Aspects to take into account during the 3 days without VAT

By means of Legislative Decree 682 of May 21, 2020, the Ministry of Finance established the VAT exemption for certain movable tangible goods that are sold within the national territory.

The three days without VAT will take place between June and July of the current year.

Through Legislative Decree 682, issued by the Ministry of Finance on May 21, 2020, the National Government decreed the three days without VAT, in which certain goods will be exempted from such tax.

In addition, the legislative decree in question clarifies that the special VAT exemption provided in Articles 22 to 26 of Law 2010 of 2019 for 2020 will not apply. Consequently, this decree establishes a VAT exemption that will only be applicable for the current year.

“the Government established that until December 31, 2020 the rate of the national consumption tax -INC- for restaurants and bars will be reduced to 0%.”

On the other hand, it is noteworthy that, through Article 9 of Legislative Decree 682 of 2020, the Government established that until December 31, 2020 the rate of the national consumption tax -INC- for restaurants and bars will be reduced to 0%.

Now, by means of Concept 628 of June 1, 2020, the Dian made a pronouncement regarding the application of the special VAT exemption, clarifying certain points related to its origin. Next, we will analyze all the aspects to take into account when making purchases during the days in which certain goods will be exempt from VAT. Let’s see:

What are the 3 days without VAT?

According to article 2 of Legislative Decree 682 of 2020, the VAT exemption days will take place on June 19, July 3 and 19, 2020. During these 3 days, certain goods will be marketed as exempt from this tax.

Which goods will be marketed as VAT exempt during the three days?

Among the goods that will not be taxed with VAT are:

–Clothingand clothing accessories whose sale price per unit does not exceed 20 UVT ($712,140).

–Household applianceswhose sale price per unit is equal to or less than 80 UVT ($2,848,560).

– Sportsequipmentwith a maximum sale price per unit equal to 80 UVT ($2,848,560).

–Toysand games whose sale price does not exceed 10 UVT ($356,070).

– Schoolsupplieswhose sale price per unit is equal to or less than 5 UVT ($178,035).

–Goodsand supplies for the agricultural sector, provided that the sales price per unit does not exceed the equivalent of 80 UVT ($2,848,560).

Note: the aforementioned values were calculated with the UVT value applicable for 2020, which was set at $35,607 by Resolution 000084 of 2019.

The seller responsible for VAT who alienates the goods covered with this benefit, previously mentioned, is entitled to deductible taxes in his VAT return, provided that he complies with the requirements set forth in the Tax Statute -ET-, especially those established in Article 485 of the statute in question. Therefore, the balance in favor generated on the occasion of the sale of the VAT exempt goods may be imputed in the respective return of the following fiscal period.

However, if among the goods covered there are goods excluded or exempted from VAT, these will maintain such condition and all its characteristics, without prejudice to the possibility of opting for the special treatment recognized during the 3 days of VAT exemption.

It should be noted that the Dian, through its Concept 628, clarified that within the category of household appliances, computers and communications equipment, there are different types of goods, such as personal computers, electric dishwashers and televisions.

Requirements for exemption

The following requirements must be met for the VAT exemption to be applicable:

Seller – acquirer

The seller responsible for VAT may only sell goods covered by the exemption located in Colombia and at retail, which must be sold directly to the natural person who is the final consumer.

Issuance of sales invoice

“It is necessary for the seller to issue the invoice or equivalent documents through the invoicing systems in force, such as electronic invoice, lithographic (on paper) or POS equivalent documents.”

It is necessary for the seller to issue the invoice or equivalent documents through the billing systems in force, such as electronic invoice, lithographic (paper) invoice or POS equivalent documents, as applicable, in which the acquirer must be identified.

It should be noted that the invoice or equivalent document for the covered goods issued to the final consumer must be issued on the day on which the purchase was made. In addition, the goods sold must be delivered to the consumer within two weeks from the date on which the sales invoice was issued. It should be clarified that the latter would apply to cases in which the stores do not have immediate availability of the goods.

Means of payment

The accepted means of payment for the VAT exemption will be electronic.

Therefore, the payment of the goods purchased may only be made through debit cards, credit cards, transfers, among other electronic payment mechanisms, understood as those face-to-face instruments that allow extinguishing a monetary obligation through data messages in which an entity supervised by the Financial Superintendence intervenes.

In addition, the proof of payment or voucher must correspond to the same day on which the purchase invoice was issued.

Limit of units

The consumer may only acquire up to 3 units of the same good covered by the VAT exemption and sold by the same seller. However, the Dian’s concept specifies that they are considered to be of the same genre, for example, shirts brand A, B or C, as well as those that being of the same brand are of different references or different materials.

“the limit of three units of the same covered good is not configured when three units of different genres of clothing are acquired, such as a jacket, a shirt and pants”.

Therefore, the limit of three units of the same covered good is not configured when three units of different genres of garments are acquired, such as a jacket, a shirt and a pair of pants.

Selling price

Sellers of VAT exempt goods must deduct from the retail value the value corresponding to VAT at the applicable rate (19% or 5%). Therefore, the sales prices of the goods informed to the consumer through the invoicing systems in force must indicate that the VAT rate is 0%.

Additionally, for control purposes, the person responsible for VAT must send to the Dian, no later than August 31, 2020, the information regarding exempt operations, which will be defined by the Dian by means of a resolution.

Failure to send such information will result in the penalty for failure to send information provided in article 651 of the ET. In addition, the Dian may apply the general anti-abuse rule established in the ET.

Thus, when any of the aforementioned requirements are not complied with, the right to treat the covered goods as VAT exempt will be lost and the responsible parties will be obliged to make the corresponding corrections to their tax returns. This is without prejudice to the criminal actions and the powers and procedures established in the ET for the investigation, determination, control, discussion and collection by the Dian, including the provisions on tax abuse and joint and several liability.

Parameterization of computer systems

Sellers responsible for VAT must parameterize their computer systems in order to exercise control over the maximum number of units that may be acquired and ensure that the goods covered do not exceed the amounts established as a requirement.

Exclusion of VAT on leasing of commercial premises

“established that, as from May 21 and until July 31 of the current year, the monthly lease fees caused and invoiced after the entry into force of the decree in question are excluded from VAT.”

On the other hand, it is necessary not to lose sight of the fact that Legislative Decree 682 of 2020 established that, from May 21 and until July 31 of the current year, monthly rental fees caused and invoiced after the entry into force of the decree in question are excluded from VAT, as well as monthly payments caused and invoiced in this same period for space concession, provided that the following requirements are met:

–Theyare leases or concessions of commercial premises or spaces.

–Thepremises or commercial spaces were open to the public before the declaration of the state of sanitary emergency.

–Theactivities carried out in the premises or commercial spaces were necessarily and primarily associated with the concurrence of customers to such premises or commercial spaces.

–During thesanitary emergency, the premises or commercial spaces had to be totally or partially closed to the public for a period of more than 2 weeks.

The above benefit is not applicable to lease fees for other commercial properties such as offices and warehouses.

Source: Actualícese