Cultural activities carried out by artists are not subject to ICA
Law 397 of 1997, through which the Ministry of Culture was created, defines the concept of culture as follows:
Article 1 – On the fundamental principles and definitions of this law. This law is based on the following fundamental principles and definitions:
1. Culture is the set of distinctive spiritual, material, intellectual, and emotional features that characterize human groups. It includes, beyond arts and letters, ways of life, human rights, value systems, traditions, and beliefs.
Within this concept of culture, the cited Law establishes in Article 18 which activities and/or cultural expressions are included:
Article 18. On incentives. The State, through the Ministry of Culture and territorial entities, shall establish special incentives and promote artistic and cultural creation, research, and the strengthening of cultural expressions. For this purpose, it shall establish, among other programs: job pools, scholarships, annual awards, competitions, artistic training workshops, support for individuals and groups dedicated to cultural activities, fairs, exhibitions, mobile cultural outreach units, and shall grant special incentives and loans for outstanding artists, as well as for local community members involved in creation, performance, experimentation, training, and research, individually and collectively, in each of the following cultural expressions:
- b) Musical arts
- c) Performing arts
- d) Traditional cultural expressions, such as folklore, handicrafts, oral traditions, and the cultural memory of the country's various regions and communities.
Based on the above, culture refers to all linguistic and artistic manifestations of human expression, developed through various activities such as theater, dance, music, etc.
Law 1493 of 2011: public performances of the performing arts
Law 1493 of 2011, which regulates the performing arts sector, defines this activity as follows:
Article 3. Definitions. For the purposes of this law, the following shall be understood:
Public performance of the performing arts: Public performances of the performing arts are live representations of artistic expressions in theater, dance, music, circus, magic, and all derivative practices created through human imagination, sensitivity, and knowledge, which gather people outside the domestic environment.
This definition includes the following dimensions:
- Artistic and cultural expression.
- Gathering of people in a specific place.
- A space for entertainment, interaction, and civic coexistence.
Exemption from the Industry and Commerce Tax (ICA)
Based on the above, cultural activities have been established as not subject to the Industry and Commerce Tax (ICA). Tax exemptions are situations that, although they fall within the taxable event, are expressly excluded by law.
The Constitutional Court, in Ruling C-1060A of 2001, stated:
“The exemption is no longer understood as a simple waiver of the tax payment, but as an imperative of tax justice (...). It can be said that the exemption falls within the taxable event, under certain circumstances defined as legitimizing facts that alter the existence or amount of the obligation.”
Therefore, a tax exemption releases the taxpayer fully or partially from paying the tax. This is reflected in Article 39(c) of Decree 352 of 2002:
Article 39. Non-taxable activities.
The following activities are not subject to the Industry and Commerce Tax:c) Public education; charitable, cultural, and/or sports activities; activities carried out by unions, nonprofit professional associations and guilds, political parties, and services provided by hospitals attached or linked to the national health system.
Additionally, Memorandum Concept No. 1107 of August 29, 2005, issued by the District Secretariat of Finance, reiterates:
“Finally, in accordance with Article 39 of Decree 352 of 2002, cultural activities, among others, are activities that by express legal mandate are not subject to the Industry and Commerce Tax.”
Conclusion
In tax matters, it is clear that the activity carried out by artists, through the development of their innate skills and talents, constitutes a cultural activity and is therefore not subject to the Industry and Commerce Tax, according to Article 39(c) of Decree 352 of 2002.
Written by: Diego Sanabria
