CONSTITUTIONAL COURT DECLARES LIMITS TO THE SIMPLE TAXATION REGIME IN COLOMBIA UNCONSTITUTIONAL

By Ruling C-540 of 2023, the Constitutional Court of Colombia declared unconstitutional Articles 42 and 44 of Law 2277 of 2022 (Tax Reform approved in 2022), which included differential limitations with respect to other categories such as education, human health care and social assistance services, regarding the maximum income ceilings to access the Simple Taxation Regime and the tax rates. The maximum ceilings established in Law 2277 of 2022 were lower than those established in previous years for the economic activity of Group 5 of the simple regime for specialized and professional services.

The articles declared unenforceable established the following:

– Ceiling of 12,000 UVT of gross income to belong to the Simple Taxation Regime for Group 5, that is for specialized and professional services.
– The rates foreseen for education activities and human health care and social assistance activities were 3.7% – 5.9%.
– The rates foreseen for specialized and professional services activities were 7.3% – 8.3%.

In said Ruling, the Chamber considered that there was an affectation to the principle of equality, inasmuch as the rules enshrined in the challenged norms introduce differences in treatment between groups 4 and 5, in accordance with the challenged norms, with respect to the income threshold to opt for the Simple Taxation Regime and the applicable rates, which were higher for group 5 compared to group 4, without these differences being reasonably justified.

Therefore, the Plenary Chamber considered it pertinent to declare the provisions of Articles 42 and 44 of Law 2277 of 2022 that established such threshold and rates to be unenforceable. Consequently, the provisions contemplated in the rules prior to the amendment of Law 2277 of 2022 will continue to apply, so the annual gross income ceiling to belong to the simple regime for both activities is 0 -100,000 UVT and the rate is 5.9% -14.5%.