The next Government of Colombia will seek to attract foreign investors by guaranteeing a stable business environment, instead of granting tax exemptions to favored sectors. That’s how he explained it Luis Carlos Reyes, appointed by President Petro to lead the Directorate of National Taxes and Customs (Dian).
(Dian, after 5,900 state contractors with pending obligations).
The next government wants to level the playing field by eliminating tax benefits that have tended to be given to politically connected actors, Reyes said,
Instead, the Petro government wants to strengthen the rule of law and have clear and stable rules for business, said the new Dian director.
“The clear message we want to send is that foreign investment is welcome”Reyes said Friday in a telephone interview.
“We are going to seek to create stable conditions that make investment in the country attractive.”
Colombia’s public finances deteriorated sharply after the pandemic, with the country losing its investment-grade credit rating last year.
(Director of the Dian chosen by Petro explains tax details).
This means that Reyes has one of the main tasks in the next Administration, since, unless the government can significantly increase revenue, it will be difficult to finance the stronger welfare state that Petro promised his voters.
The elimination of tax exemptions would allow the country to reduce the tax rates paid by companies, Reyes said.
Although he did not mention specific sectors, tourism, construction, creative and cultural industries and renewable energies benefit from tax incentives of various kinds.
As for wages, the incoming government plans to reduce tax exemptions for people who earn more than 10 million pesos (US$2,300) a month, Reyes said.
This could include voluntary contributions to pension funds and savings accounts to promote housing construction.
TAXES ON DIVIDENDS
The new government will also study how to increase taxes on investment income.
One of the proposals being studied is to tax dividend payments at the same rate as salaries, which have a maximum marginal rate of 39%, compared to the 10% currently applied to dividends.
“In Colombia capital can and should pay more”, said.
The incoming administration’s tax reform is a top priority and is likely to be introduced on August 7 when Petro takes office.
Colombia’s fiscal deficit will decrease to around 5.6% of gross domestic product this yearaccording to government projections, below the 7.1% of last year.
(No tax on sugary drinks and cell phone plans would be proposed.)
Reyes, 38, moved to the United States as a teenager, later studying in Miami before earning a Ph.D. in economics from Michigan State University.
He said that he held a meeting with officials from the US Embassy in Colombia and that the US Internal Revenue Service. will cooperate with the Colombian tax authority to obtain more information on the assets that tax residents maintain abroad.
BLOOMBERG
