Bill 136.

Summary.

The bill amends Article 11 of Law 76 of February 13, 2019. It would require the National Assembly (Asamblea Nacional), through the relevant standing committee, to request a cost-benefit assessment report from the Ministry of Economy and Finance (Ministerio de Economía y Finanzas) before the first debate on any bill that could affect tax revenue. This requirement covers proposals concerning tax incentives and credits, deductions, exemptions, reductions, payment deferrals, changes to the taxable base or tax rate, tax amnesties, the creation of national taxes and other measures with that potential effect. The report would be attached to the enacted law and published in the Official Gazette. Bills would have to follow its financial and fiscal recommendations so as to avoid adversely affecting revenue.

The amended article would make the Minister of Economy and Finance responsible for failure to submit the report to the National Assembly’s standing committee within 60 calendar days after receiving the request. Where a bill repeals or changes revenue included in the budget, the Office of the Comptroller General of the Republic (Contraloría General de la República) would also have to deliver a report on the effectiveness of tax rules to the National Assembly before the second debate, under Article 276 of the Political Constitution (Constitución Política). Failure by the Office of the Comptroller General of the Republic to submit that report would be treated as a breach of public servants’ duties.

The bill also amends Article 13 of Law 76 of February 13, 2019, on the prospective effect of tax rules. It retains the rule against retroactive effect, except for provisions governing violations, penalties and surcharges when their application is more favorable to the person liable for tax or the taxpayer, subject to an exception for acts that have become final. Laws serving a social interest could have retroactive effect if that interest is duly justified in the reasons for the law and expressly stated in it. The bill also allows retroactive application of tax rules that benefit or are justified by the protection of a social interest, including rules affecting tax benefits and incentives. It defines social interest by reference to the financial interest of the state or the population generally taking precedence over the interest of a particular group. A law creating a new tax or increasing an existing one could not apply retroactively. Repeal of a tax rule would not prevent its application to events occurring while it was in force.

Separately, the Ministry of Economy and Finance would publish, every quarter, a list of tax incentive beneficiaries and the amount of tax not paid to the state. Each year it would publish the cost of tax expenditures, cost-benefit assessments concerning whether existing incentives or benefits should continue, and systematically collected data supporting efficiency assessments. The bill identifies the amendments to Articles 11 and 13 of Law 76 of February 13, 2019, and provides for effect on the day after promulgation in the Official Gazette. Its provisions concern the National Assembly, the Ministry of Economy and Finance and the Office of the Comptroller General of the Republic, and may be relevant to taxpayers and sectors receiving tax incentives or proposing measures that affect revenue.