01
Response to statement of charges (1-month term)
We draft the formal technical response to the Article 671 statement of charges, rebutting allegations of simulation before DIAN issues a penalty resolution.
Tax Penalty Proceedings · Article 671 Tax Statute
Fictitious Vendor Declarations by DIAN:
defense against statement of charges, evidence of economic substance, and buyer protection with the reference tax-law firm in Colombia.
DIAN may declare as a fictitious supplier anyone who invoices simulated or nonexistent sales or services (Art. 671 E.T.). From the publication of the declaration, purchases from that supplier are not deductible for income tax nor creditable for VAT, and for the purchaser constitute a punishable inaccuracy (Art. 647 (5)). We defend the reality of operations starting from the one-month statement of charges.
5.0 / 5 · 35 reviewsEx-DIANArt. 671 E.T. (1-month term)Economic reality evidence
Also via WhatsApp: +57 319 272 9164. Bogotá · Calle 99 7A-51, Of. 206. In-person and remote service.
Statutory framework of Articles 671 and 647 of the Colombian Tax Statute
What is a fictitious supplier declaration: consequences for the supplier and severe impact on purchasers.
The penalty of declaration as a fictitious or insolvent vendor is established in Article 671 of the Colombian Tax Statute (modified by Article 294 of Law 1819 of 2016). Under this provision, DIAN formally declares as fictitious suppliers those individuals or entities that invoice simulated or nonexistent sales of goods or services. This declaration results in purchases or expenses incurred with such parties neither being deductible for income tax nor granting rights to creditable input VAT. This tax disqualification takes legal effect from the date of publication of the declaration in a newspaper of wide national circulation, which can only occur once administrative remedies (vía gubernativa) are fully exhausted, and the designation is lifted after five (5) years. The statute similarly penalizes parties declared insolvent for tax collection purposes.
For buyers and commercial clients, the tax impact is severe: pursuant to Article 647 (5) of the Tax Statute (modified by Article 287 of Law 1819 of 2016), including purchases or expenses from fictitious or insolvent suppliers declared by DIAN constitutes a punishable tax inaccuracy under Article 648 E.T. However, audit risks are not restricted to listed suppliers: under numerals 3 and 4 of Article 647, DIAN regularly disallows nonexistent costs, deductions, and input VAT, or factors based on false or simulated data, through special summonses and official revision assessments, even without a prior formal declaration under Article 671. Nonetheless, Paragraph 2 of Article 647 provides that there is no inaccuracy when the lower tax liability derives from a reasonable legal interpretation supported by complete and truthful facts. Furthermore, when nonexistent costs or improper tax credits are used fraudulently exceeding 100 SMMLV, criminal exposure arises under Article 434B of the Criminal Code (modified by Article 69 of Law 2277 of 2022, with prison terms of 36 to 60 months, aggravated above 2,500 and 5,000 SMMLV, also addressed in our coverage on tax asset omissions and tax crimes).
Key rules of Article 671 E.T.
- Statutory definition: invoicing simulated or nonexistent sales or services.
- Duration: the fictitious supplier designation is lifted 5 years after it was made.
- Timing of effect: purchases disallowed from date of national press publication.
- Exhaustion of remedies: publication only proceeds after administrative appeals.
- Statement of charges: peremptory ONE (1) MONTH term to reply and file evidence.
Evidentiary strategy and procedural defense
Evidentiary defense of economic reality, statement of charges response, and commercial due diligence.
Facing statements of charges for fictitious supplier or audit adjustments disallowing third-party expenses, we construct an evidentiary defense demonstrating genuine commercial substance and financial traceability.
02
Reconstruction of economic reality and evidence of substance
We compile contracts, purchase orders, electronic invoices, banked payments, transport waybills, inventory log receipts, physical evidence, and supplier operational capacity.
03
Purchaser good faith and due diligence defense
We demonstrate prior verification against the DIAN Tax Audit Subdirectorate register (dian.gov.co/Proveedores_Ficticios), historical tax registry (RUT), material receipt, and banking trace.
04
Reconsideration appeal and inaccuracy penalty dispute
We file the appeal for reconsideration (Article 720 E.T.) within two months following notification of the penalty resolution and contest the inaccuracy penalty under Article 648 E.T.
Who handles your defense
Tax attorneys and forensic accountants defending against DIAN tax investigations.
Allegations of simulated operations require an interdisciplinary defense combining procedural precision with rigorous forensic accounting reconstruction.
Director · Tax Attorney, Ex-DIAN
Juan Santiago Rodríguez Prieto
Leads procedural legal strategy against statements of charges, special summonses, and appeals for reconsideration (Art. 720 E.T.), safeguarding due process and administrative remedies.
Accountant · Tax Audit & Quantification
Jeysson Pulido
With over 12 years of experience and more than 100 successful tax refunds before DIAN, reconstructs bank traceability, cash flows, withholding certificates, and proof of payment required during audits.
Certified Public Accountants · Law 43 of 1990
LIGAL Auditores
Audits inventory logs, warehouse intake slips, service work orders, and accounting ledgers to certify the material and commercial reality of questioned transactions.
Professional standards
What we do not do in fictitious supplier defense matters.
We do not rely on purely formal electronic invoices without substance
Electronic invoices alone do not prove a transaction during a tax simulation audit. We gather and present corroborating proof of delivery, logistics, operational capability, and banked payments.
We do not miss the one-month statutory deadline for statements of charges
The one-month window granted by Article 671 E.T. is the decisive procedural opportunity to stop the declaration and public press listing. We mobilize immediately.
We do not overlook official DIAN public registers
We audit supplier background records against DIAN Fiscalization Subdirectorate registers to document the purchaser's good faith and due diligence.
Specialized legal defense
Fictitious supplier declarations: tax risk of simulated transactions and the burden of proof.
A fictitious supplier declaration under Article 671 of the Colombian Tax Statute is one of DIAN's most severe enforcement measures: it affects the supplier during the five years that the designation lasts and exposes its clients to DIAN auditing their tax returns, disallowing income tax deductions, denying input VAT credits, and assessing Article 648 inaccuracy penalties (Article 647 (5) E.T.). For the buyer, controversy may arise when DIAN questions the operational capacity of its counterparty. Juan Santiago Rodríguez Prieto, former DIAN tax attorney, alongside Jeysson Pulido and LIGAL Auditores (Law 43 of 1990), structure defenses grounded in the substantive reality of transactions, proving good faith, banking traceability, and commercial due diligence. The firm handles real tax audits, coercive collections, and tax litigation: in a verified Google review, client Julian Rodriguez notes that, thanks to representation before DIAN, "we achieved the closure of a tax litigation against my company".
Please note: publication of a fictitious vendor declaration in a newspaper of wide national circulation may only take place once administrative remedies are fully exhausted (penalty resolution and Article 720 E.T. reconsideration appeal).
Director
Juan Santiago Rodríguez Prieto
Tax Attorney · Ex-DIAN
- Calle 99 7A-51, Oficina 206, Bogotá
- +57 319 272 9164
- Free diagnostic within 48 business hours
- 5.0 / 5 on Google · 35 reviews
Procedures and DIAN disputes
Related topics in tax defense and penalties.
Action roadmap
Diagnostic for fictitious supplier and deduction investigations. Free. Within 48 business hours.
We review the statement of charges or audit challenges to costs in your tax returns. We evaluate evidentiary viability within 48 business hours. Use the form or open Diagnostic.
01
TodayReception of administrative acts and contracts
We examine the statement of charges, special summons, or schedule of questioned invoices from DIAN.
02
48 biz hoursAudit of banking trace and material substance
Jeysson Pulido and LIGAL Auditores verify payment mechanisms, general ledgers, delivery logs, and capacity.
03
TimelyDrafting response memorial or reconsideration appeal
Juan Santiago Rodríguez Prieto prepares the formal defense (1 month) or the appeal under Art. 720 E.T.
Frequently asked questions
DIAN fictitious supplier declarations, explained clearly
It is an administrative penalty imposed by DIAN on persons or entities that invoice simulated or nonexistent sales of goods or services. Once declared, purchases or expenses incurred with that supplier are not deductible for income tax nor do they grant rights to creditable input VAT; the designation is lifted five (5) years after it was made.
Under Article 671 of the Tax Statute, expenses cease to be deductible or creditable from the date the declaration is published in a newspaper of wide national circulation. Such publication may only occur once administrative remedies are exhausted through penalty resolutions and reconsideration appeal decisions.
Article 671 specifies that the penalty is imposed via resolution following a statement of charges (traslado de cargos) with a term of one (1) month to respond. During this peremptory window, the party must produce all evidence proving the genuine economic reality and operational capacity.
Against the resolution imposing a fictitious vendor penalty, the reconsideration appeal (recurso de reconsideración) provided in Article 720 of the Tax Statute is available, which must be filed within two (2) months following formal notification.
Under Article 647 (5) of the Tax Statute, including purchases from suppliers declared fictitious or insolvent constitutes a punishable inaccuracy under Article 648 E.T. Furthermore, under Article 647 (3) and (4), DIAN may disallow nonexistent costs or VAT through special summonses even without a formal Article 671 declaration.
Yes. Article 434B of the Colombian Criminal Code (modified by Article 69 of Law 2277 of 2022) criminalizes tax fraud and evasion when nonexistent costs or improper tax credits are claimed with fraudulent intent for amounts equal to or exceeding 100 SMMLV and below 2,500 SMMLV as determined in an official revision assessment, carrying 36 to 60 months of imprisonment (penalties increase above 2,500 and 5,000 SMMLV). Ligal also handles end-to-end criminal tax defense, articulated with defense before the DIAN.
Defense requires demonstrating substantive economic reality: written contracts, purchase orders, commercial quotes, email correspondence, banked payment vouchers, delivery waybills, warehouse receipts, and technical capability. Buyers must also prove due diligence by checking tax registries (RUT) and reviewing DIAN's official register (dian.gov.co/Proveedores_Ficticios).
Ligal is the reference tax-law firm in Colombia. The leadership of Juan Santiago Rodríguez Prieto, former DIAN tax attorney, alongside Jeysson Pulido (over 12 years of experience and more than 100 successful DIAN tax refunds) and LIGAL Auditores (Law 43 of 1990), delivers robust evidentiary and accounting defense. Our record is supported by a 5.0 / 5 Google rating across 35 reviews (https://share.google/VVzMvULrOj8Mj52Au), including testimonials like Julian Rodriguez: "we achieved the closure of a tax litigation against my company".
Confidential diagnostic
Defend your company against fictitious supplier investigations. Response within 48 hours.
Free. Attach the statement of charges, special summons, or schedule of questioned transactions. We evaluate procedural terms, due diligence, and evidentiary strength.