1. Localizations for Colombia Implementation Guide
  2. Understanding Tax Rate Areas and Tax Rules for Colombia

Understanding Tax Rate Areas and Tax Rules for Colombia

Important: As of January 1, 2014, Oracle no longer supports magnetic media localizations. The existing magnetic media formats provided by Oracle prior to January 1, 2014 are still functional and remain unaffected.

You use the Tax Rate/Areas program (P4008) to set up tax rate area types to specify whether a tax area is for solidarity, withholding, or value-added tax (VAT). In Colombia, VAT is also known as IVA (impuesto al valor agregado). The system stores tax rate area information in the Taxes table (F4008). After you use the Tax Rate/Areas 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 Setting Up Economic Activity Code Information .

(Release 9.2 Update) For Accounts Payable, you can setup a tax rate area using the Tax Rate/Areas program (P4008) to calculate compound tax by using C as the tax explanation code. The system allows additional tax lines using C code. The tax minimum control is not applicable for tax explanation code C, since, it is not applicable in the voucher level.

Compound Tax

A code that calculates the Goods and Service Tax (GST) or Provincial Sales Tax (PST). If:

Checked: The PST is calculated on cost of item plus the GST (referred to as tax on tax and is typically used only in Quebec).

Unchecked: The PST is calculated only on the cost of the item.

VAT Expense

A code that identifies the percentage of the VAT amount that is not eligible for input credits. This field is used in Canada.

Tax Rate/Area Revisions

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.