On June 6, 2018, Colombia’s Minister of Finance said that digital business platforms (e.g., Uber, Netflix, Airbnb) are subject to the VAT rules discussed below from June 1, 2018, at the standard 19% rate. The Colombian VAT rules apply regardless of the country of origin of the goods and services supplied online to Colombian consumers.
Background
On December 29, 2016, Colombia published Law No. 1819 of 2016 in the official gazette, which amended the VAT rules (impuesto sobre las ventas or IVA) in Book III of the Colombian Tax Code to subject supplies of goods and services through digital platforms to VAT at the new 17% rate. The amendments apply from June 1, 2018 (i.e., 18 months following their entry into force).
Article 180 of Law No. 1819 of 2016 added Article 437-2(8) to the Tax Code, which requires credit and debit card issuers, prepaid card vendors, third-party cash collectors, and others designated by the Colombian tax authority (Dirección de Impuestos y Aduanas Nacionales or DIAN) to act as VAT withholding agents for the following purchases of goods and services:
- The provision of audiovisual services (including music, videos, films, and games of any type, as well as the broadcasting of any type of event).
- Mobile application digital distribution platform services.
- The provision of online advertising services.
- The provision of distance education or training.
Article 187 of Law No. 1819 of 2016 amended Article 476 of the Tax Code to exempt the following goods and services supplied through digital platforms from Colombian VAT:
- Virtual education services for the development of digital content, in accordance with the regulations issued by the TIC (Information and Communication Technology) Ministry, provided in Colombia or abroad.
- The provision of websites, servers (hosting), cloud computing, and the remote maintenance of programs and equipment.
- The acquisition of software licenses for the commercial development of digital content, in accordance with the regulations issued by the TIC Ministry.
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