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Colombia VAT on non-resident digital services

The South American state of Colombia imposed Value Added Tax on foreign providers of digital or electronic services from 1 July 2018 – although implementation has been patchy.  Colombia collects VAT on B2C transactions paid for via credit cards via Withholding VAT which is the responsibility of the payment processors. For other transactions, there is a simplified registration process for electronic services with DIAN (Dirección de Impuestos y Aduanas Nacionales), the national tax and customs authority. There is no VAT registration threshold. No Fiscal Representative if required. For B2B transactions, nil-rating reverse charge applies and the resident business should report the VAT.

The current VAT rate in Colombia is 19%. Follow VAT Calc’s global VAT and GST on digital services blog keeps a live update on how countries are imposing indirect taxes on non-resident providers and electronic marketplaces.

What digital services are liable to Colombian VAT?

Income from the following e-services is subject to VAT:

  • E-learning
  • Download or streaming music, video etc.
  • Online or download gaming
  • Online advertising services
  • Other digital services

Determining if Colombian VAT is due

Providers should determine if their consumer is resident or ‘enjoyed’ the services in Colombia. They may rely of the following types of evidence:

  • IP address of the device that accessed the service
  • Billing or payment intermediary address
  • Electronic marketplaces VAT obligations

Generally, it is the provider who must take responsibility for any VAT obligations, for example if there is no payment provider effecting a withholding VAT.

VAT registration and compliance

When the provider is responsible for the VAT collections, they must register immediately. There is no registration threshold. They must file to join the “Registro Único Tributario” (RUT) with DIAN.

Invoices may be issued in a foreign currency, but should be settled in pesos. Full VAT invoices are required on digital service sales to consumers. Electronic VAT returns are due on a bi-monthly basis.

Withholding VAT on digital services

Colombia has introduced Withholding VAT mechanism for payments made to non-resident providers of digital services. This applied for payment via credit cards, payment wallets and prepaid cards etc acting as the DIAN withholding agent. DIAN makes public a list of non-resident providers that are not VAT registered and from whom payment providers must therefore withhold VAT.

Central and South America VAT on digital services

Comments (click for details) Rate Date Threshold Comments
Argentina 21% Apr 2018
Bahamas 10% Jan 2015 BSD 100,000
Barbados 17.5% Dec 2019 BBD 200,000
Bolivia 13% Nov 2022 -
Brazil n/a n/a n/a Various proposals
Chile 19% Jun 2020 Nil
Colombia 19% Jan-18 Nil
Costa Rica 13% Oct 2020 Nil Withholding VAT option
Dominican Republic 18% 2023? Nil Currently withholding VAT
Ecuador 12% Sep 2020
El Salvador 13% 2022 - Replace Withholding VAT
Guatemala 12% TBC
Honduras 15% 2022 HNL 250,000
Panama 10% 2022 Withholding VAT
Paraguay 10% Jan-21 Nil Withholding VAT; 4.5% DST
Peru 18% 2022 Nil Withholding VAT
Puerto Rico 10.5% Jan 2020 $100,000; or 200 transactions Marketplaces
Uruguay 22% Jan 2018 Nil VAT and Withholding Tax

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