Tax rate by region Colombia

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The information provided on this page is intended for general informative purposes only. It should not be interpreted as tax advice, nor is it meant to be. For advice on your particular tax responsibilities, consult with an experienced tax expert. PayPro Global does not assume any responsibility for any action taken or not taken based on the information presented here.

Navigating SaaS Sales Tax in Colombia: A Comprehensive Guide

Colombia adopted a value-added tax (VAT) system in 1975, aiming to bolster revenue generation and modernize its tax administration. This robust system encompasses a standard VAT rate of 19%, applicable to SaaS and other digital services. However, certain categories of products or services may benefit from a reduced VAT rate of 5%. It’s crucial for businesses to understand their specific VAT obligations to ensure compliance and avoid penalties.

Staying compliant with SaaS sales tax regulations in Colombia requires meticulous attention to detail. Businesses must file VAT returns bi-monthly, adhering to deadlines dictated by the last digit of their NIT (Tax Identification Number). The payment deadline falls within 10 days following the end of the two-month period. Maintaining accurate records is paramount, including invoices, receipts, and documentation related to sales and purchases, both digital and physical. These records must be retained for a minimum of five years. E-invoicing is mandatory in Colombia, further streamlining the tax compliance process.

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Colombia

Colombia adopted a VAT system in 1975 to enhance revenue generation and modernize its tax administration.

Official government link: Dirección de Impuestos y Aduanas Nacionales

19.00%

E-products and services VAT/Sales tax rate

5.00%

Reduced tax rate

Reduced tax rate product categories

In Colombia, a reduced VAT rate of 5% applies to a few categories of digital goods and services. This includes certain software licenses and digital learning platforms, among others.

Exempted product categories

In general, Colombia does not specifically exempt digital goods or services from VAT. However, some lower-rate categories may benefit from exemptions, for instance, certain educational services which can sometimes be categorized under different provisions.

Reverse charge mechanism for B2B sales

Yes

Tax ID validation required

Yes

When do you have to register

A non-resident company must register when it generates income that is taxable in Colombia. This typically includes any digital sales made to Colombian residents or businesses.

Online registration possible

Yes

Local representative needed

Yes

Registration procedure

Gather necessary documents (e.g., proof of identity, business license).
Complete the registration form on the DIAN website.
Submit the application online and wait for approval.
Obtain a NIT upon approval, which is necessary for tax compliance.

List of digital and electronic services liable for tax

Audiovisual services, such as music, videos, movies, and games, as well as the broadcasting of events of any kind, are provided through digital platforms. Online advertising, services of long-distance teaching and/or training, and the use or exploitation of non-tangible rights are also included. Other electronic or digital services that are destined and/or delivered to users located within Colombia, such as online streaming services (music, video), e-learning platforms, software licenses and subscriptions, and mobile applications, are part of this category.

Penalties

Non-compliance can lead to significant penalties, including fines (often a percentage of the unpaid tax), interest on overdue taxes, or even legal action in cases of severe or intentional evasion.

Registration threshold

No threshold, non-resident companies must register for VAT

Filing interval

Bi-monthly

Filing deadline

The deadlines for filing VAT returns are set according to the last digit of the NIT. Returns must be submitted within the 10 days following the end of the two-month period.

E-invoicing requirements

Yes

Record keeping

Businesses must retain accounting records for a minimum of five years. These records should include all invoices, receipts, and any documentation related to sales and purchases, both digital and physical.

How-To Guides: Colombia SaaS VAT

Step: 1 Threshold

Effective July 1, 2018, Colombia requires non-resident vendors of digital services to consumers (B2C) in Colombia to register for and collect VAT, regardless of the sales amount.

Step: 2 Business Registration

Register with the Registro Único Tributario (RUT) under DIAN (Dirección de Impuestos y Aduanas Nacionales) to become VAT-responsible. Submission is online via DIAN’s portal; include business details and activities related to digital services.
Colombia offers two alternative compliance mechanisms for non-resident digital suppliers:

  • Direct VAT registration with DIAN (RUT + filing VAT returns)
  • VAT withholding at source by Colombian credit card companies, payment processors, or other designated financial intermediaries.

Step: 3 TIN/VAT Number

Upon RUT registration, obtain a NIT (Número de Identificación Tributaria) issued by DIAN. This NIT serves as the tax/VAT identification for compliance

Step: 1 Standard VAT Rate

Standard VAT (Impuesto sobre las Ventas – IVA): 19% on taxable digital services.

Step: 2 Tax Formula

To calculate your tax amount, consider this formula: 

 

Tax Amount = Net Price × 19%

Step: 3 Reverse Charge (B2B)

For B2B cross-border digital services, the VAT is often self-assessed by the Colombian business recipient under the reverse charge mechanism (no VAT charged by non-resident seller) if the buyer is a VAT registrant

Step: 1 Selling B2C

For services to Colombian consumers (non-VAT registered end users), the foreign SaaS provider must charge 19% VAT or arrange for VAT to be withheld by payment/credit card entities under DIAN’s withholding scheme.

Step: 2 Selling B2B

For Colombian VAT-registered business buyers, VAT typically is not charged by non-resident seller and instead the buyer self-accounts the VAT (reverse charge).

Step: 3 Invoice Requirements

Valid tax invoices must include –

  • seller & buyer names and VAT IDs
  • sequential invoice number
  • issue date
  • description of services and net amount
  • VAT amount
  • currency
  • be issued via DIAN’s e-invoicing system using a Unique Electronic Invoice Code (CUFE) and QR code where applicable.

Step: 1 Filing Interval

VAT returns for non-resident digital services are bi-monthly (Form 325 for foreign providers).

Step: 2 Filing Deadline

DIAN establishes deadlines typically between the 14th–18th (bi-monthly period) of the following reporting period; check DIAN calendar annually.

Step: 3 Submission

File electronically via DIAN’s online portal (MUISCA/SIE); payments in COP or USD permitted.

Step: 4 Record Keeping

Maintain tax records and e-invoices for at least 5 years

PayPro Global Solution: Simplified Registration & Fiscal Representation

Navigating Colombia’s VAT registration and fiscal representation can be daunting. PayPro Global acts as your Merchant of Record, handling these complexities, including VAT registration and fiscal representation where needed, so you can focus on your business.

Learn more about our MoR services.

FAQ

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