Colombia's Value Added Tax — known locally as IVA (Impuesto al Valor Agregado) — is the main consumption tax applied to goods and services sold in the country. If you're running a business in Colombia or importing goods, you will encounter IVA at every turn. Understanding how it works is essential for pricing your products correctly and staying compliant with DIAN.
IVA Rates in Colombia
| Rate | Applies To |
|---|---|
| 19% (General) | Most goods and services, software, digital services, imports |
| 5% (Reduced) | Some agricultural inputs, certain machinery, coffee, corn flour |
| 0% (Zero-Rated) | Exports, books, medications, medical services |
| Exempt | Basic food staples, public transport, education, financial services |
Who Must Charge IVA?
You must register as a Responsable de IVA (IVA taxpayer) if your annual gross revenue exceeds approximately COP 110 million (~USD 26,000). Once registered, you must:
- Add IVA to your invoices
- File bimonthly IVA returns with DIAN
- Maintain records of IVA charged (débito fiscal) and IVA paid on purchases (crédito fiscal)
- Remit net IVA owed to DIAN per filing period
What If You Don't Meet the Threshold?
Businesses below the threshold register as "No Responsable de IVA" (previously called Régimen Simplificado). They do not charge IVA on sales, but also cannot offset input VAT on purchases. This status is simpler but may be disadvantageous if you have significant business expenses.
IVA on Digital Services (Important for Online Businesses)
Colombia taxes foreign digital services consumed by Colombian users at the standard 19% IVA rate. Major platforms like Netflix, Spotify, and Airbnb are required to collect and remit this tax. If you run a foreign SaaS or digital service with Colombian clients, you may have an IVA obligation even without a physical presence in Colombia.
IVA on Imports
All imported goods are subject to IVA at 19% (calculated on CIF value + customs duties). This is paid at customs and can be claimed as an IVA credit if the importer is a Responsable de IVA.
Filing IVA Returns
IVA returns are filed every two months (bimonthly), with filing windows that open in the following month. Large taxpayers may have different schedules. Filing an IVA return late triggers an automatic penalty of 5% of the IVA owed per month.
IVA Credits (Input Tax Recovery)
As a Responsable de IVA, you can deduct IVA paid on business purchases and expenses (input VAT) from IVA collected on sales (output VAT). If input VAT exceeds output VAT in a period, you accumulate an IVA balance in favor — which can be applied to future periods or, in some cases, requested as a refund.