VAT and UVT (Colombia)
VAT (IVA) is Colombia's sales tax. UVT is a unit the tax authority updates yearly to set thresholds.
What are Colombia's VAT and UVT, and how do they affect pricing in an online store?
IVA is Colombia's value-added tax, charged on most goods and services, currently at a general rate of 19%. Some products are exempt or taxed at a different rate by law, and several of those rules depend on the UVT.
The UVT, tax value unit, is a measure that Colombia's tax authority (the DIAN) updates every year and uses to set peso thresholds without having to change the law each time, for example how many personal computers stay exempt from VAT up to a certain price. When the UVT goes up, those peso thresholds go up with it.
Why it matters to your business
A store selling in Colombia has to know which products carry VAT and which do not, and show that clearly to the customer in the order summary. Charging VAT wrong is a costly mistake, and a system that recalculates on its own whenever the UVT changes saves you from checking every product by hand.
How we use this at Damorus
At URG Technology a computer priced up to 50 UVT is exempt from VAT, measured against the price the customer actually pays after any discount, so a markdown can change whether a computer is taxed. If the UVT value changes from one year to the next, every product reclassifies itself with no code changes, and checkout breaks out VAT on its own line before the total.
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