Colombia VAT (IVA) Guide - Rates, Registration, Digital Services & Compliance

VAT in Colombia

In Colombia, the Value Added Tax is known as Impuesto al Valor Agregado (IVA). It’s a federal consumption tax levied on the sale of goods, provision of services, and importation. The VAT system is administered by DIAN (Dirección de Impuestos y Aduanas Nacionales), the national tax and customs authority.

📊 VAT Rates in Colombia

Colombia applies multiple VAT rates based on the nature of goods and services:

• 🔹 Standard VAT Rate: 19%
• 🔸 Reduced Rate: 5% – for essential items like agricultural machinery, bicycles, some health products
• 🟢 0% (Zero-Rated): For exports and select basic goods/services
• 🚫 Exempt/Exonerated: Specific sectors such as education, public transport, and some financial services

🏢 VAT Registration in Colombia

📍 Mandatory Registration:

Businesses must register for VAT with DIAN if they are involved in taxable sales, services, or imports. There is no fixed threshold all VAT-liable businesses must register.

🌍 Foreign Providers of Digital Services:

Since 2020, foreign companies supplying digital services to Colombian consumers must also register for VAT and remit 19% through a simplified mechanism unless collected via credit/debit card companies.

🧾 VAT Number Format

VAT is managed under the NIT (Número de Identificación Tributaria) system.

Format Example: 900123456-7

The NIT is used for invoicing, filing, and identification with DIAN.

💻 VAT on Digital Services

Foreign digital service providers are required to charge VAT on:

• Streaming platforms (e.g., Netflix, Spotify)
• Online software and apps
• E-learning and cloud storage
• Digital advertising (e.g., Facebook Ads)

VAT can be remitted directly via DIAN’s digital platform or withheld by financial institutions facilitating payments.

🧮 VAT Calculation Example

If you sell a product for COP 1,000,000:

• VAT @ 19% = COP 190,000
• Total Amount = COP 1,190,000

🧾 E-Invoicing in Colombia

Colombia mandates electronic invoicing for most businesses.

Required Invoice Details:

• Seller and buyer NIT
• Date of issuance
• Description of goods/services
• VAT breakdown and total amount
• Unique invoice code (CUFE)
• Digital signature

Invoices must be submitted in real-time to DIAN and validated before delivery to customers.

📅 VAT Return Filing

• 📆 Frequency: Monthly (standard) or bimonthly (for small taxpayers)
• ⏳ Due Dates: Based on company NIT and DIAN’s calendar
• 🌐 Submission: Online via DIAN’s MUISCA platform

Returns must include detailed records of input/output VAT, sales, purchases, and services rendered.

🌐 VAT on Imports & Exports

📥 Imports:

Subject to 19% VAT at the time of customs clearance. This VAT is recoverable for businesses.

📤 Exports:

Zero-rated, allowing exporters to recover input VAT incurred on goods/services used to produce export goods.

🚫 VAT-Exempt Goods and Services

The following are commonly exempt or exonerated from VAT in Colombia:

• Public education and healthcare
• Local transport (excluding air travel)
• Life insurance
• Banking and certain financial services
• Books and printed materials
• Agricultural supplies (in many cases)

Note: Exempt entities cannot claim input VAT refunds.

💡 Input VAT Deductions & Refunds

Registered businesses can offset input VAT paid on purchases against output VAT collected on sales. Excess input VAT is carried forward or refunded under certain conditions (e.g., export businesses).

✅ VAT Compliance Checklist

• ✔ Register for a NIT and VAT status with DIAN
• ✔ Charge appropriate VAT on all taxable goods and services
• ✔ Use authorized electronic invoicing software
• ✔ Submit monthly or bimonthly returns via MUISCA
• ✔ Keep detailed transaction and accounting records
• ✔ For foreign digital businesses: use DIAN’s simplified system to comply with VAT obligations

Colombia’s VAT (IVA) regime is modern and increasingly digitized. Local businesses and foreign service providers must stay compliant with e-invoicing, proper tax registration, and digital VAT return filing to avoid penalties and ensure operational transparency.

👉 Use our Colombia VAT Calculator 🇨🇴 on GSTCal.org for accurate, instant VAT calculations!