Below are some of the aspects of Colombian tax legislation designed to help producers to better plan their work and correctly calculate budgets and expenses.
The following information is only a guide and we recommend you consult with professionals before starting any audiovisual production in Colombia, since application of taxes and duties will depend on each production’s unique characteristics.
Aggregate Value Tax (IVA)
Sales tax is paid on the sale of fixed assets in the form of real estate, imported fixed assets, and services provided in Colombia at rates varying from 1.6% and 35%. Generally, sales tax is 16%.
The IVA (Aggregate Value) tax does not apply to property temporarily imported for a short period such as equipment and other elements to be used in film productions and film-related activities.
Rental of property other than housing (such as locations) is subject to a 10% tax. . Special sales tax regulations apply to certain parts of the country such as the Amazon department and the archipelago of San Andres and Providence and Santa Catalina.
Aggregate Value Tax (IVA) Rebate
International audiovisual production companies may obtain IVA tax reimbursement for services purchased in Colombia since the Colombian Tax Statute (Article 481, Paragraph E) declares all export services exempt from this tax; this includes services provided in the country under a written contract and used exclusively outside the country by companies or persons with no business or activities in Colombia, as per requirements listed in the regulation.
To access the aforementioned benefits, registration in the National Goods and Services Exporters is required. The Colombian company exporting services must have a user in the VUCE (Acronym in Spanish for One-stop window for exterior commerce) and have the digital certificate from “Certicámara”.Afterwards, all the service exports contracts must be registered.
To be eligible for this exemption, a written declaration of export service contracts before monies are refunded and the corresponding record must be kept by the exporter as proof of the transaction.
This statement must contain the following certified information:
- The contracted service must be used entirely and exclusively outside Colombia.
- The amount of the contract or amount to be reinstated in Colombian Pesos (COP). DIAN (acronym in Spanish for National Direction of Taxes and Customs).
- Declaration that the contracting company has no business or activities in Colombia.
- That the service is exempt according to Article 481 of the Tax Statute.
- That no withholding tax applies for any income from exports as per Article 366-1 of the Tax Statute.
How apply to the IVA refund in Colombia related to an audiovisual production
- The foreign producer and the Colombian production service company celebrate a production service contract. The Colombian company must register the contract at the Trade Office of the Ministry of Commerce, Industry and Tourism (this Colombian company must have previously registered as a service exporter).
- Once this procedure established, the production service company must not charge the IVA and that the foreign currency income to the country through an intermediary should not apply the withholding.
- With the currency received of the foreign producer, the Colombian service company, additionally to its fixed fee, contracts directly other Colombian services (Equipment Rental, Postproduction, Catering, Transport, etc.).
- This contracts between Colombian companies, or Colombian residents generates the IVA tax. However, since there is a causal link in relation to the celebrated contract with the foreign producer, the Colombian company may request the IVA refund.
- The Colombian company must request to the DIAN (Acronym in Spanish of Taxes and Customs National Office) the refund of the IVA’s generated under the contract celebrated with the foreign producer.
- DIAN schedules an inspection visit to the Colombian production service company and issues an “auto” of refund. Then they issue a refund title or the cash rebate to an assigned account.
Find as attachment a PDF that explains the steps in order to get the IVA refund.
National Consumer Tax
This tax was recently created by Act 1607 of 2012 and is charged for services or sales to the end consumer or for the following items imported by the end consumer:
- Mobile phone services.
- The sale of certain tangible personal property domestically produced goods or imported goods.
- Services related to the sale of food and beverages prepared in restaurants, cafes, supermarkets, ice cream and fruit shops, pastry shops and bakeries, including contracted food services and the sale of food and alcoholic beverages for consumption in bars, taverns and nightclubs.
These goods and services are not subject to VAT.
In Colombia, as a rule, individuals and corporations are subject to income tax rates ranging between 0% and 33% for individuals and 25% for domestic corporations or foreign corporations with a permanent branch or establishment in Colombia, paid upon delivery of an annual income tax statement.
Foreign individuals and corporations with no permanent residence, domicile, branch or establishment in Colombia pay income tax only on income earned in Colombia originating in the sale of goods located in Colombia, the exploitation of tangible or intangible goods in Colombia, and the provision of services within the country. Your rate will be 33% of Colombian source income.
Legislation provides a mechanism called withholding tax, which consists of collecting income tax in advance. Foreign individuals or corporations with no residence, domicile, branch or permanent establishment in Colombia are not required to charge withholding tax when making payments to third parties. This means foreign non-resident filmmakers making third-party payments in Colombia are not required to charge withholding tax. However, if these payments are made through Colombian individuals or organizations, they would be obliged to apply the withholding tax to both Colombians and foreigners.
Revenue earned by artists, technicians and production personnel that do not reside in the country, when there is no contract and no payments generated by their participation in foreign film shall be considered as foreign income, as long as the National Film Office Resolution Allowing for Filming on National Territory has been issued. In such case, income tax in Colombia does not apply.