Regulation of the Exclusion of VAT for the Creation of Digital Contents
Law 1819 of 2016 (Tax Reform) excluded among others, the following operations from value added tax (VAT): (i) the provision in Colombia or abroad, of virtual education services for the development of digital content in accordance with the regulation issued by the Ministry of Information and Communication Technologies (MINTIC); and (ii) the acquisition of software licenses for the commercial development of digital content, in accordance with the regulation issued by the MINTIC.
This exclusion was subject to regulation by the MINTIC. On August 25, 2017, through Decree 1412 of 2017, the MINTIC regulated the scope for the following services: (i) digital content and (ii) software for the commercial development of digital content, as follows:
1. Digital Content: is the content that complies with the following characteristics, notwithstanding others determined by the MINTIC:
1.4. Its commercial value is not determined by the inputs used for its development.
1.5. It can be copied, transmitted or used through telecommunication networks or ICT tools (information and communication technology).
1.6. Content complies with information products provided in digital format as a sequence of ones and zeros to be read by a computer and give instructions to it, such as computer software, videos, movies, music, games, e-books and applications.
2. Software for the development of digital content: a set of programs and routines that allow a computer to perform certain tasks related to the creation and production of digital content.
This regulation extends the VAT exclusion to the provision of web pages, servers (hosting), cloud computing and remote maintenance of programs and equipment to:
c. Virtual education services for the development of digital contents, such as those aimed at digital animation, video editing and production, sound design and editing, programming, user interface and others provided for in Decree 1412 of 2017; and
d. The acquisition of software licenses for the commercial development of digital content, including among others software related to: production and sound editing, analysis, marketing and monetization of digital content, graphic editing and integration of information systems.
Regarding the general services of digital distribution platforms, these continue to be taxed with VAT via withholding tax over the 100% of the accrued tax. This model will be enforced beginning July 1, 2018, according to the rules established by the National Tax and Customs Department through a Resolution that will regulate the way in which the service providers from abroad will comply with their VAT obligations, including how to declare and pay the corresponding tax.
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