Colombia has confirmed the liability for foreign suppliers to register, collect, and remit VAT at 19% in Colombia - effective since January 1, 2019 - for sales to individuals.Many foreign suppliers of digital services may benefit from an exemption provision for digital content. In-country tax advice is needed to understand if a particular service can avail of the exemption. Foreign suppliers of digital services also need to consider possible implications of income tax obligations which may also apply.
Here are the headline details of Colombia's digital tax rules.
An important point to note is that if a foreign supplier does not register, collect, and remit VAT to the Colombian tax authority (DIAN), the government can instruct the Colombian bank card issuers to withhold the tax that is due.
There are still questions about the consequences should a foreign supplier not register. Our understanding is that despite the Colombian authorities having the option to go to the card issuer to withhold future taxes, the foreign supplier will still be liable for the unpaid taxes and interest penalties.
We will, of course, update this blog as we receive more information.
Taxamo content is created for guidance only, please consult your local tax advisor.
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