VAT and consumption tax opinions on your operation

First: is the tax triggered at all

This is the question with the largest consequences. If the tax was due and was not invoiced, the shortfall builds up invoice after invoice and somebody has to absorb it. If it was not due and was charged anyway, the problem lies with the customer and with what was collected. The analysis starts from the real operation: what is sold, how it is contracted, who supplies it and where it is deemed supplied.

• Characterisation of the good or the service and whether it is taxable, exempt or excluded.
• Availability of special rates and of the preferential treatments the company has been applying.
• Transactions combining goods and services in a single contract or a single invoice.
• Services supplied from abroad into Colombia and from Colombia to customers abroad.

The taxable base: what gets invoiced next to the price

The second source of differences is the base. Freight, installation, management fees, reimbursable expenses, financing of the payment term, packaging: items invoiced alongside the main good or service that do not always get the treatment the company assumes. We review the invoice as the system issues it, not the contract in the abstract, because the invoice is what the authority will look at.

• Ancillary items invoiced with the main good or service and how they are treated.
• Discounts, credit notes and returns, and how they are reflected in the return.
• Inventory withdrawals, self-supply and transactions without consideration.

Creditable VAT and filing period

Tax paid on purchases is not always creditable, and when it is not it has to go somewhere else. Getting that wrong affects cost, assets and the result for the period, on top of the return itself.

• Treatment of creditable VAT and of the tax that must be capitalised into cost or into the asset.
• Effect of carrying out taxable, exempt and excluded operations at the same time.
• Determination of the filing period applicable to the company.
• Consistency between electronic invoicing, supporting documents and what is declared.

Consumption tax

It shows up in activities where it is not always front of mind: restaurants and bars, catering, telephony and data. Here the question is usually twofold. Whether the tax is triggered and, above all, where VAT ends and consumption tax begins, because the same transaction should not be caught by both, or by neither.

• Analysis of whether the tax is triggered on the client's specific operation.
• Drawing the line between operations subject to VAT and to consumption tax, including mixed models and platform-based operations.
• Review of the returns filed and of how the tax was calculated.

When the review finds a difference

Not every finding is corrected immediately, or in the same way. We put on the table the effect of correcting, of holding the position, and of adjusting it going forward, with the risk of each route in writing and with the impact on customers who were already charged the tax, or were not charged it. The decision is the client's; our job is that it be made on an informed basis and before the authority formalises an assessment.

What the client receives

• A written opinion with the scoped question, the facts, the answer and its basis, plus the caveats that apply.
• The invoicing rule for the operation reviewed, drafted so the billing team can apply it without coming back to us for every case.
• Where differences exist in what has already been filed, an analysis of the options available and of their risk.
• Scope and fees agreed in writing before we start.

Typical situations we handle

• The company launches a new product or service and needs to know how to invoice it before the first invoice goes out.
• A contract bundles goods, services and reimbursements into one price and it is unclear how to split them.
• A company supplies customers abroad or contracts services from outside the country.
• A restaurant, a telecoms operator or a catering business checks whether it is charging the right tax.
• The finance team notices that one characterisation has been repeating for several periods.
• A buyer asks about the VAT treatment of a transaction before signing.