Indirect tax

Indirect tax - Colombia

01 Jan 20255 min read

This tax guide provides an overview of the indirect tax system and rules to be aware of for doing business in Colombia.

Indirect tax snapshot
What are the current rate(s) of VAT?	Standard rate of 19% for most goods and services. Reduced rate of 5% for some goods like coffee, even roasted or decaffeinated, wheat, oats, corn and rice for industrial use, grain sorghum, wheat flour, sausage and services like surveillance, supervision, concierge, cleaning and temporary employment services. Zero-rated goods like beef, pork, sheep and goat meat; fish, shrimp, milk, eggs, baby milk and also for services that are provided inside Colombia but used abroad, because the service is understood as exported. When the service is provided from abroad to a Colombian resident, it will be taxed with VAT.
Are there any confirmed or anticipated changes to these rates?	No.
What is the principal indirect tax?	Value Added Tax (VAT) is the principal indirect tax in Colombia. It is a tax on consumer expenditure, and is collected on business transactions and imports.
Is there a registration limit for the tax?	Yes. It relates to the annual turnover of taxable transactions in Colombia, and once the limit has (or will be) reached it is necessary to register.
Does the same registration limit apply to non-established businesses?	There is no obligation of registration in Colombia.
Does a non-established person need to appoint a fiscal representative in order to register?	Does not apply.
How often do returns have to be submitted?	Most businesses are required to submit VAT returns covering two months accounting periods. Returns can also be submitted on a quarterly basis.
Are penalties imposed for the late submission of returns/payment of tax?	Yes. If a VAT return, or the corresponding payment, is submitted late a penalty can be imposed, and moratory interests.
Are any other declarations required?	There are not additional declarations required.
Are penalties imposed in other circumstances?	Yes, Penalties can be imposed for a range of errors or omissions, like change the tax paid, reduce the balance in favour, among others.
Can the tax incurred by overseas businesses be claimed if they are not registered in your country?	It is not possible for businesses that are not registered in Colombia.
Deduction of Tax	All the VAT paid in the bought and the rendering of services can be deducted.

Please click on each section to expand further:

What is the principal indirect tax?

In Colombia, the Value Added Tax is the main indirect tax, which is monitored and controlled by our tax authority, called DIAN.

Although VAT is ultimately borne by the consumer by being included in the price paid, the responsibility for charging, collecting and paying it to the tax authority at each stage of the process rests with the business making the supply, i.e. the sale.

It also applies for the imported goods, and services rendered by non-residents.
The general rate is 19% and is applied in the moment of the billing.

The Colombian regulation in force dispose some benefits for exporting businesses, which have the right to ask for the reimbursement of the credit balance of the VAT in the corresponding declarations.

Depending on the income of the previous year, VAT declarations has to be submitted every two or four months.

Is there a registration limit for the tax?

Yes, there is, and it depends on the income received in the year.

Does the same registration limit apply to non-established businesses?

Applies only for people and local businesses, it does not apply for non-residents businesses.

Is there any specific legislation to tax non-resident supplies of electronically supplied/digital services to private consumers resident in your country?

Some computer devices are VAT excluded, also computation services in the cloud.

Does a non-established business need to appoint a fiscal representative in order to register?

It does not apply in Colombia.

How often do returns have to be submitted?

Depending on the income of the previous year, VAT declarations has to be submitted every two or four months.

Are penalties imposed for the late submission of returns/ payment of tax?

Yes, there are penalties for late submission of the declarations and is calculated based on the tax to pay, if there is not a tax to pay then is over the income and if there is no income, then is calculated over the equity.

Are any other declarations required?

In relation to VAT, there are no additional declarations required.

Are penalties imposed in other circumstances?

Yes, there are penalties due if the person who submitted the declaration is not indicated, the information filed on the declaration is inaccurate, wrong filling, reduce the balance in favors, or for not updating the information toward the tax authority (DIAN).

Can the VAT incurred by overseas businesses be claimed if they are not registered in Colombia?

It does not apply in Colombia.

What information must a VAT invoice show?

A VAT invoice must:

be denominated expressly as sale invoice
show the last and first name or business name and Tax ID Number of the seller or who provides the service
show the last and first name or business name and Tax ID Number of the acquirer of the goods or services, together with the discrimination of the VAT paid
show a number that corresponds to sequential numeration system of invoice sales
show the expedition date
feature a specific or generic description of the goods sold or services rendered
include the total value of the operation
show the name or business name and Tax ID Number of the printer of the invoice
indicate the quality of the withholding agent of the sales tax.

Are there any current or anticipated Standard Audit File for Tax (SAF-T) or similar electronic/digital filing requirements eg invoice listing data file/real-time VAT reporting?

It does not apply in Colombia.