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The unconstitutionality of Article 5 of Decree 113-2011 grants taxpayers the right to offset the Sales Tax with another type of tax.
[/vc_column_text][us_separator][vc_column_text]On March 25, 2021, the judgment of file RI-0763-2011 of the Extraordinary Appeal of Unconstitutionality to Legislative Decree 113-2011 was issued, in which the Supreme Court of Justice considered article 5 unconstitutional for material or substantive reasons, because it directly collides with the prohibition established in the first paragraph of article 109 of the Constitution, since it ipso iure orders the consolidation in favor of the treasury of amounts that actually belong to the taxpayer and which causes the latter harm by affecting the right to dispose of its own funds. It is highlighted that this judgment declared the unconstitutionality of articles 10 for material or substantive reasons and 20 for formal or form reasons; However, for the purposes of this article, we will only discuss the unconstitutionality of Article 5 and its consequences. Article 5 of the Revenue Efficiency and Public Spending Law limited taxpayers in the following ways: a) It did not grant them the tax credit generated by purchases taxed with the Sales Tax; b) It prohibited offsetting the Sales Tax against other taxes; and c) It confiscated the tax upon closure of activities. The unconstitutionality of the aforementioned regulations means that taxpayers can finally exercise their rights granted to them by law, such as the right to request refunds or credit notes (Articles 115 and 116 of the Tax Code) for credits arising from taxed purchases and offsetting the tax credit generated by the sales tax against another tax (Article 142 of the Tax Code). However, questions remain regarding the closure of activities, since the provision of Article 12 of the Sales Tax Law, which states "A taxpayer or responsible party who ceases the purpose or line of business of their activities shall not be entitled to a refund or reimbursement of the tax credit remaining due to said cessation of activities," remains in force. Regarding the dissemination of the ruling, in compliance with the provisions of the Constitution of the Republic and the Law on Constitutional Justice, the National Congress must proceed to order the publication of the court ruling in the Official Gazette "La Gaceta." For comprehensive advice on the matter, please contact the following email address: nfugon@lexincorp.com. *Legal Notice: The general information contained in this document is provided for informational purposes only and should not be construed as legal advice on any of the topics discussed. You should not act or refrain from acting on the basis of any content included in this document without seeking legal or professional advice. We disclaim any liability for any actions you take or fail to take based on any content in this communication.
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