Proposals for tax reform in Colombia

August 6, 2021

On August 4, 2021, in the portal of “El Tiempo”, the commentator Noelia Cigüenza Riaño tells us about the several proposals they want to introduce in the tax reform of Colombia, detailing them now:

1. Benefits to the most vulnerable

The congressmen are submitting several tax reform proposals, which must be evaluated by the Ministry of Finance for their approval. One of them is the attention to the most vulnerable ones, i.e., it is proposed that young people under 30 years of age without labor contracts may obtain employment through a special contract for not less than 1 year and not more than 2 years.

2. Proposals for companies

Regarding companies, the purpose is to increase the scope of the simple regime, or the income rate will be 27% for MSMEs and 35% for the others as of the taxable year 2022.

3. Economic revival

To help agricultural producers, an automatic VAT refund mechanism is proposed for exempt goods, as long as the income is supported by electronic invoices. Thus, greater control of tax evasion would be achieved.

4. Free trade agreement

It was also proposed to review the current free trade agreements to benefit exporters. In addition, a structural labor reform bill was proposed to reduce urban and rural labor informality.

5. Tax benefits

Given the pandemic, temporary benefits are requested to facilitate taxpayers’ compliance with their tax obligations. The benefit of extemporaneity is the remission of fines or late payment interest rates.

It is also proposed to empower the Dirección de Impuestos y Aduanas Nacionales – DIAN (National Tax and Customs Directorate) to carry out conciliations in contentious administrative proceedings in tax, customs, and exchange matters.

6. Regional proposals

According to Chamber representative, Carlos Cuenca proposes that municipalities with a population between 30,001 and 50,000 inhabitants be classified as third-category municipalities.

In addition, they propose that departmental assemblies and municipal councils establish tax relief through ordinances and agreements.

7. Other proposals on technology

Large technology platforms such as Amazon do not pay VAT or duty on packages equal to or less than 200 dollars entering under the modality of postal traffic, so what is requested is the elimination of this benefit and that all entering imports pay VAT. This would prevent unfair competition and a negative impact, emphasizing employment.

Source: Portafolio 06/08/21