Key takeaways
- The crime of Omission of the withholding or collection agent is committed by withholding agents, self-withholding taxpayers, those responsible for VAT and the national consumption tax, as well as collectors of contributions and fees. The offense consists in the failure to remit the amounts collected to the Tax Authority, and is punishable not only for failure to collect but also for the failure to timely deposit the taxes established by law
- If criminal proceedings are initiated, a legal strategy must be established to either demonstrate compliance with the tax obligation—thereby proving the absence of a criminal offense—or to ensure payment of the taxes due, in order to obtain an early termination of the proceedings without a conviction.
- It is possible to close the criminal investigation by paying the taxes due, on up to two occasions.
In depth
Colombia has established three tax-related criminal offenses. Today, we will focus on the offense of Failure by the Withholding or Collecting Agent, as it is the basis upon which the National Tax and Customs Directorate (DIAN) and the Office of the Attorney General have joined efforts to initiate criminal investigations.
Omission of the withholding or collection agent
How does this offense operate?
This offense punishes those who, being withholding agents, self-withholding agents, those responsible for VAT or national consumption tax and those in charge of collecting taxes or public contributions, do not collect the tax or do not remit it in a timely manner.
From the foregoing, four possible perpetrators of this conduct are evident.
- In the first place, those subjects determined by the tax law as withholding agents. These persons are obliged to make the withholding at the source and, subsequently, remit it to the corresponding Tax Authority within the legal deadlines.
- Those who have applied to the DIAN to be self-withholding agents, following the tax rules applicable to this situation.
- Any taxpayer liable for VAT or national consumption tax, who must collect it and deposit it with the DIAN within the established term.
- Those who by law must act as collector of public contributions or taxes and fail to do so may also be liable for this offense.
What happens if any of the above subjects is a legal person?
According to Article 402 of the Criminal Code and Article 556 of the Tax Statute, the legal representatives will be responsible before the Prosecutor's Office and the Criminal Judges for this crime. That is why having clear policies at the time of withholding, self-withholding or collection are essential to protect the directors of the companies.
Next, it is essential to understand who would be the victims in these cases. The answer will depend on the type of tax collected. If it is a national tax, such as VAT or excise tax, the DIAN will be the victim. In the case of contributions or taxes, the victim will be the public entity in charge of managing such taxes.
Regarding the object of the crime, this will vary depending on the case. If it is a withholding agent, it will be the withholding at source. If it is a person responsible for collecting one of the two national taxes described above, the object will be VAT or the national consumption tax. Finally, if it is the collection, the contribution or the corresponding tax will be the object of the crime.
This offense punishes, in essence, two conducts:
- The first covers the failure to timely deposit the tax in question. These cases occur when the perpetrator of the crime effectively retains, self-retains or collects the tax, but does not deliver it in a timely manner to the corresponding Tax Authority. For this, it is necessary to resort to the particular tax regulations.
- The second model of conduct is to omit the collection of the tax. Naturally, the fact of not executing the tax obligation may generate sanctions, both administrative and criminal.
It is important to note that the payment or offsetting of the amounts owed to the relevant Tax Authority constitutes a means of obtaining early termination of the criminal proceedings.
Suggest of course of action
- Clearly define, within internal manuals, who will be responsible for fulfilling formal obligations before the Tax Authority.
- If another employee is designated to assume these responsibilities, promptly notify the relevant Tax Authority of this change.
- Implement tax compliance and due diligence programs, particularly in cases where funds are collected for remittance to the Tax Authority.
- If criminal proceedings are initiated, a legal strategy must be established to either demonstrate compliance with the tax obligation—thereby proving the absence of a criminal offense—or to ensure payment of the taxes due, in order to obtain early termination of the proceedings without a conviction.
The criminal tax regime is currently in a phase of consolidation, with expectations of increased effectiveness in deterring tax evasion. The limitation of the extinguishment of criminal liability to only two instances seeks to prevent payment from becoming a "license to offend," thereby establishing stricter consequences for repeat offenders.
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