How to Know if the Company is a Single or Simplified Regime: What They Are, Differences and MORE

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In this article by How to Know if the Company is a Single or Simplified Regime, you can get the information you need and answer any questions you may have.

Do not be left without the information, here you can find what are the obligations of both regimes, the differences and you can really know what it means to belong to either of them. As an entrepreneur or business owner dedicated to sales or service provision, you cannot neglect matters related to sales tax.

Follow the reading and learn more about the subject.

How to know if the Company is a Single or Simplified Regime?

Speaking of common or simplified regime are ways of classifying the people or companies that must collect the Sales Tax (VAT).

The fact is not that you pay or not the Sales Tax (VAT) if you have a business or company. The truth is that those who pay it are the consumers. The basic function of companies in taking charge of collecting the tax.

The company must take responsibility for ensuring that the tax reaches the State. No business or company can withhold that tax because then it commits a crime.

The Tax Regime in Colombia is divided into three and are next:

  • The Common Regime, is the general rule to which the taxpayer must submit, is that of the merchants, industries, wholesalers, among others. The sales tax, the industry and commerce tax apply, so any transaction that the taxpayer makes must be invoiced under the electronic invoice modality.
  • Simplified regimen includes the agricultural and livestock sectors and includes the retailers.
  • He too Special regime which includes the Non-profit entities, which are the Foundations, Associations and Corporations.

How to know if the Company is a Single or Simplified Regime: What are they?

To be within a certain category of tax regime in Colombia, it is necessary to meet a certain number of conditions or characteristics. This is the case of so-called small merchants, to whom they sell small quantities of products or provide few services. These small merchants are those that belong to the Simplified Regime

In the sale of most products and services, Sales Tax (VAT) must be charged. But if it happens that the merchant or the service provider is not complying with certain criteria, the law establishes that it can be granted the unique ability not to collect VAT.

Merchants and service providers that are located in the simplified regime, should not withhold the Sales Tax (VAT), while those that belong to the common regime should.

If it is classified within the simplified regime, it is because it meets the corresponding criteria. In case of not meeting at least one of the criteria, then it immediately belongs to the common system.

The basis is derived from the activity carried out by these merchants or service providers, the amount of sales and the taxes they pay to the State. Companies that are considered under the simplified regime are exempted from certain tax and administrative procedures that must be followed by those who belong to the common regime.

Simplified regimen

The criteria to be met to belong to the Simplified regimen are as follows:

  • Should have only one commercial establishment, office, premises, headquarters or business, otherwise it no longer fulfills it.
  • Likewise, at the office, headquarters, commercial establishment or business No activities related to royalties, franchises, concessions should be carried outits other similar system that means exploitation.
  • In addition, must not be a customs userIn other words, if it is dedicated to import or export, it will no longer be considered as a simplified regime.
  • On the other hand, You must have an annual income of less than 104,136,000 Colombian Pesos, excluding what corresponds to wages.
  • Also, you must not have a contract for the sale of goods or the provision of services exceeding 104,136,000 Colombian Pesos in a fiscal cycle.
  • Similarly, It must not exceed the amount of 104,136,000 Colombian Pesos with regard to deposits, financial investments or bank consignments in a year.

For more information, consult the Directorate of National Taxes and Customs (DIAN) this link.

Common regime

In the case of the Common Regime, they must also comply with a series of conditions or characteristics that those who must collect the Sales Tax (VAT) have.

The Common system is the sales system that contributes to the collection of the tax, either directly or indirectly. Generally, it refers to wholesalers, retailers, retailers or service providers that generate taxes.

The condition of Being of the Common Regime corresponds to natural or legal persons that sell products or provide services with Sales Tax (VAT). The products that are taxed with Sales Tax (VAT) are those that generate the withholding tax.

In a certain way, it is considered responsible for the sales tax derived from certain commercial activity. All of this means that there cannot be one person meeting the requirements in both regimes.

The conditions for the Common regime are as follows:

  • The Most of the companies belong to this common system.
  • Likewise, all those who do not meet the criteria to belong to the simplified regime.
  • Also, non-profit entities.

How to Know if the Company is a Single or Simplified Regime: Common Obligations

The people and companies that are in the common system must comply with certain and certain tax obligations. One of them is the obligation to issue an invoice, to assume VAT, to submit the declaration and payment.

The obligations they must fulfill are the following:

  • They must keep the business accounting

Businesses or companies that are in this common regime must keep an accounting record of all transactions and sales operations carried out. These records must be guided by generally accepted accounting standards in Colombia.


The company or business must be registered in the corresponding Mercantile Registry, it must also do so with the trade and accounting books.

  • It is up to you to register in the RUT

Every person in the common system must be registered in the Single Tax Registry (RUT) or update it if they are already registered.

  • Must issue Invoice

The fact of being obliged to keep the business accounting implies that it issues the invoices for the sales made or the services provided. They must meet all requirements and be based on the Article 67 of the Tax Statute.

If the mandate is not fulfilled, there are the sanctions for non-compliance established in the Articles 652 and 657 of the Tax Statute.

  • Make the VAT Declaration

All companies in this regime must submit the VAT return within the corresponding established period. It must be done before the competent body with its own authority and it must be done in the periods indicated for it.

Likewise, any natural or legal person who is as a withholding agent, must make the declarations of the withholdings in the corresponding deadlines. The return must be submitted with the applicable payment, otherwise it is a Declaration not filed.

  • You must notify the cessation of activities

It is worth noting that any person, both natural and legal, that is within the common system, must present before the authorized entity everything that affects and is related to the commercial operations that it carries out.

For example, in the case of vacations, holidays, and others. That is, everything that implies that the trade is temporarily or permanently closed.

How to Know if the Company is a Single or Simplified Regime: Obligations of the Simplified

Belong to the simplified regime even when you have that condition also has obligations and responsibilities that must be properly fulfilled. The obligations for this regime are the following:

You must register as the person responsible for the simplified regime in the Single Tax Registry (RUT).

This must be done in accordance with what is established by the ordinance and before the authorized entity.

Keep the fiscal book of daily operations record

The company or business must have a fiscal book of daily operations, it must be foliated and intended for that function. It must indicate the identification of the person in charge.

The purpose is to keep a daily control of income from services or sales made in accordance with the invoices issued. Likewise, you must have the relationship of expenses for costs and expenses.

All invoices you have, as well as expenses or costs, must be totaled. This fiscal journal must be available to the Tax Administration for a period of five years.

Has the duty to comply with the technical control systems

These companies under the simplified regime must comply with all the guidelines established by DIAN, which is the entity in charge of establishing control systems in activities related to income.

The controls are given by the information that is requested by the entity in charge and serve to determine the tax obligations.

Differences Between Both

Generally there is confusion regarding these two regimes, the differences are mentioned here in this section.

It should be clear that those responsible for the Sales Tax are divided into these two groups: Common Regime and Simplified Regime. The two groups sell products and services taxed with VAT.

The differences are as follows:

  • Within the simplified Regime can only be natural persons that meet certain requirements.
  • Within the common regime both natural persons and legal persons can be that meet certain and certain conditions.
  • The limits related to income and other requirements apply to natural persons, since legal persons will always be in the common system regardless of income levels.
  • The common system must obligatorily invoice, collect VAT, make the Declaration and keep the accounting.

After reading this article on How to Know if the Company is a Single or Simplified Regime, you are now more clearly and can recognize to which regime one or another company belongs. If this information was helpful to you, now you should share it.

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