Requirements to belong to the Simplified Regime: Read us and find out what you need to know

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In colombia There are two regimes to pay income tax, the Simplified Regime and the Common Regime. Do you want to know more? Keep reading!

What is the Simplified Regime?

The Simplified Regime, is the system contemplated by DIAN, to establish the income tax that a natural person, included in the group of “small merchants”; will have to pay the State.

They are included in this group retailers, retailers, artisans, farmers and ranchers, who carry out taxed operations

What is the National Tax and Customs Directorate or DIAN?

The National Tax and Customs Directorate or DIAN, of Colombia, is the entity, which has the power to planr and supervise that all activities related to customs, tax and exchange policies are carried out, in order to consolidate the fiscal security of the State.

The National Tax and Customs Directorate is an entity dependent on the Ministry of Finance and Public Credit.

Although its main seat is in the city of Bogotá, it has service offices throughout the country, to make the fulfillment of its function more effective and facilitate customer service.

The Legal Representative of the National Tax and Customs Directorate, is the CEO.

What are the functions of DIAN?

Among the functions to be performed by the Tax Directorate and National Customs or DIAN, the following are contemplated:

  • Establishing the prices to be charged for the sale of goods and services.
  • Classification of taxpayers, according to their characteristics and the type of activity they carry out.
  • Create and run policies to govern collection, inspection and control of income taxes, complementary taxes derived from national tax stamps, customs duties and foreign trade.
  • Direct customs activity in order to ensure that the abandoned, confiscated or apprehended merchandise are donated to favor the tax revenue of the Nation.
  • Admit and pay the reward to other people who actively participate in the control of smuggling, corruption and evasion.
  • Monitor and have control of people who professionally practice the purchase and sale of currency.
  • Control and supervise operations derived from the exchange rate regime.
  • Monitor that tax obligations for import and export are fully complied with.
  • Carry out the evaluation and control of the authorities who function as tax police, so that they fulfill their duties.
  • Make alliances with either public bodies or private, national or foreign to intensify the fight and thus minimize tax, customs, and exchange delinquencies; also the evasion of taxes and the smuggling of goods.

What are the requirements to belong to the Simplified Regime?

To belong to the simplified Regime necessary:

1.- Being a Natural Natural Person.

2.- Have a single location or establishment where you carry out your economic activities.

3.- Have maximum three partners.

4.- Do not carry out activities that are related and produce benefits from the negotiation of intangible assets, What:

  • Brands.
  • Patents
  • Franchises.
  • Medical insurance.
  • Copyright, de Intellectual Property and Software.
  • Concessions to Public services.

5.- Have gross income for the activity carried out less than 3,500 UVT, Tax Value Units, during the previous year.

6.- Not be an importer or exporter; in itself not being a customs user.

7.- Not having entered into a contract for the sale of goods or services for a value equal to or greater than 3,500 UVT; Units of Tax Value, during the previous year or the current year.

8.- Your deposits during the year do not exceed 3,500 UVT, Tax Value Units.

9.- Pay the Industry and Commerce Tax, ICA.

10.- Keep the daily operations record book. Presenting income and expenses.

eleven.- At the end of the month you must total all income and expenses and record them in the book.

12.- Annually fill out the Model Form number 315. For tax declaration. This form is available on the DIAN website.

13.- Register in the RUT, Single Tax Registry.

14.- Exhibit in a place visible to the public, the proof of registration in the RUT, as belonging to the Simplified Regime.

fifteen.- Comply with regulations and systems required by the National Government.

How to register in the Single Tax Registry or RUT?

To register in the RUT, Single Tax Registry, it is necessary to comply with the following steps:

  • Enter the DIAN website.
  • To select “RUT registration”.
  • Then select “Regime involved not bound by the Chamber of Commerce”.
  • Respond very carefully and correctly the questions that appear there. If you answer the questions incorrectly, you will have to go to DIAN to carry out the procedure.
  • If the answers are correct, the form is originated of the RUT. This must be completed with all the required data.
  • Select “Save” and then select “Submit”.
  • Must be also send a PDF file of the photocopy of the identification document and a receipt of payment of public service, water, electricity or telephone.
  • At the end of the whole process, within 5 business daysFrom the moment the request was sent, the DIAN will send the PDF file and the RUT, with the word Certificate, by email.

What are the differences between the Simplified Regime and the Common Regime?

Simplified regimen

  • Must be a natural person, merchants, artisans, retailers or retailers.
  • Must have a single business establishment to carry out their activities.
  • Avoid doing economic activities that are related to intangible assets. It is necessary to know which ones are considered by DIAN as intangible assets.
  • They are not exporters or importers. Or what is the same, they are not customs agents.
  • That the gross income obtained in the previous year do not exceed 3,500 UVT, Tax Value Units.
  • No they can charge VAT.
  • Given the above, they are not required to issue invoices.
  • In opportunities, do not pay income tax. But they are obliged to declare.
  • They cannot have more than 3 partners.

Common regime

  • They can be a Natural Person that does not meet the above conditions, but all Legal Persons enter the Common Regime.
  • It is allowed to have more than one business establishment to carry out its commercial activity.
  • They are allowed carry out commercial activities where they have benefits with the negotiation of intangible assets.
  • May be customs agents, importers or exporters.
  • The gross income obtained during the previous year, must be greater than 3,500 UVT, Tax Value Units.
  • Is it so allowed to collect VAT.
  • They have to issue the bill of sale.
  • Is it so obliged to declare income and to pay taxes.
  • May have more than three partners.

What sanctions are imposed on people included in the Simplified Regime who do not comply with the regulations?

There are sanctions for people who are included in the Simplified Regime and:

  • They do not comply with the Annual statement of the tax or do not declare on the dates indicated by the DIAN. This is they do not fill out the Model Form number 315.
  • They do not comply with the guidelines presented to be included in the Simplified Regime.

The sanctions imposed They may be:

  • Closing of the establishment for as long as the law considers.
  • Fine up to 10% of the statement of bank deposits.
  • Fine up to 10% of gross income statement obtained during the previous year.

Exclusion from the Simplified Regime. In this case, the person will have to carry out all the procedures to be included in the Common Regime, which meet other requirements.

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