Frequently Asked Questions – Colombia VAT
What is VAT?
Value Added Tax is abbreviated as VAT. Goods and services are generally subject to VAT when being sold. Almost all goods and services used or consumed in Colombia are subject to this regulation. Because it is ultimately paid by consumers, it is a consumption tax.
Who must pay VAT?
Normally, the supplier who sells goods or services is responsible for billing and collecting the VAT from the customer. After the VAT has been collected, the supplier informs the tax authorities and remits the collected VAT to them.
It is important to keep in mind that there may be instances when electronic services (ESS) are supplied by a nonresident supplier (as is the case with Zoom), in which case the responsibility for the collection and the remittance of VAT may shift to a local VAT agent.
It is possible for businesses and individuals to act as VAT agents. You need to consult with your tax advisor in order to determine whether you meet the requirements for being a VAT agent.
Why am I being charged VAT?
According to Colombian VAT regulations, Zoom must collect and remit Colombian VAT on services that are provided to its customers who are located in Colombia but who are not agents.
How do I enter my VAT agent status?
Please follow these steps if you are a VAT agent and would like to enter your VAT agent status in the Zoom billing portal:
- Join the Zoom Portal by signing in.
- Click the Billing tab under Account Management.
- Scroll down to the Billing Information section.
- Under the Billing Contact section, you will be able to enter the GST/VAT number (which appears after the Sold To Contact Address field on the form).
- If you are asked to enter a GST/VAT number, you should type either “VAT agent” or “Agente de IVA” and click Save.
Zoom may require additional evidence to verify that the customer has correctly identified themselves as a VAT agent, so please understand that Zoom may ask for additional proof.
What happens if I am not a VAT agent?
Zoom will charge Colombian VAT on its supplies to you if the customer is not a qualified VAT agent in Colombia.
How does Zoom identify the location of the customer for VAT purposes?
Several rules are set out in the VAT laws of Colombia to determine the place of taxation for supplies made to individuals and to business customers.
The place of taxation of supplies made by businesses or to individuals is Colombia for businesses and individuals who live in Colombia if they are liable for income tax in Colombia.
When at least one of the following criteria is met by an individual, they will be considered to be a resident of Colombia:
If a customer utilizes a credit/debit card for the purpose of paying for digital services in Columbia, or if she or he uses a bank to make payments in Columbia, (1) either facility must be in Columbia
(2) the IP address used for the purchase of digital services is located in Colombia.
Thirdly, if the international country code indicated in the phone number used for payment of digital services is Colombia, then the service provider is in Colombia.
There is an exception to this rule: an individual entrepreneur who maintains a place of residence in Colombia will be considered as conducting his business in Colombia if he is a Colombian legal entity with its legal address in Colombia.
Is there any threshold for VAT on electronically supplied services?
There is no VAT for Zoom’s sales in Colombia, where the customer is not a VAT agent, so all sales of Zoom’s services are subject to VAT.
In the case of charity organizations, are there any special exemptions from the VAT that apply to them?
No, VAT must be added to all supplies made to charities unless the customer is a registered VAT agent.
Are Zoom services exempt from VAT or do they not charge VAT on their services?
In cases where Zoom receives evidence that a customer is a VAT agent, Zoom will not charge VAT to the customer. Zoom does not offer any other exemptions at the moment.
There is a possibility that Colombian VAT agents may be required to self-assess the Colombian VAT on the services purchased from Zoom.
Are there any VAT obligations for me as a customer?
In the case that our customers are VAT agents, they may be required to self-assess the VAT on the services they purchase from Zoom.
It is your responsibility to notify Zoom if you are changing the status of your VAT agent.
What if I am a VAT agent and forget to inform Zoom?
You can confirm your status as a VAT agent for Colombia at any time through Zoom’s billing portal by entering your registration number. Before the next invoice is issued, Zoom will not charge VAT if “VAT Agent” or “Agente de IVA” is entered before the next invoice is issued. When the next invoice is issued, VAT will be charged even if a status such as “VAT Agent” or “Agent de IVA” has not been entered.
Upon entering VAT agent status and if VAT was previously charged on the invoices that you have been issued, Zoom will be able to refund any VAT that was included on invoices that were issued in the thirty days prior to providing a TAX ID number that was valid. If an invoice is issued outside of this thirty-day period, however, VAT will not be refunded.
Decision tree – will I be charged Colombian VAT?
Each customer’s tax situation is unique. As a general overview of relevant tax rules, the above information should not be considered as tax advice. We strongly recommend speaking with a professional tax advisor for tailored advice since Zoom cannot provide you with tax advice customized for your individual situation.
Frequently Asked Questions: Colombian VAT
What is VAT?
Value added tax is abbreviated as VAT. This tax is generally charged on sales of goods and services. In Colombia, it covers the majority of goods and services sold and consumed. The final consumer pays the tax since it is ultimately a tax on consumption.
Who must pay VAT?
A supplier who sells a product or service is generally responsible for billing and collecting VAT from its customers. In the following period, the supplier declares and remits the tax collected to the tax authorities.
There may be situations in Colombia where a non-resident provider of services is providing electronic services (as with Zoom). In such cases, a VAT withholding agent in Colombia may be responsible for collecting and remitting tax on behalf of the non-resident provider.
Both companies and individuals can act as VAT withholding agents. You should consult your tax advisor if you are interested in becoming a VAT withholding agent.
Why am I charged VAT?
The Official VAT Regulations of Colombia require Zoom to collect and remit Colombian VAT when it provides services to Colombian customers that are not withholding agents, but are within Colombia.
How do I enter my VAT withholding agent status?
Here are the steps you need to follow if you are a VAT withholding agent in Zoom’s billing system:
- Access the Zoom Portal by signing in
- And selecting Billing from Account Management.
- Choose Billing Information.
- If the field Billing Contact appears after the Sales To field, you can enter your GST/VAT number there.
- You need to enter “VAT Agent” or “VAT Withholding Agent” in the field for GST/VAT number, then click the Save button.
Zoom may ask to see additional evidence regarding the customer’s validity as an agent withholding VAT in order to verify that they have been identified accurately as a VAT agent.
What happens if I am not a VAT withholding agent?
Zoom will apply Colombian VAT to the services it provides in Colombia if the customer is not a VAT withholding agent.
How does Zoom identify customer location for VAT purposes?
In relation to the provision of services to individuals and business customers, Colombian VAT law sets forth certain rules defining the place of taxation.
According to Colombian law, if a person resides in Colombia, they are taxed in Colombia for services provided to them.
At least one of the following conditions must be met in order to qualify as a resident of Colombia:
(1) If the client pays for the digital services with a credit or debit card located in Colombia or if the client made the payment with a Colombian bank, then the client is located in Colombia.
(2) Digital services are purchased using a Colombian IP address.
(3)Colombia is the country code for the phone number used to purchase or pay for digital services.
If a commercial client has a Colombian legal entity with a Colombian domicile or if it is an individual entrepreneur residing in Colombia, such client is considered to be carrying out its business operations in Colombia.
Is there a limit for the application of VAT on services provided electronically?
No. Zoom customers who are not VAT withholding agents are subject to VAT when they purchase our services.
Are there special exemptions applicable to charities in which VAT is not applied?
No. In the case of charities that are not VAT withholding agents, Zoom charges VAT on all services it provides.
Does Zoom provide VAT exemptions or services that are not subject to VAT?
Customers who prove themselves to be VAT withholding agents will not be charged VAT by Zoom. Currently there are no other exemptions available.
On behalf of Zoom, you may need to file a self-assessment for Colombian VAT on services that you purchase from Zoom.
Do other VAT obligations apply to me as a customer?
Zoom may require its customers in the form of VAT withholding agents to self-assess VAT on services they purchase from us.
Whenever your status as a VAT Withholding Agent changes, Zoom must be notified of the changes.
What should I do if I am a VAT withholding agent and I forgot to inform Zoom?
During the check-in process on Zoom’s billing platform, you can confirm VAT withholding agent status in Colombia at any time. Zoom VAT will not be applied to the next invoice if you add the “VAT Agent” or “VAT Withholding Agent” before the next invoice is issued. It is imperative that you enter the statuses “VAT Agent” or “VAT Withholding Agent” before suing the next invoice, otherwise, VAT will be applied to any upcoming invoices.
The Tax ID number that you need to provide to Zoom must be valid for the period you are requesting a VAT refund on. If you have already been charged VAT on your invoices and have previously been charged VAT on them you can request a VAT refund from Zoom for any invoice issued within thirty days. The VAT on invoices that are not paid within this thirty-day period will not be refunded.
Decision tree: Will Colombian VAT apply to me?
The tax circumstances of every client are unique. As with any summary of relevant tax regulations, this information is not intended as tax advice. We strongly recommend consulting with a professional tax advisor for personalized tax advice since Zoom cannot provide tax advice for your particular situation.