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Colombias Constitutional
Court overrules possiblerecognition of leasecontracts as operatingleasesBy means of Decision C-015 of 2013, Colombias Constitutional Court
held as unconstitutional a part of Section 15 of Law 1527 of 2012, which
allowed all lease contracts to be possibly recognized as operating leases.
Background
Section 15 was affected by the repeal of paragraph 4 of Section 127-1
of the Tax Statute and paragraph of Article 89 of Law 223 of 1995. The
ruling was communicated through No. 1, published on 25 January 2013.
The repealed language of paragraph 4 of Section 127-1 of the Tax Statute
provided that all financial lease contracts or lease contracts with the
option to buy would be treated as provided in numeral 2 of this article,
regardless of the nature of the tenant. This repealed language also applied
to infrastructure leases.
With the repeal of paragraph 4 of Section 127-1, financial lease contracts
or lease contracts with the option to buy could be treated as operating
leases if all of the requirements of Section 127-1 were met (e.g., time,
type of property and qualification of the tenant as a medium enterprise).
If the lease is recognized as an operating lease, the entire lease payment
is recognized as an expense, not as an asset and a liability.
14 February 2013
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Global Tax Alert2
HoldingThe Constitutional Court held
that a part of Section 15 is
unconstitutional for violating the
unity of matter principle because
the provision was intended to
establish the general framework
for warrants or direct discounts
and, instead, it regulated different
issues. Additionally, the court
observed that it was necessary
to remove the rule of law becausethe reasons and purpose for which
the law was enacted, which is to
regulate warrants, was unrelated to
the purpose of repealing the leasing
rule.
Accordingly, for accounting and
tax purposes, all leasing contracts,
including infrastructure leases,
should be treated as financial
leases, not as operational leases.
ImplicationsTaxpayers may want to review how
this ruling affects their leases for
fiscal year 2012 and subsequent
fiscal years.
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3 Global Tax Alert
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