The Details About the Royalty Debate Taking Place in the Constitutional Court

Tax attorney Juan Carlos Valencia was cited in an Asuntos Legales article about a public hearing at the Constitutional Court debating the legality of a tax reform that prohibited the deduction of royalties for oil and coal producers in Colombia. Mr. Valencia explained that the court's decision should favor the unconstitutionality of the measure due to its different impact on taxpayers and the violation of the principle of contributory capacity. Additionally, he pointed out the distinction between those who pay royalties in money and that generate inequities, and that it is difficult to establish measures that equalize their treatment. Lastly, he discussed the possible effects if the prohibition of deduction would imply a double payment of taxes, clarifying that deductions do not mean that the State assumes taxpayers' expenses.

"Regardless of the decision that is adopted, from the public hearings that the court carried out with extreme rigor, it was clear on the part of all those involved, that those who pay royalties in money are being taxed on an income that corresponds to the state. I anticipate that this single inequity could lead the court to question this norm because it could not survive in a system whose pillars are equity and contributory capacity," he said.

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