background image
Colombia Establishes Alternative VAT Withholding System for Foreign Digital or Electronic Services Providers — Orbitax Tax News & Alerts

The Colombian tax authority (DIAN) has issued Resolution No. 000049 of 1 August 2019, which establishes the procedures for foreign digital/electronic service providers to avail themselves of the alternative VAT withholding system. Since 1 January 2018, foreign providers of B2C services have been required to account for VAT on their supplies and submit returns ({News-2018-12-13/A/4-previous coverage}). With the alternative VAT withholding system, foreign service providers may opt to instead have VAT withheld directly at source on payments for their services.

The withholding system is voluntary, with foreign service providers required to submit an application with DIAN through the DIAN website ( ) or other means that may be made available. As part of the application, service providers must provide information as specified in the resolution. If a foreign service provider operates more than one business, an application for each must be submitted.

The withholding agents for the alternative VAT withholding system include issuers of credit and debit cards, the sellers of prepaid cards, and other intermediaries facilitating payment for digital or electronic services. These withholding agents are required under the resolution to have the necessary systems in place to begin withholding VAT by 1 February 2020 (1 September 2019 for prepaid card sellers). For the purpose of withholding, DIAN will issue separate resolutions to list out the foreign services providers that have opted and been approved for VAT withholding. Foreign service providers opting for the withholding system must continue to account for VAT and submit returns until the withholding agents begin to withhold at source.

Resolution No. 000049 was published in the Official Gazette on 12 August 2019 and is in force from this date. Click the following link for a copy of the resolution published by a third party.