This guide provides an overview of VAT in Colombia, including applicable rates, registration requirements, compliance obligations, and filing deadlines. It is designed for businesses engaging in transactions within Colombia.
Colombia applies VAT not just on goods, but also on financial services like bank fees.
Doing business in Colombia? You’ll need to play by the Colombian Tax Statute rules.
Registration is required only once your business exceeds the threshold in Colombia.
Colombia requires foreign digital service providers to register for VAT if they supply digital services to consumers in Colombia.
Only VAT-registered businesses in Colombia that are engaged in taxable operations (sales of goods and services) can reclaim VAT. Additionally, businesses must have proper documentation to support their claims, including valid invoices.
To reclaim VAT, businesses must submit valid invoices (facturas) issued by VAT-registered suppliers. These invoices should indicate the VAT paid and meet DIAN’s requirements. Additionally, the business should provide proof that the expenses were used for taxable business purposes.
Non-compliance with VAT obligations can result in penalties, interest, and potential audits by DIAN. Failing to submit VAT returns on time or underreporting VAT may lead to financial penalties and additional scrutiny of the business’s tax affairs.
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