Learn how to calculate and file VAT

Calculate and declare VAT

The Value Added Tax or VAT is an indirect tax that the final consumer pays for the added value in each stage of a good or service, the support in this process is part of the bookkeeping advisory in Colombia. If you want to know how to calculate and pay VAT in Colombian territory, then continue reading.

Who pays VAT in Colombia

As established by the Colombian Tax Code, all individuals and legal entities that consume goods or services will pay VAT in Colombia.

Remember that a natural person is a flesh and blood human being, while a legal person is a company, which is represented by any natural person.

Keep in mind that you have the option of deducting the VAT payment from your general tax return.

Situations in which VAT is applied

In accordance with article 420 of the Colombian Tax Code, the generating events of VAT are the following:

  • Sales of goods not expressly excluded.
  • Sale, operation or circulation of games of chance, with the exception of lotteries.
  • Provision of services in the national territory.
  • Import of goods not expressly excluded.

How to calculate VAT

You must understand, first of all, that the Colombian Tax Code establishes, in its article 468, a general VAT of 19% of the value of the good or service consumed.

There are, however, other exceptional rates of 5% contemplated in articles 468-1 and 468-3).

In the case of goods and services with VAT deductions of 19%, their price is multiplied by 1.19 and, for goods and services with a 5% deduction, it must be multiplied by 0.05%.

Then, you must add all the VAT percentages of the two-month period or four-month period to file them together as appropriate.

How and when to file VAT

According to article 600 of the Colombian Tax Code, there are two VAT declaration periods, the bimonthly period and the four-monthly period. If your income is greater than 92,000 UVT, then you must declare VAT every two months, while if your income is below that figure, you declare it every four months.

For this declaration you must add the VAT of all the goods and services that you have consumed during the two-month or four-month period. If you have not consumed any good or service in that time, then you should not declare, since zero declarations are not allowed.

It is important that you keep your purchase invoices from the supermarket and other goods and services that are taxed with VAT in order to make the declaration.

There are, however, some goods exempt from VAT, which are contemplated in article 477 of the Colombian Tax Code. These goods include live bovine animals, fillets of both mammals and fish, and unconcentrated milk or cream without sweeteners of any kind.

Institution before which VAT is declared

VAT in our country is declared before the Directorate of National Taxes and Customs (DIAN). You can physically present yourself at a bank or at any of its subsidiaries throughout the country.

Another option is to pay VAT from the DIAN’s digital services, for which you must go to their page and make the payment online.

Remember that evading the VAT return is a crime punishable by sanctions or even deprivation of liberty, and that being a responsible citizen means fulfilling all your obligations to the State; We urge you, by this means, to be a responsible citizen and comply with your VAT return. We invite you to know our portfolio of accounting services in colombia and have our advice