Dian proposes to lower corporate income tax than the Ministry of Finance

In one of his first public appearances since taking over as director of the Dian, replacing Luis Carlos Reyes, Jairo Villabona gave the first glimpse of the plans he has in mind at the head of this entity, which will undoubtedly address one of the aspects that this Government has classified as urgent in the midst of the liquidity crisis that arose from the drop in tax revenue.

During the forum ‘Conversations for Colombia’, held by the National Trade Council, Villabona criticized the tax system that currently exists in the country, since for him there are absurd and complex charges, which in the long run end up affecting the attractiveness of the local market for investors.

“We have 94 tax benefits, that’s absurd, It is a very complex system and when one looks at the nominal rate of the OECD, the nominal rate of taxes in Colombia for legal entities is actually the highest, it is 35%, but if one estimates the effective rate it is much lower, the effective rate is much lower,” said this official.

In this regard, he touched on one of the issues that has been a flagship of this Government, especially from the Ministry of Finance, such as the income tax for legal entities, which he proposed to lower than what Minister Ricardo Bonilla has proposed on several occasions.

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“One could even lower the rate from 35% to 25%, I would do that. Lower it from 35% to 25% and I would eliminate 99% of the tax benefits. The problem is that there are some tax benefits that are already determined in time and have acquired rights. That would be a point to review to avoid non-compliance, but I would do it this way,” explained the Director of the Dian.

The collection will not be fulfilled

Jairo Villabona, director of the Dian

Courtesy – CGN

Jairo Villabona also spoke out against the alert issued by the Comptroller’s Office regarding tax collection so far this year and maintained that this was to be expected, given that factors such as the loss of non-deductibility of royalties and income from litigation and arbitration were going to end up affecting it.

“What happens is that the goal was high because there was “Some resources were royalties that were rejected, there were others that were from arbitration processes that were going to be carried out, which were close to $15 billion, and the law did not pass that law. Between those two, they already amount to almost $21 billion,” he said.

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He added that the “withholding tax, which was very high in 2023 and had consequences for collection in 2024 and the advances that have already been paid, also had an impact. Let’s say that a large part of the explanation for the drop in collection is in what I just mentioned,” making it clear that things will not be like this, this year the collection goals will not be met, while they are calculating the projections for what is to come.

Stimulate collection

With this in mind, director Villabona concluded that one of the pending tasks at this time is to stimulate tax collection and that this requires innovative measures aimed at getting taxpayers themselves to help report evasion and at simplifying the tax system and making it more attractive.

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“There are several measures being considered. One of the country’s main problems is tax evasion. It is said that tax evasion in Colombia is close to $100 billion according to calculations that have been made. I believe that the issue of tax evasion has been addressed very little in the country and that could be an interesting alternative that also helps all sectors of the economy that are harmed by evasion and smuggling,” he added.

Although it is no longer time to cry over spilled milk, the Dian made it clear that one of the priorities of this new administration is to seek alternatives to increase tax revenues, through grounded and that go hand in hand with the economic reality that Colombians face.