The excluded goods are the products that do not originate the value added tax (VAT). Therefore, these goods are not subject to sales tax. As they are not subject to said tax, it should not be declared, since whoever sells them is not responsible for said tax. On the other hand, the excluded goods are all those products that the law has expressly classified as such..
The manufacturer of these excluded goods has no responsibility to declare VAT. Therefore, the VAT that this producer has to pay to his suppliers for the purchase of raw materials for the production of said goods, must be transferred directly as an additional amount to the cost of the product..
Companies that sell only these types of products simply will not have any kind of liability with respect to sales tax. However, if they sell any taxed or exempt goods, they will become liable for VAT, even if most of their traded goods are excluded from VAT..
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The excluded goods, at the time they are imported or sold, do not incur VAT. The commercialization and / or production of these goods does not make the seller responsible for this tax..
In order to know if a service or product is excluded from VAT, it must be determined whether it is explicitly within the services and goods that the law has expressly classified as excluded..
Therefore, in case any product is not in this legal list, it will mean then that it is a taxed good as a consequence..
If a person does not have the responsibility for sales tax, then they do not have to declare VAT. As a result of this, you cannot require a deduction of the VAT you have paid for purchases made..
Therefore, any amount paid for VAT must be carried as an amount greater than the cost or expense of the good or service purchased. In such a case, this may be deducted on the income tax return. However, it cannot be deducted in the VAT return, since you do not have to declare it..
Therefore, the difference between the exempt goods and the excluded goods is that the exempt goods, whose VAT rate payable is 0%, are really taxed goods, therefore giving the right to deduct VAT for purchases made..
On the other hand, the excluded goods do not produce VAT. Due to this reason, the amounts that have been paid for VAT cannot be discounted, resulting in not having the right to a refund of the value added tax..
The articles indicated below have been taken as an example of the national tax statute in Colombian legislation, according to articles 424 and 476. Each country will have in its corresponding legislation the enumeration of the excluded assets that it has contemplated..
- Live animals of the goat, swine or ovine species, chickens, geese or turkeys.
- Products made up of natural elements of milk and food products made in an artisanal way based on milk.
- Natural honey.
- Fresh or chilled vegetables.
- Unroasted coffee beans and raw cocoa beans.
- Cooked or baked bread, and made mainly based on cereal flours.
- Water, including carbonated mineral water, and artificial or natural.
- Fresh fruits, such as bananas, figs, pineapples, avocados, guavas, mangoes, grapes, melons, watermelons, papayas, apples, pears, apricots, cherries, peaches, among others.
- Seeds of coriander, wheat, flax, turnip, sunflower, almonds, walnuts, cotton, mustard, sesame, castor, melon, safflower, for sowing.
- Corn, rice, oats, soybeans, grain sorghum, copra, peanuts, for planting.
- Sulfur of any kind.
- Natural gas in a gaseous and liquefied state, propane gas for household use, and butane gas in a gaseous state.
- Electric power.
- Antibiotics.
- Fertilizers of vegetable or animal, chemical or mineral origin.
- Insecticides, fungicides, rodenticides and other anti-rodents, herbicides.
- Natural rubber.
- Tires of a kind used on forestry or agricultural machines and on vehicles.
- Nets made for fishing.
- Newsprint in sheets or in reels.
- Legal tender coins.
- Clay, Calicanto, and Cement-Based Building Bricks and Blocks.
- Apparatus and machines for preparing animal feed or food.
- Tractors for agricultural use.
- Machines for sorting or cleaning fruits, eggs or other agricultural products.
- Sprinkler or drip irrigation systems. Drippers and sprinklers for irrigation systems.
- Wheelchairs and other disabled vehicles, as well as their accessories and parts.
- Orthopedic appliances and articles, including medical-surgical bandages and girdles.
- Coloring and writing pencils.
- Contact lenses and glasses for glasses.
- Hospital, medical, laboratory and clinical, dental, human health services. Plastic surgeries other than functional or restorative cosmetic surgeries and beauty treatments are excluded from this exclusion..
- Educational services provided by pre-school, primary, secondary, special and higher education entities, registered as such in the respective institutions of the national government.
- The public, river, sea and land transport service of people within the national territory, and the international and national private or public transport of cargo, air, river, sea and land.
- The national air transport of passengers with origin or destination to national routes, where there is no organized land transport.
- Energy utilities, as well as energy based on gas or other materials.
- The water used to provide the public sewerage and aqueduct service, public garbage collection services and also public cleaning services.
- Food services, which are contracted with public resources, to be used by the prison system, by schools of public education, social assistance, national police, the military forces, public geriatric centers, community kitchens and public hospitals.
- The property rental service for housing and the rental of spaces for craft shows and national exhibitions, also including cultural and artistic events.
- Financial returns and interest on credit operations.
- Entrance tickets to sporting and cultural events, including those for family recreation and musicals, to the cinema, and also to horse, bull and canine shows.
- Funeral services, burial and exhumation of corpses, cremation, maintenance and also rental of mausoleums and tombs.
- Purchase of software licenses to commercially develop digital content.
- Provision of cloud computing, web pages and servers or hosting.
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