An inaccuracy in the VAT return does not, by itself, constitute the punishable conduct. Can DIAN, the Colombian tax authority, penalize a company for accounting irregularities merely because the figures in its VAT return do not match those in its books? Colombia’s Council of State (Consejo de Estado), Fourth Section, answered no in its ruling of June 18, 2026 (docket 76001-23-33-000-2020-01584-01, internal number 28665, reporting judge Wilson Ramos Girón). The conduct described in article 654, paragraph e, of the Colombian Tax Code (Estatuto Tributario) exists when the books are kept in a way that prevents verifying the factors of the tax base, not because the self-assessed return contains inaccuracies.
The case
DIAN penalized Sociedad Portuaria Regional de Buenaventura S.A. for accounting irregularities through Resolution 352412019000001 of May 16, 2019, confirmed by Resolution 000783 of July 27, 2020. The reason: differences between the accounting figures and those in the VAT return for the first two-month period of 2018. The Administrative Court of Valle del Cauca dismissed the claim on January 24, 2024, and the company appealed.
The figures the Chamber reviewed, according to the statement of charges of October 11, 2018:
- Total or net revenue: COP 74,668,152,355 in the books versus COP 74,396,393,000 in the original return. The amended return adjusted the figure to COP 74,668,152,000, that is, to the books.
- Revenue taxed at the general rate: COP 14,483,697,194 in the books versus COP 14,532,267,000 in the return, a figure the amendment did not change.
After the amendment, DIAN kept the penalty for the difference in taxed revenue: COP 48,569,806. The company submitted certificates from its statutory auditor (revisor fiscal) and from the provider of its accounting system attesting that the books were properly kept.
First issue: consistency between the statement of charges and the penalty
When a penalty is imposed through a separate resolution, articles 638 and 655 of the Tax Code require a prior statement of charges, and the conduct charged there must be the same one that ultimately supports the penalty. The company argued that the difference in revenue taxed at the general rate had only appeared when the reconsideration appeal was decided.
The Chamber found that, from the statement of charges through the penalty resolution and the decision on the appeal, DIAN had referred to both differences, net revenue and taxed revenue. There was consistency, and this ground failed.
Second issue: what article 654, paragraph e, actually penalizes
- The conduct: failing to keep the accounting books in a way that allows verifying or determining the factors needed to establish the bases for assessing taxes or withholdings.
- The penalty (article 655): 0.5 % of the greater of net equity and net revenue for the year before the penalty is imposed, capped at 20,000 UVT (tax value units), without prejudice to the rejection of unsupported costs and deductions.
- Accounting as evidence (articles 772 to 775): properly kept books are evidence in the taxpayer’s favor and, where they disagree with the returns, the accounting entries prevail.
- The conduct it targets, according to the Chamber: not keeping accounts, not registering the books, not producing them when required, keeping two sets of books, or not filling them in so that the assessment bases can be established, or with late entries.
The Chamber’s decision
An error in the return is not, by itself, an accounting irregularity. The Chamber did not share DIAN’s view that the error in the tax base is what triggers the infringement. The conduct in paragraph e exists when the way the books are kept prevents verifying or determining the factors of the tax base. Here, it was precisely from the accounting data that DIAN detected the inaccuracies in the return: the books did serve that purpose.
Faced with discrepancies between the return and the books, DIAN should have applied article 775 (the accounting entries prevail) and, where appropriate, started the official review of the tax within the finality period of article 714, based on the accounting records. It was not appropriate to penalize facts that do not fall within the conduct described in article 654, all the more so when there was no evidence that the inconsistencies stemmed from omissions or defects in the records.
The ruling reversed the lower court’s judgment, declared the penalty resolutions void and held that the company owes nothing for that penalty, with costs of both instances charged to the defendant. The Chamber did not examine the arguments on analogous application of the infringement and on the proportionality of the fine, as they were new allegations not raised in the claim, nor the remaining grounds for annulment, such as double jeopardy (non bis in idem), once the basis of the penalty had been undermined.
Judge Myriam Stella Gutiérrez Argüello dissented: she considered the penalty appropriate because the difference in taxed revenue persisted after the amendment, and the certificates were not backed by an accounting voucher or note justifying the lower amount recorded.
An example: differences between the books and the return
Hypothetical case with illustrative figures. Comercial Delta records taxed revenue of COP 2,000 million for a two-month period in its books and reports COP 2,050 million in its VAT return. The tax administration detects the difference by comparing the return with the books and imposes the penalty for accounting irregularities.
- If the books are properly kept: the books are up to date, supported, and allowed the authority to verify the base. Under the ruling, the difference is an inaccuracy in the return, not the conduct of paragraph e. The path is article 775 and, where appropriate, the official review within the finality period; the irregularities penalty would not apply.
- If the books do not allow verification: if Delta does not register its books, does not produce them, keeps two sets of books or its entries are late, so that the assessment bases cannot be established, the conduct can indeed exist, with the penalty of article 655.
- The defense: Delta must show that its accounting is sound, with financial statements, certificates and supporting documents, and that the authority used it to detect the difference.
Fidelis Advisories’ recommendations
- Book-to-tax reconciliation: reconcile each period’s taxed revenue in the books with the VAT return, not only net revenue.
- Complete amendments: when amending a return, adjust every item with differences. In this case, the amendment covered net revenue but not taxed revenue.
- Certificates that cover what is in dispute: ask the statutory auditor for certifications that expressly address the items under review, and keep the accounting vouchers or notes that support them.
- Reply to the statement of charges: respond within the deadline with accounting support and check that the conduct charged is the same one that later grounds the penalty.
Consolidated opinion
Does a difference between what is reported in the VAT return and what is recorded in the books allow a penalty for accounting irregularities? Not by itself. Article 654, paragraph e, of the Tax Code penalizes accounting kept in a way that prevents verifying or determining the tax base, not an inaccuracy in the self-assessed return. Where there is a discrepancy, the books prevail and the path is the official review within the finality period. If the authority detected the difference precisely thanks to the books, those books were sound and the penalty does not apply.
This is a second-instance ruling adopted by majority, with a dissenting opinion, on a case from tax year 2018; its application to other cases depends on the facts of each one.
This article is for information purposes only and does not constitute legal advice. Contact us about your specific case.
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