Colombian VAT rates and VAT compliance

The standard VAT rate for Colombia is 19%, with a reduced rate for basic foodstuffs; health services and insurance, a nil VAT rate for some goods. Exports of goods or services; tourism services for non-residents; some financial services and insurance; some agriculture supplies; electricity and natural gas supplies; medicines are all exempt.

There is a further Consumption Tax on:

• Restaurant Services (8%);
• Mobile phones (4%)
• Luxury goods (16%)

In certain circumstances, the purchasers of taxable goods or services are obliged to withhold 15% of the VAT due. This reverse charge is a type of split payment. These include:

• Government offices
• Where the vendor is non-resident
• Where the customer and vendor are within the common VAT regime (100% of the VAT due)

There are detailed rules controlling the recording and processing of transactions for VAT. These include guidelines on:

• Invoice requirements, including the requirement for credit notes;
• Foreign currency reporting and translation based on Central Bank rates – payments must be in Columbian pesos;
• Export invoices, and proof for departure of supplies e.g. customs documents and DEX (Declaración de Exportación);
• E-invoices from June 2018;
• Language requirements;
• Credit notes and corrections; and
• What accounting records must be maintained and for how long.

VAT Invoices must include the following information:

• A declaration that it is a “Factura de Venta”, VAT invoice
• Name and tax payer number of the vendor
• Name and tax payer number of the customer
• Unique VAT invoice number
• Date of the invoice
• The reference from the DIAN Tax Office to the unique VAT number
• Description of supplies, quantities etc.
• Gross, VAT and net values
• Reference to the vendor’s VAT withholding agent status if appropriate

VAT returns are bi-monthly in Colombia for businesses with revenues of 3 billion pesos per annum. For smaller taxpayers, returns are quarterly.

The penalty for late VAT returns and payments is 5% of the value of the VAT due.

Foreign companies may not reclaim Colombian VAT incurred.