## (COL) Setting Up the System for Colombian Taxes

This chapter provides an overview of tax rate areas for Colombia and discusses how to:

- Set up economic activity information.

- Set up tax parameters.

- Set up general parameters for tributary codes.

- Set up the system for tax reporting.

See Also

Setting Up UDCs for Colombia

### Understanding Tax Rate Areas and Tax Rules for Colombia

You use the Tax Rate/Areas program (P4008) to set up tax rate area types to specify whether a tax area is for solidarity, withholding, or value-added tax (VAT). In Colombia, VAT is also known as IVA (impuesto al valor agregado). The system stores tax rate area information in the Taxes table (F4008). After you use the Tax Rate/Areas program to enter tax rate areas, the system displays the Additional Tax Information form on which you enter the economic activity code for Colombia.

See Setting Up Economic Activity Code Information.

You should set up tax rate areas within a structure, for example, A BBB CCC D. This table represents how you can set up the structure:

Character | Example
A (Tax type) | G (General VAT)
BBB (Tax concept) | COM (Purchasing) HON (Fees) SER (Services CMI (Commissions) ARR (Leasing) M (Manual tax settlement) Note. Use M when there is no specific VAT or withholding percentage and the tax calculation is entered manually.
CCC (Tax subgroup) | For COM (Purchasing): GEN (General) CMB (Fuel) AGR (Biological assets) For SER (Services): GEN (General) VYA (Control and hygiene) HYR (Hotels, restaurants, and housing) CON (Building) For ARR (Leasing): MUE (Movable assets) INM (Immovable assets) For M (Manual tax settlement): VAT RET (Source withholding)

Using this example, tax areas could be:

- GCOMGEN: General VAT for automatic general purchases.

- EHONGENM: Manual exempt general fees.

Tax Rules

You set up tax rules by company in the Tax Rules program (P0022). When you set up tax rules for Colombian companies, enter 1 for the Tolerance Amt Warning, 0 for Tolerance Amt Error, and select the Tax on Gross Including Discount option.

See Also

Setting Up Tax Rate Areas

### Setting Up Economic Activity Code Information

This section provides an overview of economic activity codes, lists prerequisites, and discusses how to associate economic activity codes to tax rate areas.

#### Understanding Economic Activity Codes

When you use the Tax Rate/Areas program to set up tax rate codes for Colombia, the system automatically displays the Additional Tax Information form on which you associate the economic activity code to the tax rate area. The system saves the code that you enter to the Additional Tax Areas - COL table (F76C4008).

When you enter standard vouchers or logged vouchers, the system retrieves the economic activity code when it calculates taxes on the vouchers. The system saves information about the relationship between the voucher and the economic activity code in the A/P Ledger Tag Table - COL table (F76C4011). If no economic activity code exists for the tax rate code in the F76C4008 table, the system uses the economic activity code from the supplier's address book record. If no code exists in the address book record, the system returns an error.

When you set up tax rates codes you can enter or modify the economic activity code for existing tax rate codes by selecting the tax rate code and then selecting Regional Info from the Row menu on the Tax Rate/Area Revisions form.

You further define economic activity by specifying the effective dates, tax rate, and minimum amount on which the tax is assessed. You use the I.C.A. program (P76CI00) to specify the dates, rate, and amount by the city and economic code. You set a processing option in the I.C.A. program to identify the system 00 category code in which you set up codes for the source city for which you pay taxes by city and economic activity.

#### Prerequisites

Before you complete the task in this section:

- Verify that the value in the Localization Country Code field in the User Profile Revisions program (P0092) is CO (Colombia).

- Verify that the economic activity codes are set up in the 01/07 UDC table.

#### Forms Used to Set Up Economic Activity Codes

Form Name | FormID | Navigation | Usage
Work With Tax Rate/Areas | W4008A | Tax Parameters (G76C412), Tax Rate/Areas | Review and select existing records.
Tax Rate/Area Revisions | W4008B | Click Add on the Work With Tax Rate/Areas form. | Enter tax rate area information.
Additional Tax Information | W76C4008B | Click OK on the Tax Rate/Area Revisions form. | Associate the economic activity code to the tax rate area.
Work With Economic Activity | W76CI00B | Tax Parameters (G76C412), I.C.A. | Review and select existing records.
Economic Activity | W76CI00D | Click Add on the Work With Economic Activity form. | Specify the effective dates, tax rate, and minimum amount by city and economic activity code.

#### Setting Processing Options for I.C.A. (P76CI00)

Processing options enable you to specify default processing values for programs and reports.

Currency

Currency Code - From | Specify the currency code in which you process the records.
Category Code | Specify the system 00 category code in which you set up the codes to identify the source city for which you pay taxes by city and economic activity. The system uses the code when it calculates taxes by economic activity. System 00 category codes are for the JD Edwards EnterpriseOne Address Book system.

#### Associating an Economic Activity Code to a Tax Rate Area

Access the Additional Tax Information form.

Economic Activity Colombia | Enter a value that exists in the 01/07 UDC table to specify the economic activity code.

#### Setting Up Effective Dates, Rates, and Minimum Amounts

Access the Economic Activity form.

Tax Type | Enter the tax type in this field, which is equal to the two first characters of the GL offset defined in the tax area.
City Code | Leave this field blank.
City/ Ec. Activity (city/economic activity) | Enter a values that exists in the 00/xx UDC table to specify the economic activity code. Category code 00/xx is the category code that you specify in the Category Code processing option. Note. The system no longer uses the values in UDC 76C/AE.
Tax Rate | Enter the tax rate.
Minimum Amount | Enter the minimum value of an item that can be taxed. For example, if you enter 50, taxes are not calculated on items valued at less than 50 pesos. This field is used for processing sales and purchase orders only.

### Setting Up Tax Parameters

This section discusses how to set up tax parameters for Colombia.

#### Forms Used to Set Up Tax Parameters

Form Name | FormID | Navigation | Usage
Work With Tax Parameters | W76CI00A | Tax Parameters (G76C412), Tax Parameters | Review and add tax parameters.
Tax Parameters | W76CI00C | Click Add or Select on the Work With Tax Parameters form. | Revise and define tax parameters.

#### Setting Up Tax Parameters

Access the Tax Parameters form.

Tax Rules System | Enter a user-defined code (H00/TX) that specifies the system to which the tax rules apply. The system allows you to select one option only. Values are: 1: AR and Sales Order 2: AP and Purchasing 3: GL and Journal Entry
Company/Supplier Tax Payer | Enter a user-defined code (76C/TC) that specifies the type of tax payer for the company that originates the transaction.
Tax Type | Enter the tax type, which is equal to the two first characters of the GL offset defined in the tax area
Minimum Amount | Specify whether the maximum amount that an item can be taxed must be taken into consideration to calculate withholdings.
Economic Activity | Specify whether the percentage of a tax must be calculated by city and economic activity. If you select Y, you must define percentages by city and economic activity.
Tax Rate 1 | Enter the percentage of tax that should be assessed or paid to the corresponding tax authority, based on the tax area. Enter the percentage as a whole number and not as the decimal equivalent. For example, to specify 7 percent, enter 7, not .07. If the tax is a withholding, enter the percentage as a negative number.

### Setting Up General Parameters for Tributary Codes

This section discusses how to set up the tributary codes.

#### Form Used to Set Up General Parameters

Form Name | FormID | Navigation | Usage
General Parameters | W76CP001A | System Configuration (G76C1041), General Parameters | Specify the category codes that the system uses to identify business units, accounts, and other tributary information.

#### Setting Up General Parameters

Access the General Parameters form.

Business Unit | Enter the business unit in which you define all tributary information. The system uses this business unit as the reporting company.
Category Code That Identifies Tributary Code | Enter the system 09 UDC category code in which you set up tributary codes. For example, if you set up UDC 09/10 to identify tributary codes, enter 10.
Category Code That Identifies Tributary Subcode | Enter the system 09 UDC category code in which you set up tributary subcodes. For example, if you set up UDC 09/20 to identify tributary codes, enter 20.
Category Code to Identify Account Master Field for Values | Enter the system 09 UDC category code in which you identify the account master field to report.
Category Code to Identify Account Master Field for Base | Enter the system 09 UDC category code in which you identify the base amount to report.
Category Code That Identifies the Department | Enter the system 09 UDC category code from the account master that is associated with the department code and municipality.
Third Name | Enter 1 to use the Mailing Name (data item MLNM) field to determine the value that the system uses for the third name. If you leave this field blank, the system uses the value in the Alpha name field (data item ALPH) of the address book.
Person Type Code | Specify the UDC from system 76C in which exists the codes for the person type information or the corporation number that is assigned by DIAN. For example, enter TC to use the values in the 76C/TC UDC table. If you do not complete this field, the system uses the values that exist in the TAXC (H00/TA) UDC table.

### Setting Up the System to Work with Tax Reporting

This section provides overviews of next numbers, legal companies, and general system setup for tax reporting; and discusses how to:

- Associate codes for natural and legal entities to DIAN (Direccion de Impuestos y Aduanas Nacionales de Colombia) document types.

- Set up address book, general ledger, and other format information.

- Associate minimum amounts and next numbers with DIAN format numbers.

- Set up minimal amounts and foreign supplier information.

See Also

Setting Up UDCs to Use Magnetic Media for Tax Reporting

#### Understanding Next Numbers for DIAN Reporting

The electronic tax reporting process requires that you set up next numbers for the header of the XML files and for each format. Set up the next number for the header in system 76C in the Next Numbers program (P0002). Set up the next number for the individual formats in the Sending Number field on the Format Setup Revision form in the DIAN General Setup program (P76C0F00).

#### Understanding Legal Companies

You set up legal company and transactional company relationships to enable many companies to be unified in one legal company. The relationship between the companies enables you to produce reports that combine data from more than one company. For example, you can associate the companies that you use for transaction processing (transactional companies) with companies that you use for legal reporting (legal companies) so that legal reports can contain data for more than one transactional company. At a minimum, a legal company and a transactional company relationship must exist for the default company.

#### Understanding General System Setup for Tax Reporting

Before you process records for electronic tax reporting, you must set up the system with information that the system needs to complete some of the data required by the DIAN formats.

Legal and Natural Person Information

You use the DIAN Person Code Setup COL 00 form in the DIAN Person Setup program (P76C020) to associate DIAN document types to codes that exist in the Person/Corporation Code (76C/PC) UDC table. The system saves the information in the Person Codes Setup table (F76C020). You assign codes from the 76C/PC UDC table to customers and suppliers when you set up address book records for your customers and suppliers. The system uses the association between the DIAN document type and the person or corporation code to determine the type of document used to verify a taxpayer's status. For example, you might associate the DIAN document code for the NIT (Número de Identificación Tributaria) to the code for a corporation. You also specify whether the code in the 76C/PC UDC table applies to a natural person, and whether a foreign natural person or foreign legal entity is a member of the Transference Prices Regimen.

You use the General Setup Revision form in the DIAN General Setup program (P76C0F00) to specify information about address book records. You specify the values in the Type Code (01/W0) UDC table that the system uses for names, and specify the address book category codes that the system uses for department and municipal codes.

General Ledger Information

You use the General Setup Revision form in the DIAN General Setup program to specify the model business unit that is set up for a model chart of accounts, and specify the category codes in system 09 that you set up with values for formats 1011, 1012, and 1034.

XML Generation Information

You use the General Setup Revision form in the DIAN General Setup program to identify the next numbering scheme that the system uses to number the XML submission and to define terms that identify foreign entities and entities which do not meet minimum amount requirements.

You use the Format Setup Revision form in the DIAN General Setup program to identify the minimum reportable amount for each format and to establish the next number for the report for each format.

Minor Amounts and Foreign Supplier Setup

You use the DIAN General Setup program to set up the tax ID and transaction types (document types) that the system uses when you report transactions involving:

- A foreign supplier

- A total that does not exceed the minimum amount for the format type.

The system saves the values that you set up to the DIAN MM Minor and Foreign Setup table (F76C0F05) and uses these values for transactions involving foreign suppliers or minimal amounts when you run the generation programs for these format types:

- 1001

- 1002

- 1003

- 1005

- 1006

- 1007

- 1008

- 1009

- 1012

#### Prerequisites

Before you complete the tasks in this section:

- Set up these UDCs:

  - Type Code (01/W0) to describe the codes for first name, other name, first surname, and second surname.

  - Address Book (system 01) category codes to describe department and municipal codes.

  - Account Master (system 09) category codes to identify formats used in reporting.

- Identify the model business unit number in which you set up a model chart of accounts.

#### Forms Used to Set Up the System for Tax Reporting

Form Name | FormID | Navigation | Usage
Work With Companies | W0010C | General Setup (G76CSTP), Legal Company Setup | Set up new companies or access existing company information.
Company Setup | W0010B | Select an existing record on the Work With Companies form and click Select. Click Add on the Work With Companies form. | Enter information for a company or review existing information.
Company Localized Data | W7400010A | Select Regional Info from the Form menu on the Company Setup form. | Specify the legal company.
DIAN Person Code Setup COL 00 | W76C020A | General Setup (G76CSTP), DIAN Person Setup | Associate a person or corporation code to a DIAN document type, specify whether the code is for a natural or legal person, and specify whether a foreign person or corporation is subject to the Transference Prices Regimen (TPR).
General Setup Revision | W76C0F00B | General Setup (G76CSTP), DIAN General Setup Select a company and then click Select on the Work With Legal Companies form. | Set up Address Book, general ledger, sending next number, and information for minimum amounts and foreign suppliers that the system uses when you generate the DIAN magnetic files.
Format Setup Revision | W76C0F00C | Select a company and then select Format Setup from the Row menu on the Work With Legal Companies form. | Associate minimum amounts and foreign supplier information with DIAN format numbers.

#### Associating Codes for Natural and Legal Entities to DIAN Document Types

Access the DIAN Person Code Setup COL 00 form.

Pers/Corp – Colombia (person/corporation Colombia) | Enter a value that exists in the Person/Corporation Code (76C/PC) UDC table that identifies the type of person or corporation to which you associate a document type.
DIAN Doc. Type (Direccion de Impuestos y Aduanas Nacionales de Colombia document type) | Enter a value that exists in the DIAN Document Types (76C/DT) UDC table that identifies the document type that you associate with the person or corporation.
Nat. Per. (natural person) | Enter Y or 1 for a natural person. Enter N or 0 for a legal person.
For. TPR (foreign Transference Prices Regimen) | Leave this field blank if the person or legal entity is not foreign. Enter 1 for a foreign person or legal entity who does not belong to the TPR. Enter 2 for a foreign person or legal entity who belongs to the TPR.

#### Setting Up General Format Information

Access the General Setup Revision form.

General Setup

Sending Number Index | Enter the line number from the system 76C next numbering scheme that identifies the magnetic media sending number that is reported to DIAN. For example, if you set up line 5 for system 76C in the Next Numbers program (P0002), enter 5. The system prints the next number in the sequence in the header of each XML file that you generate.
Const. Foreign Oper. (constant foreign operations) | Enter the term that the system prints in the Firm Name field of the reports that describes the transactions that belong to foreign operations.
Tax ID Foreign Oper. (tax ID foreign operations) | Enter the tax ID that the system assigns to transactions for foreign suppliers. The system determines which suppliers are foreign suppliers by the value entered in the Person/Corporation Code field in the Address Book Colombian Additional Information program (P76C0101). Transactions for foreign suppliers must be reported with a tax ID of 444444000.
Doc Type Foreign Oper. | Enter a value that exists in the DIAN Document Types (76C/DT) UDC table to specify the document type that the system assigns to transactions for foreign suppliers. Transactions with foreign suppliers must be reported with a document type of 43. The system writes this tax ID to the tables used for tax reporting instead of the document type originally assigned to the transaction.
Const. Minimum Qty. (constant minimum quantities) | Enter the term that the system prints in the Firm Name field of the reports that describes the transactions that do not exceed the configured minimum quantity.
Tax ID Minimum Qty. tax ID minimum quantity) | Enter the tax ID that the system assigns to transactions that do not exceed the minimum amount for each format type as defined in the DIAN General Setup program (P76C0F00). These transactions are reported on one line using the tax ID that you enter here. The system reports this tax ID when you submit the reports for formats for which you set up a minimum amount. Transactions with minimum amounts must be reported with a tax ID of 222222222.
Doc Type Minimum Qty. (document type minimum quantity) | Enter a value that exists in the DIAN Document Types (76C/DT) UDC table to specify the document type used for transactions that do not exceed the minimum amount for a format type. Transactions with minimum amounts must be reported with a document type of 43. The system writes this tax ID to the tables used for tax reporting instead of the document type originally assigned to the transaction.

Address Book

Access the General Setup Revision form.

Depart. Munic. Cat. Code (department and municipal category code) | Enter a number that identifies the JD Edwards EnterpriseOne Address Book (system 01) category code that defines the department and municipal codes.
Firm Name Alpha or Mailing | Enter Y or 1 to specify that the system uses the mailing name from the address book record. Enter N or 0 to specify that the system uses the alpha name from the address book record. The system uses the value that you enter when the customer or supplier is a legal entity.
Who's Who Code First Name | Enter a value that exists in the Type Code (01/W0) UDC table to identify the field in the Who's Who record in the JD Edwards EnterpriseOne Address Book system that the system uses for the first name.
Who's Who Code Other Name | Enter a value that exists in the Type Code (01/W0) UDC table to identify the field in the Who's Who record in the JD Edwards EnterpriseOne Address Book system that the system uses for an additional name.
Who's Who Code First Surname | Enter a value that exists in the Type Code (01/W0) UDC table to identify the field in the Who's Who record in the JD Edwards EnterpriseOne Address Book system that the system uses for the first surname.
Who's Who Code Second Surname | Enter a value that exists in the Type Code (01/W0) UDC table to identify the field in the Who's Who record in the JD Edwards EnterpriseOne Address Book system that the system uses for the second surname.

General Ledger

Access the General Setup Revision form.

Model Business Unit | Enter the code that represents the model business unit used to define the accounts setup for magnetic media.
Format 1011 Cat. Code (format 1011 category code) | Enter the system 09 category code that identifies the 1011 format.
Format 1012 Cat Code (format 1012 category code) | Enter the system 09 category code that identifies the 1012 format.
Format 1034 Cat Code (format 1034 category code) | Enter the system 09 category code that identifies the 1034 format.

#### Associating Minimum Amounts and Next Numbers with DIAN Format Numbers

Access the Format Setup Revision form.

Format Number Number | Enter a value from the DIAN Magnetic Media Formats (76C/FM) UDC table that identifies the format number as established by law.
Minimum Amount | Enter the minimum amount established by the law for each format. The system uses this value to identify whether to report each transaction separately or to consolidate and report the transactions as one line using the tax identification number (Número de Identificación Tributaria [NIT]) 222222222. You must enter an amount over 0 (zero). When the calculated amounts for each concept for the format does not reach the minimum amount, the system reports the totaled amount for each concept on one line with a NIT of 222222222. If the transactions exceed the minimum amount, the transactions are reported separately.
Sending Number | Enter the next number for the record type (format). The system uses the number that you enter to identify the XML file for the format. The system does not use a next numbering scheme from the Next Numbers program (P0002) to determine the next number for the format.