Do you become liable for VAT if you are obliged to file income tax returns?

Individuals who are obliged to file income tax returns for the taxable year 2021 must comply with this requirement between August 9 and October 19, 2022.

Now, does being obliged to file income tax returns imply being liable for VAT?

A natural person who acts as not liable for VAT and, in addition, does not meet the requirements of articles 592 and 594-3 of the Tax Statute -ET- and article 1.6.1.1.13.2.7 of Decree 1625 of 2016, replaced by Decree 1778 of 2021, must file the income tax return for the taxable year 2021.

However, being obliged to file the income tax return does not imply that the natural person must become liable for VAT, since being obliged to file and being liable for VAT are different obligations, for which different ceilings are assessed. Thus, under Article 592 of the ET and Article 1.6.1.13.2.7 of Decree 1625 of 2016, natural persons and unliquidated successions that in the respective taxable year have met any of the following requirements shall be obliged to file income tax returns:

– That the gross net worth on the last day of the taxable year 2021 has exceeded 4,500 UVT ($163,386,000).

– That as of December 31, 2021, the consumption by means of credit card has exceeded 1,400 UVT ($50,831,000).

– That the gross income obtained during 2021 has been equal or higher than 1,400 UVT ($50,831,000).

– That the total value of purchases and consumptions made in 2021 has exceeded 1,400 UVT ($50,831,000).

That the total accumulated value of bank deposits, deposits or financial investments has exceeded 1,400 UVT ($50,831,000).

On the other hand, according to paragraph 3 of article 437 of the ET, a natural person will be liable for VAT when he/she meets any of the following requirements:

– That in the previous year or in the current year he/she has obtained total gross income from the activity greater than 3,500 UVT ($127,064,000 for 2021; $133,014,000 for 2022).

– To have more than one commercial establishment, office, headquarters, premises or business where he/she carries out his/her activity.

– That in the commercial establishment, office, headquarters, premises or business activities are developed under franchise, concession, royalty, authorization or any other system that implies the exploitation of intangibles.

– That it is a customs user.

– That it has not entered into contracts for the sale of goods and/or provision of taxable services for an individual value equal to or greater than 3,500 UVT in the immediately preceding year or in the current year.

– That the amount of his bank deposits, deposits or financial investments during the previous year or during the respective year, coming from activities taxed with VAT, exceeds the amount of 3,500 UVT.

Now, if a natural person obtained during the taxable year 2021 between 1,400 and 3,500 UVT, he/she is obliged to file the income tax return. However, in VAT matters, he/she will be able to continue operating as not responsible for this tax since he/she does not meet the requirement for being obliged to file the VAT return.

Therefore, it is clear that both rules must be evaluated to determine whether or not a person is obliged to file a VAT return and whether or not he/she is liable for VAT.

Source: Actualícese

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