Columbia Withholding Tax

Data Elements

Constant Amount (WT_CONSTVAL)

Definition

Indicates the value of the constant applicable for calculation of withholding tax in Colombia.

Constant Name (WT_CONSTNAME)

Definition

Indicates the name of the constant that you maintain for calculation of withholding tax in
Colombia.

Use

The type of constant can be the following:

 UVTCR
 UVTMN
 UVTMX
 MANCONTR1
 MANCONTR2
 MANCONTR3
 ARPMN
 ARPMX

Constant Rate (WT_CONSRATE)

Definition

Indicates the administrator of professional risks (ARP) rate that the system uses for calculation
of mandatory contribution in Colombia.
Total Service Amount (TOT_AMTACRCMP)

Definition

Indicates the total service amount (in COP) that the vendor charges for services provided to
companies.

Service Amount (TOT_AMT)

Definition

Indicates the service amount (in COP) that the company pays to acquire a vendor's service.

Volunteer Contribution (VOL_CONTRIBUTION)

Definition

Indicates the amount (in COP) that a vendor donates on behalf of a freelancer. This amount
serves as a pension contribution that the freelancer is entitled to on retiring from the profession.

ARP Contribution (IDWTCO_ARPVALUE)

Definition

Indicates the administrator of professional risks (ARP) value that the system uses to calculate
an employee’s mandatory contribution.

Use

You can either enter the value or the rate. If you enter the value, the system checks if the value
lies between the minimum and maximum rate and then adds it to the mandatory contribution.

ARP Contribution Rate (IDWTCO_ARPRATE)

Definition

Indicates the administrator of professional risks (ARP) rate that the system uses to calculate the
mandatory contribution value. The system adds this rate to the mandatory contribution rate.
Customizing Activity

Define Withholding Tax Constants (V_J_1_T059WTK)

Use

In this Customizing activity, you make settings that ensure that when you prepare a withholding
tax return for Columbia, the system adds a constant (for example, 10 UVT or in general, a local
tax value unit) to the total tax amount.

The table below details when the system adds the constant to the total tax amount/The system
adds the constant to the total tax amount only when the value of a vendor’s invoice lies within
the UVT range mentioned in the table below.

UVT Range Tax Rate (in %) Tax Calculation

0.01 - 95 0 N/A

95 - 150 19 (Invoice Base Amount in UVT

- 95 UVT) * 19%

150 - 360 28 (Invoice Base Amount in UVT

- 150 UVT) * 28% + 10 UVT

360 and above 33 (Invoice Base Amount in UVT

- 360 UVT) * 28% + 69 UVT
 Monthly Data Maintenance for Freelancers and Vendors (J1ICOVEND)
Use

You use this transaction to maintain monthly data for freelancers and vendors in the Columbia:
Monthly data for freelancers/vendors (J_1ICO_VENDDET) application table.

Monthly data includes the total service amount for a particular month. You use this data to
derive the tax rate for a vendor for a particular month.

To access this transaction on the SAP Easy Access screen, choose Accounting -> Financial
Accounting -> Accounts Payable -> Withholding Tax -> Colombia -> Monthly Data Maintenance
for Freelancers and Vendors.

Activities

You can make the following settings in this transaction:

 Enter the company code, month and year during which the freelancers provide the
service.
 Enter the vendor and contract amount mentioned in the certificate.
 If you choose the ARP Contribution percentage radio button, then enter the ARP rate as
well.
If you choose the ARP Contribution Value radio button, then enter the ARP contribution
as well.
 Extended Withholding Tax
Use
The Extended Withholding Tax solution comes with sample settings for a range of withholding taxes. It
also comes with a number of Smart Forms that you can use to print withholding tax certificates.

Features
In Colombia, the main withholding taxes include:
 Income tax, which is known as impuesto de la renta
 Stamp tax (impuesto de timbre)
Stamp tax is levied on any documents, public or private, whose value exceeds the amount
stipulated by the authorities. The general rate is 1%, but some documents are subject to a 0% rate.
If the precise value of a document is not clear when the tax is due, the tax is still calculated at 1%,
but you have to record it using a separate tax code so that you can enter it separately on the
withholding tax return.
 Remittance tax (impuesto a las remesas)
This is a tax that is withheld on payments made to businesses abroad, in addition to any other
taxes withheld (with some exceptions). It also applies to any profits transferred by a Colombian
subsidiary to a parent company, if the parent company is abroad.
 Industry and commerce tax (impuesto de comercia y industrio)
This is a tax levied by municipalities. The exact tax rates vary depending on the municipality.
 Value-added tax (VAT, known as impuesto al valor agregado)
When you make a payment that includes VAT, you withhold a portion of the VAT due. This does
not apply if both parties are tax agents. Where payments are made to nonresident individuals or
businesses, VAT is withheld in full.
The system allows you to handle withholding taxes in accounts payable and accounts receivable.
In Accounts Receivable (FI-AR), the system also handles companies that are self-withholding agents:
Large companies are entitled to handle their own income taxes (autoretenciones). If you make a payment
to a company with such a status, you do not withhold any tax. Instead, the company calculates and remits
the withholding tax itself – hence the term "self-withholding."
For country-version Columbia, if the total value of an invoice lies with the UVT range in the table
mentioned below, the system calculcates the withholding tax at the relevant rate and adds a constant
value to it.
UVT Range Tax Rate (in %) Tax Calculation
0.01 - 95 0 N/A
95 - 150 19 (Invoice Base Amount in UVT -
95 UVT) * 19%
150 - 360 28 (Invoice Base Amount in UVT -
150 UVT) * 28% + 10 UVT
360 and above 33 (Invoice Base Amount in UVT -
360 UVT) * 28% + 69 UVT
For example, if the invoice amount is 175 UVT, the system determines the base by first subtracting 95
UVT from the invoice amount; in this case, 60 UVT. The applicable tax rate on the invoice amount is 28
percentage. The system also adds a constant value to the total tax amount; in this case, 10 UVT.
Hence, the withholding tax amount is (60 UVT * 28%) + 10 UVT = 26.8 UVT.
Note
The value of an UVT is changed at the beginning of each fiscal year.
If the previous year’s revenue of an independent employee is equal to or greater than 4073 UVT, the
system calculates the mimimum withholding tax amount by comparing the tax obtained using the above-
mentioned table with a new base. The new withholding tax base is determined as follows:
Serial Number Category Tax Calculation
A Total Invoice Amount N/A
B Mandatory pension contribution [(Total Invoice Amount * 40%) *
16%]
C Professional risks contribution [(Total Invoice Amount * 40%) *
0.522%]
D Mandatory health contribution [(Total Invoice Amount * 40%) *
12.5%]
E Monthly payment in COP Total Invoice Amount -
Mandatory pension contribution -
Professional risks contribution -
Mandatory health contribution
F Monthly payment in UVT (Monthly payment in COP / UVT)

Activities
Customizing
For generic information about customizing Extended Withholding Tax, see Settings for Extended
Withholding Tax: Overview.
Country Version Colombia comes with sample Customizing settings for all of the taxes listed above,
including withholding tax types and withholding tax codes.
In addition, you define CIIU codes, recipient types, and income types, which are later used in reporting,
and use them to classify your withholding tax codes.
To ensure that the system adds the constant value when you prepare a withholding tax return, make
settings in Customizing for Financial Accounting (New), under Financial Accounting Global Settings (New)
-> Withholding Tax -> Extended Withholding Tax -> Calculation -> Colombia -> Define Withholding Tax
Constants.
You maintain the data for freelancers and vendors on a monthly basis. To do so, on the SAP Easy
Access screen, choose Accounting -> Financial Accounting -> Accounts Payable -> Withholding Tax ->
Colombia -> Monthly Data Maintenance for Freelancers and Vendors.

Master Data
Enter the required information in the vendor and customer master data.
Periodic Processing
You use the system to prepare withholding tax certificates for your vendors as required. Sample Smart
Forms are provided.