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What happens with the VAT in the Simple Taxation Regime 2023? – Personal Finance – Economics


Mar 3, 2023

The Simple Taxation Regime (RST) is a tax payment system that seeks to facilitate compliance with tax obligations of businessmen, entrepreneurs, merchants and professionals, according to the Directorate of National Taxes and Customs of Colombia (Dian).

This mechanism generates savings when it comes to paying taxes in a unified manner, since it provides low rates that are settled according to income level. It is declared annually, but payments must be made with bimonthly advances through the entity’s electronic systems.

This system is voluntary, so those who wish can take advantage of it, as long as the requirements are met.

As Dian explains, those who can apply to the RST are natural persons who develop a business, «including liberal professionals or legal persons of a corporate nature, whose partners or shareholders are natural persons residing in Colombia.»

(Also read: The deadline to receive the benefits of the Simple Tax Regime is over).

This system is voluntary, so those who wish can apply by meeting the requirements.

Those who in the previous taxable year acquired gross, ordinary or extraordinary income of less than 100,000 UVT (currently just over four billion pesos) may also voluntarily access it. Recognition is also allowed for those who provide professional consulting and scientific services in which the intellectual factor predominates over the material. In this case, income cannot exceed 12,000 UVT.

What about VAT in the Simple Taxation Regime?

In accordance with article 907 of the Tax Statute, the unified tax under the Simple Taxation Regime includes income tax, national consumption tax -in the case of those who develop food and beverage spending services- and income tax. Consolidated industry and commerce, «according to the rates determined by the municipal and district councils.»

In this line, the sales tax (VAT) is excluded from the Simple Taxation Regime. “The periodicity of the VAT in the taxpayers that belong to the Simple Taxation Regime is annual, according to article 915 of the tax statute. However, the payment must be made monthly, so that the annual declaration is a consolidated declaration”, details the specialized portal ‘Gerencie’.

(Keep reading: What is the Simple Taxation Regime and why does the Dian invite you to register?).

VAT is not contemplated in the Simple Taxation Regime.

The benefits of taking advantage of this regime include a new tax discount on financial movements of 4 x 1,000, the possibility of not being subject to Withholding at Source for income, exemption from parafiscal payments (ICBF, SENA and health contributions ) under the terms of article 114-1 of the Tax Statute and reduction of procedures for compliance in the presentation of the declaration and payment of taxes.

As if that were not enough, this system offers the advantage that with a single receipt you can anticipate the payment of tax obligations, such as VAT, the Unified Tax (income), the National Consumption, Industry and Commerce Tax, Notices and Boards and Fire Surcharge.

In order to boost competitiveness in the market, the Dian provided that both small stores and minimarkets, micromarkets and hairdressers that exclusively carry out this activity, will not have to pay the Sales Tax.

(Of interest: What is the simple tax regime?).

The registration to the Simple Taxation Regime expired on February 28. Please note that if you are enrolled, you must present and pay the bimonthly advances in a timely manner.

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