Latam Tax Insights / Digital economy
Contenido
02 Digital taxes in Argentina: regulations in the fiscal landscape
03 Taxation of digital services in Brazil: navigating the complexities of ISS, ICMS, and corporate taxes
05 Tax reforms in digital services: impact on businesses in Chile
07 Digital tax regimes in Latin America: key insights for compliance and competition in Colombia
08 Digital services under the fiscal spotlight: what you need to know in Mexico
10 New rules for digital services in Peru
13 How digital taxes affect businesses in Uruguay
14 Fiscal regulation of digital services in Venezuela
15 Forvis Mazars in Latin America
16 Contacts
Digital tax regimes in Latin America: key insights for compliance and competition in Colombia
Forvis Mazars in Colombia
Since 2016, digital platforms offering services such as music, video,
games, and education in Colombia have been subject to Value
Added Tax (VAT).
However, tax authorities only adjusted the system in 2019, allowing foreign service providers to meet their tax obligations in Colombia.
Foreign service providers
A “foreign service provider” is any entity not domiciled in Colombia that provides the following services:
1. Audiovisual services (including, but not limited to, music, videos, films, and games of any kind, as well as the broadcasting of any type of event).
2. Services provided through digital platforms.
3. Online advertising services.
4. Distance learning or training.
5. Licensing of rights to use or exploit intangibles.
6. Other electronic or digital services directed at users in Colombia.
In addition, if a legal entity provides any of the aforementioned services, it is required to:
- Be registered in the Single Tax Registry as a subject to VAT.
- Issue invoices and collect VAT.
- Submit and pay the corresponding VAT return within the deadlines established by the tax authority.
Significant Economic Presence (Regime)
As of 1 January 2024, Colombia implemented a new tax regime based on Significant Economic Presence (SEP), which applies the Income Tax to foreign companies generating income in the country without the need to have a physical presence there.
Companies are required to pay this tax if they meet
any of the following criteria:
- Gross income exceeding 31,300 Tax Value Units (UVT) (approximately COP $1,473,135,000 or USD $352,844.26) in the previous year;
- Interaction with more than 300,000 users or clients located in Colombia; or
- Enabling transactions in Colombian pesos.
This tax applies to the provision of digital services from abroad (the services mentioned above) to users located in Colombia. Furthermore, the tax will be paid as a withholding tax at a rate of 20%, according to Section 20-3 of the National Tax Code (C.T.C.).
Alternatively, companies may choose to pay taxes on 3% of their total gross income. This alternative requires advance payment of 2% of gross bi-monthly income for SEP purposes.
If the company fails to meet this obligation, it must pay a penalty for not filing the tax return and interest for late payment for each month or part of a month in delay.
