalties, and fines. The maximum repayment term will be seven years.

The scheme covers debts other than indirect tax dues, including value-added tax, and social security taxes. The Decree also provides relief to companies agreeing to pay penalty amounts not linked to outstanding taxes.