In Colombia there are two types of books that are related with tax obligations: (i) the commercial books, which gathers all the information related to the commercial operations of the company, and (ii) the accounting books.
Commercial books are: (i) the shareholders register,(ii) the minutes book of the board of directors, and (iii) the minutes book of the general assembly. Taxpayers are obliged to register these books, except the minutes book of the board of directors, before the Chamber of Commerce, in order to comply with the related legal requirements for their validity.
On the other hand, accounting books contain all information needed to prepare the financial statements. The most commonly used accounting books are the following:
- Journal book;
- Balance book;
- Inventories book;
- Auxiliary books; and
- Fiscal book (when the company is required to keep records of its accounts).
The Colombian Commerce Code regulates the mandatory bookkeeping form and methods. Articles 49 and 50 of the Commerce Code require the books to be kept in Spanish, using the double entry book system, and a method that provides clear, complete and truthful information. This is regulated by Decree 2649 of 1993 that indicates the special rules related to books and records.
Books need to be kept in the main domicile of the entity. They must also be displayed in such place, in case the tax authority needs to audit them. As from 2012, accounting books can be kept electronically. Commercial books have to be kept in lithographic form, except the minutes book of the board of directors which can be kept electronically.
The following prohibitions apply for the books and records:
- The entries or their dates cannot be modified.
- The company is not allowed to leave spaces between entries that could facilitate the insertion or addition of text.
- The entries cannot be corrected or erased.
- The entries cannot be removed or deleted.
The books kept following the above mentioned rules, will be sufficient proof in tax audits and other processes. If they do not meet the requirements, they will not constitute sufficient proof in the audits made by the authorities.
According to articles 654 and 655 of the Tax Code a penalty applies for accounting irregularities. The penalty is equal to 0.5% of the equity or income by the company during the previous year, whichever higher, and is capped at 20.000 UVT.42
This penalty is imposed for the following violations:
- Failure to keep mandatory books.
- Failure to make the books and supporting documents available to the tax authority when making an audit.
- Displaying double accounting.
- Failure to keep the books in a form that allows the tax authority to verify the factors and elements serving for the assessment on the income tax return or the withholding tax return.
- Failure to keep the books updated for more than four (4) months.
The books need to be kept for 10 years, either on paper on in an electronic form in order to allow the tax authority to audit them if necessary.
All entities are required to keep the documents and information related to taxes, even if they are not taxpayers, for a minimum period of 5 years (Art 632) counted from 1 January of the year that follows the issuing or receipt of the proof or document.
42One UVT corresponds to COP $29.752 for taxable year 2016