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Developments in 2020: VAT withholding collection system through debit and credit card issuers & COVID-19 measures

  • Allows foreign providers of digital services to opt into a VAT withholding collection system through debit and credit card issuers.
  • Does not require foreign non-resident providers of digital services to issue Colombian invoices
  • COVID-19
    • Granted extensions for certain tax installment payments; reduced tax rates, provided three-day VAT exemption and fast-tracked procedures.
    • Authorized the Colombian tax authorities to automatically issue income tax and VAT refunds to taxpayers that are not categorized as high-risk taxpayers and at least 25% of whose costs or expenses or VAT credits are supported on electronic invoices until December 31, 2020.
    • Enacted a number of VAT exemptions and reduced rates.
    • Exempted companies reorganizing (similar to a Chapter 11 process) from income tax withholding or self-withholding, and subjects them to VAT withholding at 50% of the usual rate, through the end of 2020; for tax years 2020 and 2021, reorganizing companies should treat reductions or discounts obtained during the process in accounts payable as capital gains, subject to a reduced capital gains rate of 10% (compared to general rate of 32%)

See also All newsitems posted in 2020 for Colombia

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