Legal Bulletin



Ruled unconstitutional the prohibition to compensate balances in favor of the corporate income tax for equality “CREE” with other taxes

The Constitutional Court reaffirmed that the tax power of the legislator is not an imposing faculty that can be used to cause unjustified restrictions to taxpayers


In its Ruling C-393 of 2016, the Constitutional Court determined that article 20 of Law 1739 of 2014, which limits the possibility of compensating balances in favor of “CREE” with other tax liabilities, ignores the principle of justice and tax fairness.

The Court applied “reasonability intermediate test” methodology to the prohibition and found that: (i) the purpose of this prohibition was to ensure the financing of educational social programs (ii) the way in which the financing is ensured is adequate to achieve this purpose (iii) in the tax area there is no other figure that achieve this objective with the same effectiveness, however (iv) the measure is disproportionate compared to the tax fairness parameter.