Finer Balances for Sales Tax

The general rule, then, is that the VAT must be caused and collected at the time of sale or provision of the service, it should not be done before or after. If the product was sold on October 15, it is the October 15 in which the VAT must be caused, invoiced and collected, even if the payment is made later.

Responsible for sales tax

Article 437 of the tax statute indicates who are responsible for the sales tax, understanding as responsible the people or companies that collect it, collect it and transfer it to the Dian’s accounts, and there it indicates that those responsible for this tax are the merchants and importers, and those who provide services taxed with the VAT. In the sales tax calculator this is important.

• In summary, it can be said that all legal and natural persons who sell products or provide taxed services are responsible for Sales Tax.
• For the purposes of the responsibility of the sales tax , the state classified them into two groups:

Sales tax rates

In Colombia, the VAT has several rates, some higher than others and even a 0% rate for so-called exempt products.

General VAT rate

The general VAT rate is 19 as provided in article 468 of the tax statute modified by law 1819 of 2016.

It means that all the products and services taxed with the VAT have a rate of 19% except those that have expressly indicated that they have a different rate.

Differential rates

For social and economic reasons, among others, the state has set special or different VAT rates from the general rate of 19 some lower and others higher.

These are mainly products that belong to the family basket and products of first necessity or impact in certain sectors of the economy for which the state wants to make special treatment.

Within the 5% rates there are also one services that you can find in article 468-3 of the tax statute.

Other fees

• The other differential taxes that had VAT were eliminated with Law 1819 of 2016 and instead the consumption tax was created, the rates of which are found in article 512-2 and following of the tax statute.

Goods exempt from sales tax

Remember that exempt goods are taxed at a rate of 0%, which entitles the person responsible to deduct the VAT that he has paid at the time of acquiring said products.

Service excluded from the sales tax 

• There are a series of services that are excluded from the VAT according to article 476 of the tax statute.
• Difference between taxed, exempt and excluded assets
• The taxed goods or services are those that are subject to a certain rate, either the general or differential.
• Exempt assets are those assets that are taxed at a rate of 0% (zero).
• The excluded assets are those that by express legal provision are not subject to the tax.

The main difference is that exempt goods give the right to deduct the tax paid for their inputs, raw materials and other direct and indirect costs, while the excluded goods cannot do so, the VAT they pay for any concept must carry it as a higher cost or expense value.

Paul Petersen