(COL) Setting Up the System for Colombian Taxes

This chapter provides an overview of tax rate areas for Colombia and discusses how to:

Set up user-defined codes (UDCs) for Colombia.
Set up tax parameters.
Enter the economic activity code.
Set up general parameters for tributary codes.

Understanding Tax Rate Areas for Colombia

Use tax area types to specify whether a tax area is for solidarity, withholding, or value-added tax (VAT). Tax rate areas are stored in the F4008 table. For Colombia, you must set up tax rules by company. Enter 1 for the Tolerance Amt Warning, 0 for Tolerance Amt Error, and select the Tax on Gross Including Discount option.

After you use the Tax Rate/Areas (P4008) program to enter tax rate areas, the system displays the Additional Tax Information form on which you enter the economic activity code for Colombia.

See Entering the Economic Activity Code.

You should set up tax rate areas within a structure, for example, A BBB CCC D. This table represents how you can set up the structure:

Character	Example
A (Tax type)	G (General VAT)
BBB (Tax concept)	COM (Purchasing) HON (Fees) SER (Services CMI (Commissions) ARR (Leasing) M (Manual tax settlement) Note. Use M when there is no specific VAT or withholding percentage and the tax calculation is entered manually.
CCC (Tax subgroup)	For COM (Purchasing): GEN (General) CMB (Fuel) AGR (Biological assets) For SER (Services): GEN (General) VYA (Control and hygiene) HYR (Hotels, restaurants, and housing) CON (Building) For ARR (Leasing): MUE (Movable assets) INM (Immovable assets) For M (Manual tax settlement): VAT RET (Source withholding)

Using this example, tax areas could be:

GCOMGEN: General VAT for automatic general purchases.
EHONGENM: Manual exempt general fees.

Setting Up UDCs for Colombia

Set up system 76C and system 09 UDCs before processing taxes for Colombia.

See Setting Up UDCs for Tax Processing for Colombia.

Setting Up Tax Parameters

This section discusses how to:

Set up tax parameters for Colombia.
Set up economic activity for Colombia.

Forms Used to Set Up Tax Parameters

Form Name	FormID	Navigation	Usage
Work With Tax Parameters	W76CI00A	Tax Parameters (G76C412), Tax Parameters	Review and add tax parameters.
Tax Parameters	W76CI00C	Click Add or Select on the Work With Tax Parameters form.	Revise and define tax parameters.
Work With Economic Activity	W76CI00D	Tax Parameters (G76C412), ICA. On the Work With Tax Parameters form, select Work With Ec. Acti from the Form menu.	Set up economic activity.

Setting Up Tax Parameters

Access the Tax Parameters form.

Tax Rules System

Enter a user-defined code (H00/TX) that specifies the system to which the tax rules apply. The system allows you to select one option only. Values are:

1: AR and Sales Order

2: AP and Purchasing

3: GL and Journal Entry

Company/Supplier Tax Payer

Enter a user-defined code (76C/TC) that specifies the type of tax payer for the company that originates the transaction.

Tax Type

Enter the tax type, which is equal to the two first characters of the GL offset defined in the tax area

Minimum Amount

Specify whether the maximum amount that an item can be taxed must be taken into consideration in order to calculate withholdings.

Economic Activity

Specify whether the percentage of a tax must be calculated by city and economic activity. If you select Y, you must define percentages by city and economic activity.

Tax Rate 1

Enter the percentage of tax that should be assessed or paid to the corresponding tax authority, based on the tax area. Enter the percentage as a whole number and not as the decimal equivalent. For example, to specify 7 percent, enter 7, not .07. If the tax is a withholding, enter the percentage as a negative number.

Setting Up Economic Activity

Access the I.C.A. - Economic Activity form.

Tax Type

Enter the tax type in this field, which is equal to the two first characters of the GL offset defined in the tax area.

City Code

Leave this field blank.

C/EA Code (category code - Address Book 07)

Enter a user-defined code (00/07) used in the 1099 process to identify the box on the 1099 form in which a voucher or pay item should be reported. Examples include:

01: Rents

13: Nontaxable distributions

61: Interest income

A7: Nonemployee compensation

Maximum Unit Cost

Enter a number that identifies the maximum amount that an item can be taxed. If the unit cost of an item is more than the amount that you specify in this field, the maximum unit cost becomes taxable.

This field is used for processing sales and purchase orders only.

Entering the Economic Activity Code

This section provides an overview of the economic activity code for Colombia and discusses how to enter the code.

Understanding the Economic Activity Code

When you use the Tax Rate/Areas program to set up tax rate codes for Colombia, the system automatically displays the Additional Tax Information form on which you enter the economic activity code. The system saves the code that you enter to the F76C4008 table.

When you enter standard vouchers or logged vouchers, the system retrieves the economic activity code when it calculates taxes on the vouchers. The system saves information about the relationship between the voucher and the economic activity code in the F76C4011 table. If no economic activity code exists for the tax rate code in table F76C4008, the system uses the economic activity code from the supplier's address book record. If no code exists in the address book record, the system returns an error.

In addition to entering the economic activity code when you set up tax rates codes, you can enter or modify the economic activity code for existing tax rate codes by selecting the tax rate code and then selecting Regional Info from the Row menu on the Tax Rate/Area Revisions form.

Prerequisites

Before you complete the task in this section:

Verify that the Localization Country Code field in the User Profiles program is set to CO (Colombia).
Verify that appropriate economic activity codes exist in the 1099 Reporting Code (01/07) UDC table.

Form Used to Enter the Economic Activity Code

Form Name	FormID	Navigation	Usage
Work With Tax Rules	W0022A	Tax Processing and Reporting (G0021), Tax Rules	Review and select tax rules by company.
Tax Rules Revisions	W0022B	On Work With Tax Rules, click Add.	Add and revise tax rules by company.
Additional Tax Information	W76C4008B	Click OK on the Tax Rules Revisions form. Alternatively, select an existing record on the Tax Rules Revisions form and select Regional Info from the Row menu.	Add or revise the economic activity code.

Entering the Economic Activity Code

Access the Additional Tax Information form.

Economic Activity Code

Enter a code that exists in the 1099 Reporting Code (01/07) UDC table to specify the economic activity code.

Setting Up General Parameters for Tributary Codes

This section discusses how to set up the tributary codes.

Form Used to Set Up General Parameters

Form Name	FormID	Navigation	Usage
General Parameters	W76CP001A	System Configuration (G76C1041), General Parameters	Specify the category codes that the system uses to identify business units, accounts, and other tributary information.

Setting Up General Parameters

Access the General Parameters form.

Business Unit

Enter the business unit in which you define all tributary information. The system uses this business unit as the reporting company.

Category Code That Identifies Tributary Code

Enter the system 09 UDC category code in which you set up tributary codes. For example, if you set up UDC 09/10 to identify tributary codes, enter 10.

Category Code That Identifies Tributary Subcode

Enter the system 09 UDC category code in which you set up tributary subcodes. For example, if you set up UDC 09/20 to identify tributary codes, enter 20.

Category Code to Identify Account Master Field for Values

Enter the system 09 UDC category code in which you identify the account master field to report.

Category Code to Identify Account Master Field for Base

Enter the system 09 UDC category code in which you identify the base amount to report.

Category Code That Identifies the Department

Enter the system 09 UDC category code from the account master that is associated with the department code and municipality.

Third Name

Enter 1 to use the mailing name (data item MLNM) field to determine the value that the system uses for the third name. If you leave this field blank, the system uses the value in the Alpha name field (data item ALPH) of the address book.

Person Type Code

Specify the UDC from system 76C in which exists the codes for the person type information or the corporation number that is assigned by DIAN. For example, enter TC to us the values in the 76C/TC UDC table. If you do not complete this field, the system uses the values that exist in the TAXC (H00/TA) UDC table.

Tax Rules System	Enter a user-defined code (H00/TX) that specifies the system to which the tax rules apply. The system allows you to select one option only. Values are: 1: AR and Sales Order 2: AP and Purchasing 3: GL and Journal Entry
Company/Supplier Tax Payer	Enter a user-defined code (76C/TC) that specifies the type of tax payer for the company that originates the transaction.
Tax Type	Enter the tax type, which is equal to the two first characters of the GL offset defined in the tax area
Minimum Amount	Specify whether the maximum amount that an item can be taxed must be taken into consideration in order to calculate withholdings.
Economic Activity	Specify whether the percentage of a tax must be calculated by city and economic activity. If you select Y, you must define percentages by city and economic activity.
Tax Rate 1	Enter the percentage of tax that should be assessed or paid to the corresponding tax authority, based on the tax area. Enter the percentage as a whole number and not as the decimal equivalent. For example, to specify 7 percent, enter 7, not .07. If the tax is a withholding, enter the percentage as a negative number.

Tax Type	Enter the tax type in this field, which is equal to the two first characters of the GL offset defined in the tax area.
City Code	Leave this field blank.
C/EA Code (category code - Address Book 07)	Enter a user-defined code (00/07) used in the 1099 process to identify the box on the 1099 form in which a voucher or pay item should be reported. Examples include: 01: Rents 13: Nontaxable distributions 61: Interest income A7: Nonemployee compensation
Maximum Unit Cost	Enter a number that identifies the maximum amount that an item can be taxed. If the unit cost of an item is more than the amount that you specify in this field, the maximum unit cost becomes taxable. This field is used for processing sales and purchase orders only.

Business Unit	Enter the business unit in which you define all tributary information. The system uses this business unit as the reporting company.
Category Code That Identifies Tributary Code	Enter the system 09 UDC category code in which you set up tributary codes. For example, if you set up UDC 09/10 to identify tributary codes, enter 10.
Category Code That Identifies Tributary Subcode	Enter the system 09 UDC category code in which you set up tributary subcodes. For example, if you set up UDC 09/20 to identify tributary codes, enter 20.
Category Code to Identify Account Master Field for Values	Enter the system 09 UDC category code in which you identify the account master field to report.
Category Code to Identify Account Master Field for Base	Enter the system 09 UDC category code in which you identify the base amount to report.
Category Code That Identifies the Department	Enter the system 09 UDC category code from the account master that is associated with the department code and municipality.
Third Name	Enter 1 to use the mailing name (data item MLNM) field to determine the value that the system uses for the third name. If you leave this field blank, the system uses the value in the Alpha name field (data item ALPH) of the address book.
Person Type Code	Specify the UDC from system 76C in which exists the codes for the person type information or the corporation number that is assigned by DIAN. For example, enter TC to us the values in the 76C/TC UDC table. If you do not complete this field, the system uses the values that exist in the TAXC (H00/TA) UDC table.