⚖️ What due process standards do LatAm courts follow when deciding tax matters?
🟡🔵 In a ruling dated December 12, 2024, the Colombian Administrative Tax Court (Consejo de Estado de Colombia) reversed a lower-tier decision that:
1️⃣ Had stated that the local tax authority (DIAN Dirección de Impuestos y Aduanas Nacionales) failed to provide a clear rationale for its denial of the application of the “principle of favorability” to the taxpayer (derived from Art. 29 of the Colombian Constitution + the then-effective Art. 102 of Law 1943/2018 – a permission for the reduction of fines and late filing/payment interest subject to certain legal requirements);
2️⃣ But, sponte sua, provided its own assessment of whether the taxpayer had met the legal requirements for that application, and by concluding that they had not, ratified DIAN’s denial.
✅ The court agreed with the taxpayer that this represented an internal contradiction in the lower-tier decision. If the conclusion of the lower court was that DIAN’s denial was inappropriate because it lacked reasoning, that denial had to be declared as null and void for legal purposes. The taxpayer should therefore have its right to the application of the “principle of favorability” recognized by the court (p. 8-9). The ruling was shared by Ricardo Sabogal y Asociados and is available in PDF here: https://bit.ly/4hp18se
🟡🔴 In a landmark decision dated October 20, 2021, the Ecuadorian Constitutional Court (Corte Constitucional del Ecuador) announced its departure from the “motivation test” that the court had proposed in a precedent from 2012 (p. 11). The former test, based on standards of reasonableness, logic and intelligibility, was abandoned because it forced courts to ascertain whether administrative or court decisions had a “correct” rationale instead of the “sufficient” rationale required by Art. 76.7.1 of the Ecuadorian Constitution (p. 14).
▶️ The court states that the “guiding criterion” for the assessment of whether an administrative or court decision is properly motivated is two-fold. It is composed of (i) a “sufficient” normative rationale and (ii) a “sufficient” factual rationale (p. 19). The court also highlights the types of rationale deficiency that a decision might have:
❌ A non-existent rationale (p. 24);
❌ An insufficient rationale (p. 24); or
❌ An incoherent, impertinent, incongruous, or uninteligible rationale (p. 24-33).
✅ Though the case revolved around a labor complaint filed in 2013, its “guideline criterion” has become the standard for the justification of administrative and court decisions in Ecuador (see, for example, a 2022 ruling about the Ecuadorian Special Consumption Tax – https://bit.ly/4hnzcF2). We thank Andrea Moya for the reference to this ruling – you can find its PDF on the official website of the Constitutional Court here: https://bit.ly/42jOIgU
