A few days ago, the president of the Colombian Business Association (Andi), Bruce Mac Master, assured that the effective tax rate (TET) for companies in Colombia is well above the 35% rental rate, and that with the reform this would increase.
(See: How much sugary drinks and snacks would rise if they were taxed).
According to Andi, the effective tax rate currently paid by the industry is 56.7%, mining and hydrocarbons 53% and transport 49.2%. And with the reform, according to union calculations, they would go to 62%, 87.1% and 63.1%, respectively.
Given these figures, and others that have been presented by other analysis centers, the Ministry of Finance published a document with details on the Effective Rate of Corporate Taxation in Colombia. It is worth mentioning that the business TET is understood as the percentage of the profits that is destined to the payment of taxes.
(See: The fiscal measures highlighted by the OECD on Colombia).
According to calculations made by the Ministry of Finance, the TET in Colombia is 25.5%. Figure 9.5 percentage points below the nominal rate of income tax (35%). According to the portfolio, this is the result, mainly of the tax benefits, which are accessed to a greater extent by large companies, those with revenues greater than $50,000 million a year.
(See: The new changes in the Government’s tax reform project).
Faced with this issue, this week the Minister of Finance, José Antonio Ocampo, assured that “the rates are much lower than what Andi and many other analysts have said, those calculations are incorrect.”
According to Ocampo, in the first place, it is because some of the estimates that have been presented “take all the maximum rates, which is not true, because the companies do not pay the maximum rate but instead have enough tax discounts. Second, because the rest is not distributed throughout the dividend, so it cannot be added up like this”.
(See: What taxes are paid for each gallon of gasoline in Colombia).
As for the change that the tax reform would bring, where one of its pillars is the elimination of exemptions that favor some sectors, the Treasury maintains that the TET would reach 29.4%.
The ministry defended that this is a figure “much lower than the data resulting from omitting tax benefits or due to other inaccuracies.” And that, in fact, “the Bill seeks to reduce unjustified benefits.”
According to the document, the increase in the effective tax burden of companies, corresponding to the Tax Reform Project, is estimated at 3.9 percentage points, and the largest contributions to this increase correspond to income tax (4.0 percentage points). , while the dividend component decreased by 0.2 percentage points, especially due to the reduction of the burden on smaller companies.
Document ‘enriches’ discussion
Among the elements that the portfolio took into account for the calculation is the tax on dividends, and recognizes that not all the profits of the companies are distributed to the shareholders, and also considers the incidence of the wealth tax.
This Wednesday, Mac Master tweeted on his Twitter account: “It is good news for the national debate that Minister Ocampo feeds the discussion with technical arguments
of crucial issues for the country. I await your analysis with great interest, I will correct any wrong analysis or affirm what has been said”.
LAURA LUCIA BECERRA ELEJALDE
