The 2012 worldwide VAT, GST and sales tax guide

C OLOMBIA 131
incurred by the constructor that is directly associated with its
invoiced fee. The constructor is not entitled to credit for VAT paid
on expenses that are associated with the construction.
E. Time of sale
The time when VAT becomes due is called the “time of sale” or
“tax point.”
For a sale of goods, the tax point is the earlier of the following
events:
• The issuance of the invoice or the delivery of the goods
• Withdrawal of movable goods by the taxable person for its own
use or to form part of its fixed assets
For a supply of services, the tax point is the earliest of the following
events:
• The issuance of the invoice or equivalent document
• Termination of the provision of the service
• Payment or accrual, whichever occurs first
For the importation of goods, the tax point is when the goods are
nationalized; that is, when the goods have cleared all customs
formalities for importation.
F. Recovery of VAT by taxable persons
A taxable person may discount (credit) VAT paid on purchases
(known as input tax) from VAT charged on sales (known as output
tax), if the input tax relates to certain types of expenditure.
Input tax paid on the acquisition of movable tangible goods and
on services supplied to a taxable person, or VAT paid on imports
of movable goods, may be claimed as a discount (credit) up to a
limit determined by applying the rate of VAT charged on the supply
of the goods or services provided by the taxable person to the
input tax incurred. Any excess input tax paid (that is, the amount
of input tax exceeding the limit determined by applying the VAT
rate charged on the supply of goods and services) should be
treated as a higher amount of cost or expense. In addition, for
transactions with foreign suppliers, the reverse-charge (selfassessment)
mech anism must be used and the VAT withheld may
be treated as input tax in accordance with the general rules and
limitations if the taxable person can prove to the tax authorities
that the tax has been withheld. Alternatively, the VAT withheld
can be treated as a higher cost or expense if the rules to claim the
input tax as a credit are not met.
Refunds. If the amount of input VAT recoverable in a taxable
period exceeds the amount of output VAT payable, the taxable
person earns an input VAT credit. The credit may be refunded if
either of the following applies:
• The taxable person is an exporter of goods or services.
• The taxable person supplies zero-rated (0% rate) goods or has
been subject to VAT withholding and the total balance arises
from the withholdings.
In addition, a refund of VAT paid on the acquisition of materials
used to construct “housing of social interest” may be requested if
the construction plans were approved by the Colombian
government.