On December 22, the Colombian government issued the Decree 1733 of 2020 which regulates Law 2024 of 2020, the so-called “Fair Payments Law”.
The Fair Payments Law established that all payments in money caused as consideration in mercantile operations must be made within the terms established by law. This is a mandatory law so any contractual provision to the contrary will be invalid.
The decree clarifies, mainly, the following matters:
Exclusions from the scope of the law: The following types of payment are excluded from the scope of the law:
- Payments caused as consideration for acts that, in accordance with articles 20 through 23 of the Colombian Commercial Code, are not considered mercantile operations. Thus, the acquisition of goods for domestic consumption and their sale, the acquisition of goods to produce artistic works and the sale of these by their author, the rendering of services inherent to the liberal professions, and the sale made directly by farmers or ranchers of their crops, in their natural state, would not be within the scope of this rule.
- Payments on consumer relationships subject to consumer protection regulations. That is, those payments that arise in transactions between a producer or supplier that supplies a good or renders a service and a consumer who acquires it and uses it as a final recipient to satisfy its own, private, family or domestic need, or even a business need as long as it is not intrinsically linked to the economic activity of the company.
- The obligations that arise in commercial operations between large companies. In other words, the law applies to those transactions where at least one of the parties is a Micro, Small or Medium-sized Company, according to its income from annual ordinary activities, in terms of Decree 1074 of 2015:
- For the manufacturing sector:
- Microenterprise: Less than or equal to 23,563 UVT (COP$ 855.525.404).
- Small Business: Greater than 23,563 UVT (COP$ 855.525.404) and less than or equal to 204,995 UVT (COP$ 7.442.958.460).
- Medium Company: Greater than 204,995 UVT (COP$ 7.442.958.460) and less than or equal to 1'736,565 UVT (COP$ 63.051.202.020).
- For the services sector:
- Microenterprise: Less than or equal to 32,988 UVT (COP$ 1.197.728.304).
- Small Business: Greater than 32,988 UVT (COP$ 1.197.728.304) and less than or equal to 131,951 UVT (COP$ 4.790.876.908).
- Medium Company: Greater than 131,951 UVT (COP$ 4.790.876.908) and less than or equal to 483,034 UVT (COP$ 17.537.998.472).
- For the commercial sector:
- Microenterprise: Less than or equal to 44,769 UVT (COP$ 1.625.472.852).
- Small Business: Greater than 44,769 UVT (COP$ 1.625.472.852) and less than or equal to 431,196 UVT (COP$ 15.655.864.368).
- Medium Company. Greater than 431.196 UVT (COP$ 15.655.864.368) and less than or equal to 2.160 .692 UVT (COP$ 78.450.405.136).
*Large companies are those whose income from annual ordinary activities exceeds the aforementioned ranges.
The accreditation of the size of the company must be done through a certificate issued by the natural person in the case of these, or in the case of entities, by a certificate issued by the legal representative, accountant, or tax auditor if the company is obliged to have one.
- Obligations contained in securities (except sales invoices).
- Payments for compensation for damages.
- Payments derived from the execution of insurance contracts.
- Obligations derived from credit agreements and other typical or atypical contracts where the deferred payment terms are essential to the type of contract. The decree clarifies that the obligations derived from this type of typical or atypical contracts are excluded from the scope, provided that the parties have agreed so.
- Obligations subject to bankruptcy procedures, business restructuring or liquidation, including obligations subject to the insolvency regimes of non-merchant natural persons and the taking of possession and liquidation of the Organic Statute of the Financial System.
- International trade operations. It is worth mentioning that this exception is entirely introduced by this decree.
When to start counting the term for payment: In order to clarify the moment from which the terms for the fair term are counted, and aligning them with the provisions on electronic invoicing, the decree clarifies that:
- When the purchaser of the good or service receives the sales invoice electronically, the obligations must be paid within the following terms:
- 60 calendar days from the receipt of the invoice that meets the requirements established in the Tax Statute, for invoices received between January 1st and December 31st, 2021.
- 45 calendar days from the receipt of the invoice that meets the requirements established in the Tax Statute, for invoices received after January 1st, 2022.
- When the invoice is not received by the purchaser through electronic means, or when the seller is not obliged to issue a sales invoice in accordance with current regulations, the fair payment term will begin with the delivery of the goods or the end of the rendering of the service.
- Regarding the commercial operations carried out within the framework of the General System of Social Security in Health, the maximum and final term for the payment of obligations will be of sixty (60) calendar days from receipt of the invoice. The obligation to pay in fair terms will apply to these payments as of January 1st, 2023.
Finally, the decree establishes that the Ministry of Commerce, Industry and Tourism will grant recognition to companies that make their payments in terms shorter than those established by law, being the responsibility of the ministry to establish the conditions, terms and the recognition that will be granted to the participants who occupy the first places.
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January 28, 2021 at 06:03AM
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Regulation of the Fair Payment Terms Law - JD Supra
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