On June 28th, 2024, the Internal Revenue Service issued the Resolution No. NAC-DGERCGC24-00000024, establishing the provisions for income tax self-withholding and its monthly payment by companies classified as Large Taxpayers.

Taxable Income and Exemptions:

All income received monthly by large taxpayers will be considered taxable, except for the following incomes:

• Income from contracts for exploration and exploitation of hydrocarbons.
  
  
• Income from contracts entered with government entities and public enterprises (central government, decentralized autonomous governments, decentralized entities, social security entities).
  
  
• Incomes recognized in court resolutions or through administrative acts with government entities.
  
  
• Incomes subject to special regimes and incomes subject to another self-withholding regime.
  
  

If a Large Taxpayer cannot distinguish between taxable and exempt income, the self-withholding tax will be calculated on the total monthly income received.

Large Taxpayers acting as commission agents must only consider amounts received from direct commissions, discounts, or margins established by third parties when calculating and paying self-withholding taxes.

Large Taxpayers subject to regimes in the banana or agricultural sectors are exempt from performing self-withholding taxes according to this Resolution. Instead, withholding agents must apply the corresponding withholdings in accordance with general regulations.

Percentages and Settlement:

Starting from June 2024, the specific self-withholding percentages applicable to each large taxpayer are detailed in the following link:

On May 29, 2024, the Resolution No. NAC-DGERCGC24-00000020 issued by the INTERNAL REVENUE SERVICE was published in the Official Register. This Resolution reformed the contents of the Annex on Transactions with Related Parties and the Transfer Pricing Report whose most relevant content is summarized below:

• Types of taxpayers

The following classification of taxpayers was included for the establishment of the amounts of pecuniary sanctions regarding the report of the Annex on Transactions with Related Parties and the Transfer Pricing Report:

1. Large Taxpayers and Large Estates;
   
   
2. Special Taxpayers; and
   
   
3. Other taxpayers subject to transfer pricing regime.

• Tax penalties for failure to file the report

Taxpayers who do not submit the Transfer Pricing Report or the Annex on Transactions with Related Parties shall be fined based on the following table:

• Tax penalties for registration of the report incompletely

Taxpayers who submit incomplete, inaccurate or erroneous information shall be fined based on the following table:

The Transfer Pricing Report or the Annex on Transactions with Related Parties shall be deemed to contain incomplete, inaccurate or erroneous information when the following are incurred:

• Not taking into consideration the Technical Sheet for the standardization of the transfer pricing analysis and the technical sheet of the Annex on Transactions with Related Parties in force for the evaluated fiscal year.
  
  
• Submit incomplete or inaccurate information, which differs between the Transfer Pricing Report and the Annex on Transactions with Related Parties, for transactions with related parties and the methodology and indicator when applicable.
  
  
• When the values declared in the income tax return, Annex on Transactions with Related Parties and Transfer Pricing Report, show differences between any of them.
  
  
• In the case of the Transfer Pricing Report, when the working papers established in the Technical Sheet for standardization of the Transfer Price Analysis in force to the evaluated fiscal year are not included.

When the taxpayer settles and pays the fine without prior notification by the Tax Administration, it shall be considered a voluntary liquidation.

If the Tax Administration notifies the taxpayer of the breach of its duties, a fine shall be issued based on the above categories.

• Sanctions regime for late registration

Taxpayers who submit information after the deadline shall be fined based on the following table:

• Fiscal year 2023 registration of reports and annexes

1. The Annex on Transactions with Related Parties and the Transfer Pricing Report for the 2023 fiscal year, may be filed until September 2024 on the same due dates as for the monthly tax returns of each taxpayer.
   
   
2. Transfer Pricing Reports for the 2023 fiscal year submitted after this Resolution, must be made in accordance with the Technical Sheet published on the IRS website, on May 27, 2024.

Non-profit private institutions will be exempt from paying income tax, as long as they use their assets or income for specific objectives and meet up the requirements established by law.

In addition, Tax regulations establish that at least 5% of the total income must come from contributions or donations.

On September 11, 2024, the Internal Revenue Service clarified, through Circular No. NAC-DGECCGC24-00000006, what will be considered as donations and contributions for private non-profit institutions to access the Income Tax exemption:

1. Donations: Donations can be made in the form of monetary contributions or legacies, (such as goods and volunteer work), from members, founders, or others, including non-reimbursable cooperation and service compensation.
   
   
   
2. Contributions:
   
   

• Contributions include: expenses, quotas, and/or contributions made by partners, members, founders, or others, to legally established private non-profit institutions, such as those for religious worship, charity, promotion and development of women, children, and families, culture, art, education, research, health, sports, professional, union, political parties, community organizations, indigenous people, co-ops, unions, federations, confederations of co-ops, and other legally recognized associations of farmers and small producers.

• Contributions are also considered those obtained, maintained, generated, or received as income in compliance with their statutory objectives, resulting from self-management or activities carried out, measurable in cash or in kind, as long as their assets and income are allocated to their specific purposes and only to the extent that they are directly invested in them.