The Value Added Tax (VAT) is an indirect tax that taxes the consumption, which means that when a person (customer) makes a purchase of a good or service, is paying this tax at a general rate of 13% or in any of the reduced rates of 4%, 2% or 1%.
Staring July 1st 2019 will be starting date and lawyers, doctors and others must collect from their clients and customers the VAT Tax
Submission and payment of the VAT
The collection of VAT charged to customers, for the provision of services or for the sale of monthly goods made by the taxpayer, must be filed using the form D-104, within the first 15 calendar days of the following month and paid online or trough any of the entities authorized by Tax Office.
Even if no sales or purchases have been made during the month or there is no tax payable, you must always submit the respective return form D-104.
The filing must be made online using the called 'Virtual Tax Administration' webpage/software (ATV in Spanish).
The payment can be made online through the website of the financial institution authorized by the Tax Office.
Calculation of the tax
When companies have collected the value added tax (VAT) for the sale of goods or the provision of services (also called tax debit or VAT charged to customers) during the month they have the obligation to pay to the Tax Office within the first 15 calendar days of the following month.
Before paying the VAT charged during the month, the taxpayer has the option to deduct or discount the VAT paid (tax credit) for the goods or services that he has acquired to carry out his economic activity.
Tax debit - Tax credit = Tax to pay
(VAT charged) (VAT paid)
Calculation for the month of July 2019 (July 1st to July 31st 2019):
Net sales taxed (¢ 3,000,000 x 13% VAT) = ¢ 390,000 (tax debit)
Net purchases of the month (¢ 2,000,000 x 13% VAT) = (- ¢ 260,000) (tax credit)
¢ 130,000 Net tax of the month (¢ 390,000 -¢ 260,000)
- ¢ 50,000 Withholding tax on sales tax (credit card companies did a withhold )
¢ 80,000 Tax to be paid