Even the most budget-friendly vacations in Medellin involve things like accommodations, transportation, and food. However, visitors to Colombia might encounter an unpleasant surprise when reviewing their credit card receipts: the country’s VAT, known as the IVA tax. This is set at 19% for most of the country’s goods and services, which represents a pretty significant part of the cost of visiting Colombia. However, you don’t have to simply resign yourself to the additional cost and move on; there’s actually a way for non-residents to get a refund for the IVA they were charged while in the country.
At first, Colombia’s IVA was set at 16%; in 2017 it was raised to 19%. These numbers might seem high, but they’re fairly typical of what other Latin American countries charge for their IVA taxes. Here are some examples:
- Chile’s IVA is 19%
- Mexico’s IVA is 16%
- Peru’s IVA is 18%
- Brazil’s IVA is 17% minimum, up to 25%
- Argentina’s IVA is 21%
- Uruguay’s IVA is 22%
- Ecuador’s IVA is 15% for luxury items, and 12% for standard items
The purpose of Colombia’s IVA tax refund is to encourage international tourists to spend more money, which actually works out better for the economy than simply charging them the IVA tax. This refund is available for any non-resident who makes purchases in Colombia, unless they have dual citizenship in Colombia and another country.
How to get an IVA tax refund in Colombia
If you’re a foreigner who doesn’t reside in Colombia, you can enjoy a 100% refund on 12 different product categories for which the IVA tax is charged. The rules may change in 2023 to include all products, but for now there are limits to the items that are eligible for a refund.
Another way to calculate the eligibility of a purchase is if its value (including sale price and VAT) is equal to/greater than 3 Tax Value Units (UVT). This equals $108,924 COP, or about $26 USD. Previously, regulations required the purchase to be at least 10 UVT in order to receive an IVA tax refund.
Before you give yourself carte blanche on your spending allowance now that you’ll be skipping the IVA tax, you should know that there’s a catch: the maximum refund is $8,482,200 COP, which is around $2,023 USD. Even so, this allows you plenty of room for tax-free spending while in Colombia.
Another important caveat is that cash purchases aren’t eligible for refund, and neither are most online purchases; only those made in person with credit or debit cards.
The process of getting an IVA tax refund is taken care of as you exit the country, by going to the nearest DIAN office. These are located in many of the country’s airports, which makes the process more seamless for departing tourists. Just make sure you give yourself plenty of extra time before your flight; the form to claim an IVA tax refund recently changed, and some people have reported that the forms they downloaded from the DIAN website was different from the one they were required to fill out at the office.
This is what you’ll need to do:
- Fill out DIAN’s Form 1344
- Present the form to DIAN at the airport, preferably before you check in for your flight
- Bring your passport, a copy of the data page, and a copy of the page with your most recent entry stamp
- Bring copies of each sales receipt that’s under 180 days old
- Only submit receipts that were paid for in person in Colombia, with an international card
- Only submit receipts that were issued by registered merchants, and that show the IVA tax breakdown
- Only submit receipts that are for goods you’ll bring back home with you
Frequent visitors to Colombia should note that only one DIAN tax refund application can be submitted each quarter. Within three months, the card you indicated on Form 1344 will receive the refund. If not, you can contact DIAN on their website.
What to know about Colombia’s IVA tax
This tax is Colombia’s primary indirect tax, and applies to the majority of goods and services in the country. However, some items are exempt, and others have a lower tax rate. These are some examples of items that come with the 19% IVA tax rate:
- Spare parts for vehicles (not including parts for electric vehicles)
- Condiments such as dressings, sauces, and spices
- Margarine
- Oils
- Ultra-processed foods such as breads, cookies, and cereals (beginning in November 2023)
- Sodas (beginning in November 2023)
- Jewelry
- Footwear
- Appliances
- Airline tickets
- Movies
- Household and personal toiletries
- Clothing
There are certain electronic products that only get taxed when they exceed a specified price bracket. For example, affordable tablets or computers could be exempt. Desktop computers and laptops that cost $1,900,000 COP or less (around $450 USD) are exempt, but the tax applies to any of these products that cost more than this.
Then there are domestic or imported beers, which have an IVA tax of 14%. Products like affordable bicycles, toilet paper, and coffee have a 5% IVA tax. The 5% tax also applies to health insurance policies, hospitalization and surgery insurance policies, and prepaid medicine plans. Essential items like vegetables, fruits, eggs, and milk (as well as many others) are completely excluded from the tax.
If you shop at a grocery store, electronics store, or anywhere else in Colombia, you won’t have to be mentally adding an extra 19% to your purchases; the IVA tax is already included in the posted prices. If you check your receipt, though, you’ll see the breakdown for each category of IVA that was included in the total cost.
Colombia is already cheap compared to the US, but with an IVA tax refund it can be even cheaper
Colombia’s tourism industry is thriving, not just because it’s a beautiful country to visit, but also because it puts effort into making the experience more convenient for tourists. By figuring out how to save on IVA taxes in Colombia, you can enjoy your time there for an even more affordable price.
