The National Tax Authority (DIAN) pronounced on the following issues related to tax penalties, in particular the application of the principles of proportionality, harmfulness, gradualness and favorability, on 17 March 2017. Article 640 of the Tax Code (TC), as amended by Law 1819 of 2016 (the tax reform), provides rules for the application of the principles of harmfulness, proportionality, gradualness and favorability when applying and assessing tax penalties.
Taxpayers may benefit from a reduction of the penalty for late submission of tax returns, provided that (i) the taxpayer has not incurred any penalties due to late submission of other tax returns in the preceding 2 years; and (ii) DIAN has not issued an administrative decision on the late submission of the tax return. If conditions (i) and (ii) are met, the taxpayer is required to pay only 50% of the tax penalty resulting from the application of the formula provided under article 641 of the TC.
Taxpayers may only apply the reduction of the penalty for late submission corresponding to tax year 2014. However, the tax penalty for tax year 2015 must be paid in full, as none of the requirements provided under article 640 of the TC would be met.
