November 05, 2026
Fictitious suppliers in Colombia are individuals or companies that issue invoices for sales or services that never took place. If your Colombian subsidiary, branch or SAS booked costs from one of them, even unknowingly, the Colombian tax authority (DIAN) can disallow those costs and the VAT credit, impose a 160% penalty and, in serious cases, refer the matter for criminal prosecution. Enforcement is intensifying: in October 2025 the DIAN announced 2,270 potential fictitious suppliers identified in field inspections, and persuasive actions against 3,638 taxpayers that had transactions with them.
For foreign-owned companies the risk is sharper. DIAN notices arrive in Spanish, often to an email address nobody at headquarters monitors, and the legal representative can face personal fines and criminal exposure. This guide explains what each DIAN notice means, which deadlines apply and what your real options are: correcting with a reduced penalty or defending the reality of your purchases.
A fictitious supplier (proveedor ficticio) is a person or company that the DIAN formally declares, through a sanctioning resolution, for invoicing simulated or non-existent sales or services (article 671 of the Colombian Tax Code). From the publication of that declaration and for five years, purchases from that supplier cannot be deducted for income tax or generate a VAT credit.
The rule punishes whoever issues the fake invoice, but its effects fall on whoever uses it. A simulated transaction is one that appears to be a real deal but never happened, or happened under different terms than those invoiced: a different quantity, price or product. In practice, the DIAN distinguishes three situations:
| Concept | What it means | Legal basis | Effect on the buyer |
|---|---|---|---|
| Fictitious supplier (proveedor ficticio) | Invoices simulated or non-existent sales or services | Art. 671(a), Tax Code | Costs and VAT credits disallowed from publication of the declaration, for 5 years |
| Insolvent supplier (proveedor insolvente) | Transferred its assets to third parties to avoid DIAN collection | Art. 671(b), Tax Code | Same effect, until it pays or agrees a payment plan |
| Non-existent transaction (no declaration) | The supplier has not been declared, but the DIAN proves the purchase never occurred | Art. 647, Tax Code | Cost disallowed plus inaccuracy penalty |
The declaration is a sanction with due process. The DIAN issues formal charges, the supplier has one month to respond, and then the sanctioning resolution is issued. Under DIAN Ruling 041700 of June 9, 2011, the competent official is the Regional Director of the supplier's domicile, and the charges must be served within two years after the supplier filed its income tax return.
The declaration is published in a national newspaper and lasts five years. It does not lapse automatically: the supplier must request its removal and the reactivation of its tax registration (RUT), which the DIAN suspends (DIAN Ruling 1720 of 2017). Since 2026, under DIAN Opinion 2328 of 2026, the DIAN will not authorize new invoice numbering for a supplier with a current declaration and must disable any ranges already granted.
The DIAN publishes a PDF list on its website with every resolution declaring a fictitious supplier, organized by regional office, showing the tax ID (NIT), resolution number and publication date. The most recent cut-off is August 13, 2026. Search your suppliers' NITs before contracting and at every accounting close.
You can review the official list as of August 13, 2026 by searching each supplier's NIT. The list has three limitations a foreign compliance team should understand:
It depends on the date. Purchases made after the declaration was published are disallowed even if the goods were delivered. For earlier purchases the declaration does not apply retroactively, but the DIAN can still disallow the cost if it proves, through circumstantial evidence, that the transaction did not exist. At that point, your company must prove it was real.
Under DIAN Ruling 041700 of 2011, disallowance is not limited to simulated transactions: it covers every purchase from that supplier after publication. Article 647(5) of the Tax Code treats those purchases as a sanctionable inaccuracy without any further proof by the DIAN. Good faith does not change the outcome. Checking the list before buying is the only effective protection.
This is where most cases arise. The supplier is declared fictitious months or years after your company bought from it, and the DIAN uses that declaration as evidence against your invoices. Colombia's highest administrative court (Consejo de Estado, Fourth Section) has held that a set of compelling circumstantial evidence is enough to rebut the presumption that a tax return is truthful and shift the burden of proof to the taxpayer (judgment of November 4, 2021, case 24516).
The same court held that an invoice is the required support for a cost, but the DIAN may disprove it with other evidence without having to allege forgery. It may also interview suppliers without your company being present, because you can challenge those statements when responding to the audit (judgment of March 31, 2022, case 22717). In 2024 it upheld the disallowance of purchases from a supplier with no premises at its registered address, no employees enrolled in social security and an impersonated legal representative. The taxpayer only had invoices, accounting entries and unsigned cash receipts, and the court noted the absence of contracts, purchase orders, warehouse entries and transport records (judgment of July 18, 2024, case 28415). The practical lesson: cases are won with evidence of the transaction, not with the invoice.
First identify which notice you received and how much time you have: one month to respond to a notice to correct, three months to answer a special requirement and two months to file a reconsideration appeal. Then decide, with your evidence in hand, whether to correct with a reduced penalty or defend your purchases. Missing deadlines eliminates the reductions.
| Stage (Spanish term) | What it means | Deadline | Legal basis |
|---|---|---|---|
| Persuasive letter (carta persuasiva) | Invitation to correct voluntarily | No legal deadline; acting before formal notices keeps more options open | DIAN enforcement practice |
| Information request or tax inspection (requerimiento ordinario / inspección tributaria) | The DIAN gathers information and evidence. An inspection order raises the correction penalty to 20% | 15 calendar days for an information request, unless the notice sets another term | Arts. 684, 686 and 644, Tax Code |
| Notice to correct (emplazamiento para corregir) | Formal warning of a possible inaccuracy. Suspends for one month the DIAN's term to issue the special requirement | 1 month | Arts. 685 and 706, Tax Code |
| Special requirement (requerimiento especial) | Proposed amendment of your return plus penalty | 3 months to respond | Arts. 703, 705 and 707, Tax Code |
| Official assessment (liquidación oficial de revisión) | The DIAN amends your return | The DIAN has 6 months after your response deadline | Art. 710, Tax Code |
| Reconsideration appeal (recurso de reconsideración) | The only administrative appeal | 2 months | Art. 720, Tax Code |
| Annulment lawsuit (nulidad y restablecimiento del derecho) | Judicial review before the administrative courts | 4 months after notice of the appeal decision | Arts. 138 and 164, Law 1437 of 2011 |
The special requirement can only be served within the statute of limitations of the return, generally three years (article 714 of the Tax Code). Checking that date is the first thing a lawyer does, because a late special requirement fails on its own.
The DIAN notifies its decisions electronically, as a priority, to the email address registered in the company's RUT (articles 565 and 566-1 of the Tax Code). Notification is deemed made on the date the email is sent, and the taxpayer's deadlines start running five days after the email is delivered. There is no extension because the recipient is abroad or does not read Spanish.
In foreign-owned companies this is the most common reason for losing a case before it starts. The RUT often lists the email of a former accountant, a local manager who left the company or a generic inbox nobody monitors. Update the RUT email to an address your team checks daily, and make sure someone can read DIAN notices in Spanish or forward them immediately to Colombian counsel.
If you need to act from abroad, a lawyer can represent your company before the DIAN under a power of attorney. A power granted outside Colombia must generally be apostilled under the Hague Convention, so prepare it in advance rather than when a deadline is already running.
The decision turns on one question: can your company prove the purchase happened? With complete traceability, defending the transaction is usually right. With weak evidence, correcting early reduces the penalty dramatically. The DIAN confirmed in Opinion 000189 of 2025 that the 160% penalty can be reduced under articles 709 and 713 of the Tax Code, although the graduation rules of article 640 do not apply.
| Timing | Option | Resulting penalty |
|---|---|---|
| Before any notice to correct or inspection order | Voluntary correction (art. 644) | 10% of the additional tax |
| After a notice to correct or inspection order, before the special requirement | Correction (art. 644) | 20% of the additional tax |
| When answering the special requirement | Accept the facts (art. 709) | 40%: one quarter of the proposed 160% |
| Within the reconsideration appeal period | Accept the facts (art. 713) | 80%: half of the proposed 160% |
| Unsuccessful defense to the end | Final assessment | 160% of the difference, plus interest |
In every scenario your company pays 100% of the additional tax plus late-payment interest. Only the penalty is reduced, and only for the facts you accept: you can accept some invoices and contest others. To obtain the reduction you must amend the return and prove payment or a payment agreement. This decision also has criminal consequences, explained below.
Has your Colombian company received a notice to correct or a special requirement? The choice between correcting and defending must be made with the file and the deadlines in front of you. Our tax lawyers in Colombia review your evidence, calculate the reduced-penalty scenario and prepare the response, with consultations in English. Book a consultation or message us on WhatsApp .
The DIAN disallows the costs, deductions and VAT credits supported by those invoices, recalculates the tax, charges late-payment interest and imposes an inaccuracy penalty of 160% of the difference (article 648(2) of the Tax Code). That penalty can drop to 40% or 80% if your company accepts the facts in time.
The inaccuracy penalty (sanción por inexactitud) applies when a tax return contains data that produces a lower tax or a higher refund. Article 647(5) expressly includes purchases from fictitious or insolvent suppliers. Paragraph 1 of the same article extends the penalty to costs without economic substance. The effect compounds: disallowed costs raise income tax, disallowed VAT credits raise VAT, and interest and penalties run on both.
To understand how these rules fit into the overall tax framework for foreign-owned entities, see our guide on how foreign companies pay taxes in Colombia.
Yes. Including non-existent costs or expenses with the intent to evade taxes is tax fraud or evasion (article 434B of the Colombian Criminal Code) when the lower tax or higher refund reaches 100 monthly minimum wages (SMMLV), as determined by the DIAN's official assessment. The penalty is 36 to 60 months of prison and increases with the amount.
Article 434B of the Criminal Code, as amended by article 69 of Law 2277 of 2022, punishes anyone who includes non-existent costs or expenses, or claims improper tax credits, with the intent to defraud or evade. The Constitutional Court upheld this reform in Judgment C-019 of 2024. The amount is always set by the tax authority's official assessment.
| Lower tax or higher refund | Prison term |
|---|---|
| From 100 to less than 2,500 SMMLV | 36 to 60 months |
| More than 2,500 and less than 5,000 SMMLV | Increased by one third (48 to 80 months) |
| More than 5,000 SMMLV | Increased by half (54 to 90 months) |
The offense requires intent. A buyer who was deceived and can prove it has a very different criminal defense from one who knowingly bought invoices. Paragraph 1 of article 434B adds two conditions for prosecution. First, there must be no administrative appeals pending. Second, there must be no reasonable interpretation of the applicable law, provided the facts and figures declared are complete and true. To initiate prosecution, the DIAN may file a special petition through a committee led by its Director General or a delegate. In other words, your strategy in the administrative process shapes your criminal risk.
Yes, within limits. Under paragraph 2 of article 434B, the criminal action is extinguished when the taxes, penalties and interest are paid, but only up to two times. After that, payment only allows the sentence to be reduced by up to half. This is why correcting and paying in time has a double effect: it reduces the tax penalty and closes the criminal door.
Criminal liability in Colombia is personal. The person who signs or approves the return, usually the legal representative, can be investigated even if they live abroad and even if the decision was taken by local staff. Other offenses may also apply depending on the facts, such as forgery of a private document (article 289) or criminal conspiracy (article 340) when the scheme involves an organized invoice ring. If a director or officer has been summoned by the Attorney General's Office (Fiscalía), the tax defense before the DIAN and the criminal defense in Colombia must be coordinated as a single strategy.
Most fictitious supplier cases in foreign-owned companies start with a local purchasing decision that headquarters never reviewed. These controls, built into your intercompany policies, make your subsidiary's costs much harder to challenge:
When you acquire or invest in a Colombian company, include these points in your legal due diligence. If you are setting up operations, consider them from day one, whether you are incorporating a branch in Colombia or a subsidiary.
Yes. The list only has automatic effects from the publication of the declaration. If the supplier has not been declared, the DIAN can still disallow the cost and VAT credit if it proves through circumstantial evidence that the transaction did not exist (article 647 of the Tax Code). Your company must then prove the purchase was real.
Five years from the declaration, under article 671 of the Tax Code. It does not lift automatically: the supplier must ask the DIAN to remove it and reactivate its RUT. While the declaration is in force, the DIAN will not authorize new invoice numbering for that supplier.
Yes, if the invoices were included in the return with intent to evade and the official assessment determines a lower tax or higher refund of at least 100 SMMLV. The penalty for tax fraud or evasion is 36 to 60 months and increases with the amount. Payment extinguishes the criminal action up to two times.
Yes. Under DIAN Opinion 000189 of 2025, it drops to one quarter (40%) if your company accepts the facts when answering the special requirement, and to half (80%) if it accepts them within the reconsideration appeal period. You must amend the return and pay or agree a payment plan. The graduation rules of article 640 do not apply.
Electronic notification to the email registered in the RUT is valid even if nobody reads it. Notification is deemed made on the date of sending, and your deadlines start five days after delivery. Keep the RUT email updated and monitored, and contact Colombian counsel as soon as you learn of any DIAN notice.
Three months from notification, under article 707 of the Tax Code. Within that period your company can contest the proposal, request evidence or accept the facts with the penalty reduced to one quarter. If you do not respond, the DIAN can issue the official assessment within the following six months.
The same invoice can end in a correction with a reduced penalty or in a 160% assessment with criminal exposure for your legal representative. The difference almost always comes down to two factors: the evidence your company can gather and the stage at which it acts. Every deadline that passes closes an option.
At Affirma Law we combine tax and criminal tax defense to handle both fronts with a single strategy, in English. We review your evidence, check the statute of limitations, calculate correction scenarios and prepare the response to the DIAN. Book a consultation with our tax lawyers, message us on WhatsApp or send us your case through our contact form.
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Reviewed by the tax and criminal tax law team at Affirma Law.
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