Requirements to belong to the Simplified Regime: What is it, Differences and MORE

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The Simplified Regime is the institution in charge of the taxes paid by small merchants in Colombia. Know them requirements to belong to the Simplified Regime helps thousands of small businesses, which can be benefited by the policies of this institution.

The tax legislation that manages the Simplified Regime includes various types of small businesses. These include retailers or retailers, which are those who are responsible for selling various products in small quantities.

In case you have a small business in Colombia or you want to have one, the characteristics of the Simplified Regime may interest you.

If so, in the following article you will be able to read all about this legislation, the requirements to belong, its differences with the Common Regime and much more.

What are the Requirements to belong to the Simplified Regime?

To belong to the Simplified Regime and not to the Common Regime, merchants must meet a series of requirements. These must be recorded, carry out the corresponding process and wait for the final answer.

This answer corresponds to the National Tax and Customs Directorate (DIAN), which is the institution in charge of this process. In fact, through the DIAN website You will be able to find the exact information about the online procedure to start your Simplified Regime process.

Now, to be able to do all this and belong to the Simplified Regime, you must meet the following requirements:

  • Have at least one year in the market that corresponds to the business.
  • Have an amount of income less than (3,500) UVT in the previous year of work. If not, your company does not meet the requirements to be considered a small business.
  • Have, at most, a single establishment, premises, office, headquarters or business to carry out the respective activity of the company.
  • Not to develop in said offices any activity under franchise, royalty, concession, authorization or any system that is dedicated to the exploitation of intangibles.
  • Not be customs users.
  • The amount of bank consignments, as well as investments and deposits, cannot exceed (3,500) UVT.
  • Not having contracts for the provision of services or sale of goods that are taxed for a value equal to or greater than 3,500 UVT.

As you can see, the economic limit that is assessed in tax units to determine small businesses is 3,500 UVT. In general, companies that bill above that amount or that do not comply with the aforementioned standards cannot have the Simplified Regime service.

It should be noted that companies that want to perform services or sale of goods greater than 3,500 UVT must be registered in the Common Regime. Otherwise, you would fail to comply with the aforementioned requirements, which would affect your request for the Simplified Regime.

Who belongs to the Simplified Regime?

The Simplified Regime protects all businesses that DIAN’s economic policies consider small businesses. So, understanding that they are merchants with less power, sales value taxes are different those of the Common Regime.

Therefore, the Simplified Regime belongs to natural persons who, when engaging in commerce, sell in small quantities. That is, retailers are the first large group that can apply and belong to the Simplified Regime.

In turn, farmers and ranchers whose activities are taxed must make their due tax declaration. Due to the lower purchasing power they generate, in general they are also candidates to belong to the Simplified Regime.

In contrast, those larger companies with higher value do not fall within the requirements of the Simplified Regime. These types of larger businesses usually have to declare under the Common Regime factor.

However, in case you still have doubts, you should always bear in mind that the amount of UVT that you invoice per year is the most important thing. The general requirements prevent any company that exceeds 3,500 from belonging to this modality.

Differences between Simplified Regime and Common Regime

In Colombia, the value of the added tax (VAT) corresponds to 16% of the value of the product or service. In the tax return there are two types of people: those who pay it by paying their percentage on each purchase and the «responsible».

The first group is the common citizen who does not work in the market, while the second is the merchants. Within this group, those responsible are who should do their tax collection and pay the state.

Then, all merchants, business or companies must file their taxes. Some do it through the Common Regime and others through the Simplified Regime, but these are not exactly the same.

In themselves, the basic differences of these regimes are:

  • Those of the Common Regime must carry, in a compulsory way, the accounting. On the other hand, those of the Simplified Regime should only do so if they make commercial advances.
  • Those merchants belonging to the Simplified Regime are not obliged to issue invoices, while those of the Common Regime are.
  • Those of the Simplified Regime may suffer special withholdings by those who are part of the Common Regime.
  • All merchants or companies of the Common Regime must submit their annual return, while those of the Simplified Regime do not.

Basically they are differences in the declaration, in the issuance of some documents and in the frequency of delivery of certain requirements. Due to the economic power of the companies that do not belong to the Simplified Regime, filing taxes is a bit more complex.

Remember that all people, companies, companies or businesses that have legal status belong to the Common Regime. Additionally, companies that exceed the UVT amounts specified by the DIAN in the tax return will go in this section.

How do I know if I meet the Requirements to belong to the Simplified Regime?

One of the biggest doubts regarding these issues in Colombia is how to know which regime the companies belong to. In general, the requirements of each type tend to differentiate companies very well, but there are some that can be identified with both requirements.

Therefore, it is important to remember that the Simplified Regime it is only for small businesses. Companies can avail themselves of said title following the previously mentioned requirements, since those that do not comply with them cannot belong to this modality.

However, the most important thing to know is the general UVT limit. In applications to belong to the Simplified Regime, companies are asked to not have income greater than 3,500 UVT. Likewise, they cannot have bank consignments, investments or deposits that exceed this amount.

The general reason for this is simple: the companies handling these amounts are assumed to be not small businesses. Therefore, if you want to enroll your company in the Simplified Regime and handle more than these figures, it is likely that your application will be rejected.

What is the Simplified Regime?

As you may have read, the Simplified Regime is a different way to declare taxes. It is a legislation that applies to the so-called “small merchants”, since it is understood that their economic power within the market is less.

These small merchants are understood to be those companies or companies that comply with the requirements established by the DIAN. In addition to this, they must enter within the economic limit of 3,500 UVT for bank consignments and investments, since all companies that exceed it may not belong to the Simplified Regime.

Although all these procedures can be a bit complicated, it is an annual declaration that is usually simplified if your company belongs to the Simplified Regime. These processes are carried out by DIAN, which is the Colombian company in charge of collecting these taxes.

When companies are going to be your statement, the main doubt usually be in the type of regime to which they belong. Many may wonder if their company, even though it belongs to the Common Regime, may or may not belong to the Simplified. The answer is obtained by seeing if the expenses, calculated in UVT, exceed the maximum figure or not.

However, both modalities have very marked differences, which are usually seen in the declaration processes. While the companies of the Simplified Regime they should not deliver special statements or issue invoicesThose of the Common Regime do have to.


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