LAW 1473 OF 2011

(July 5)

Official Journal No. 48.121 of 5 July 2011

CONGRESS OF THE REPUBLIC

By means of which a tax rule is established and other provisions are dictated.

COLOMBIA CONGRESS

DECRETA:

ARTICLE 1o. OBJECT. This law aims to issue rules that guarantee the long-term sustainability of public finances and contribute to the country's macroeconomic stability.

ARTICLE 2o. subhead] The provisions of this law will apply to the fiscal accounts of the Central National Government, in accordance with the methodology that the Superior Council for Fiscal Policy-Confis will define for this purpose.

ARTICLE 3o. DEFINITIONS. For the purposes of this law only, the following definitions shall be taken into account:

a) Total Fiscal Balance: It is the result of the difference between the total income and the total expenditure of the Central National Government, according to the methodology that for this purpose defines the Confis;

(b) Total Income: Equals to the sum of the structural income and revenues from the economic cycle, the extraordinary effects of the mineral-energy activity and other similar effects;

c) Total Expenditure: Corresponding to the sum of structural expenditure and counter-cyclical expenditure;

d) Structural Fiscal Balance: Corresponds to the Fiscal Balance Total adjusted for the effect of the economic cycle, for the extraordinary and transitory effects of the mineral-energy activity and for other effects of similar nature. Equivalent to the difference between structural income and structural expenditure of the Central National Government;

e) Structural Income: It is the total income of the Central National Government, once adjusted for the effect of the economic cycle and the extraordinary effects of the energy mining activity and other similar effects;

f) Structural Expenditure: This is the level of expenditure consistent with structural income, under the conditions set out in this Act;

g) Countercyclical Spending: Temporary expenditure that contributes to the economy returning to its long-term growth path, as authorized in article 6or this law.

ARTICLE 4. CONSISTENCY. The fiscal rule is materialized through the Medium Term Fiscal Framework. The Investment Plan of the National Development Plan Bill, the Medium Term Spending Framework, the Financial Plan, the Annual Investment Plan and the Draft General Budget Law, must be consistent. with the fiscal rule, contained in the Medium Term Fiscal Framework.

ARTICLE 5o. FISCAL RULE. Structural expenditure may not exceed structural income, in an amount that exceeds the established annual structural balance goal.

The structural deficit of the Central National Government will not be greater than 1% of GDP from the year 2022.

TRANSIENT TRANSIENT. The National Government will follow an annual downward path to the deficit in the structural fiscal balance, which will allow it to reach a structural deficit of 2.3% of GDP or less in 2014, of 1.9% of GDP or less in 2018 and of 1.0% of GDP or less in 2022.

ARTICLE 6o. COUNTER-CYCLICAL SPENDING. The National Government will be able to carry out spending programs, as a countercyclical policy, when it is projected that in a particular year at the rate of real economic growth it will be two percentage points or more below the rate. of real long-term economic growth, provided that a negative product gap is also projected. This countercyclical expenditure cannot exceed 20% of the estimated gap.

This spending will be transitory and will be completely dismantled over a period of two years, with the requirement that in the first year of this period the economy must register a real economic growth rate equal to or higher than its economic growth. real long-term.

The Confis will define the methodology for calculating the product gap, the amount of countercyclical expenditure and the trajectory of its dismount, considering the evolution of the product gap and the overall economic situation.

ARTICLE 7o. Article 8or Act 179 of 1994 will remain as follows:

" Sustainable and fiscal stability. The budget will take into account that the growth of the expenditure must be in line with the evolution of the long-term income to structural of the economy and must be a tool of stabilization of the economic cycle, through a fiscal rule ".

ARTICLE 8o. MEDIUM-TERM EXPENDITURE FRAMEWORK. The Medium Term Expenditure Framework will contain projections of the main sectoral priorities and the maximum levels of expenditure, distributed by sectors and components of expenditure of the General Budget of the Nation for a period of 4 years. The Medium Term Expenditure Framework will be reviewed annually.

The National Government will regulate the Medium Term Spending Framework and will define the parameters and procedures for the quantification of spending and how the organs that are part of the General Budget of the Nation will participate. Each expenditure budget proposal shall provide the motivation, quantification and evaluation of the programmes included.

ARTICLE 9o. The literal d) of article 3or Act 152 of 1994 will be as follows:

" d) Consistency. In order to ensure macroeconomic and financial stability, the expenditure plans arising from the development plans shall be consistent with the revenue and funding projections, in accordance with the restrictions of the programme. The European Union's financial contribution to the financing of the European Union's financial contribution to the Community's financial contribution. Consistency with the tax rule contained in the Medium Term Fiscal Framework should be ensured. "

ARTICLE 10. Add a paragraph to 6or Law 152 of 1994, as follows:

" Paragraph. The Investment Plan of the National Development Plan Bill should be consistent with the fiscal rule contained in the Medium Term Fiscal Framework. "

ARTICLE 11. EXCEPTIONS. In extraordinary events that compromise the macroeconomic stability of the country and previous concept of the Confis, the application of the fiscal rule may be temporarily suspended.

ARTICLE 12. REPORTS. The National Government, in June of each year, will give a detailed report to the Economic Commissions of the Congress of the Republic, in which the fulfillment of the fiscal rule of the year immediately preceding, contained in the Article 5or this law.

This report will simultaneously accompany the presentation of the Medium Term Fiscal Framework.

ARTICLE 13. COMPLIANCE. In any event of non-compliance with the fiscal rule, the National Government must explain in detail and through the report in question the previous article, the reasons for the failure and set goals and objectives to be met. ensure compliance with it.

ARTICLE 14. ADVISORY COMMITTEE FOR THE TAX RULE. The National Government will consult an independent technical committee to decide on the following topics:

a) The methodology and definition of basic parameters required for the operation of the tax rule;

b) The proposals that the Government makes on methodological changes for the definition of the tax rule;

c) The report of compliance with the fiscal rule that the Government must present to the Economic Commissions of the Congress of the Republic, in accordance with Article 12 of this Law;

d) The suspension of the tax rule that is dealt with in article 11 of this law.

The Committee will be composed of representatives of the deans of the faculties of Economics of different universities in the country, by members of research centers, by experts and consultants of recognized trajectory and suitability and by the presidents of the economic affairs committees of the Congress of the Republic. In no case shall the pronouncements of the Advisory Committee for the Fiscal Rule be binding. The National Government shall regulate the selection of the members of the Committee, as well as the functioning of the Committee.

PARAGRAFO. The Ministry of Finance and Public Credit will publish the methodology, the estimates, the technical details of the design of the tax rule, which must be consistent with the goals, limits and characteristics set forth in this law, as well as the tax accounts of the Central National Government in the terms of Article 2or of this law. Changes to the methodology should be made public, along with their technical justification.

ARTICLE 15. Article 15 of Law 179 of 1994 will remain so:

" Fiscal and Macroeconomic Savings and Stabilization Fund. Create the Fiscal and Macroeconomic Savings and Stabilization Fund, as an account without legal status, the purpose of which is to contribute to the country's macroeconomic and fiscal stability.

The Fund will be made up of resources from the total surpluses of the Central National Government, its corresponding yields, and the extraordinary contributions to be determined by the National Government. Your resources may only be used for the depreciation of the public debt, the extraordinary expenses to attend the events referred to in Article 11 of this Law and the financing of the expenditure Countercyclical In any event, the annual amount of the savings to finance counter-cyclical expenditure may be greater than 10% of the Fund's balance at 31 December of the previous year.

The National Government will regulate the operation, operation and investment of the Fund's resources, and will be able to incorporate them into the General Budget of the Nation.

The Fiscal and Macroeconomic Savings and Stabilization Fund and its yields will be administered by the Bank of the Republic, through a contract signed by the Ministry of Finance and Public Credit, which will only require its validity and The Ministry of Finance and Public Credit and the Bank of the Republic are also signed and published in the Official Journal.

These resources will be provided by the Ministry of Finance and Public Credit-Directorate General of Public Credit and National Treasury to the Bank of the Republic with the periodicity to be determined in the contract.

The Fund's capital and its returns shall be invested in external assets in accordance with the terms and conditions agreed in the contract in which this article deals. "

ARTICLE 16. ORGANIC RULES. Items 4or, 7or, 8or, 9or, 10 and 15, are organic rules.

ARTICLE 17. EFFECTIVE AND REPEALED. This law applies from 1 January 2012 and from its entry into force it repeals all rules that are contrary to it.

The President of the honorable Senate of the Republic,

ARMANDO BENEDETTI VILLANEDA.

The Secretary General of the honorable Senate of the Republic,

EMILIO RAMON OTERO DAJUD.

The President of the honorable House of Representatives,

CARLOS ALBERTO ZULUAGA DIAZ.

The Secretary General of the honorable House of Representatives,

JESUS ALFONSO RODRIGUEZ CAMARGO.

COLOMBIA-NATIONAL GOVERNMENT

Publish and comply.

Dada en Bogotá, D. C., 5 July 2011.

JUAN MANUEL SANTOS CALDERÓN

The Deputy Minister General of the Ministry of Finance and Public Credit, in charge of the Office of the Minister of Finance and Public Credit,

WILLIAM BRUCE MAC MASTER RED.