Colombia ranks 180th out of 190 countries, with the highest taxes in the world as a percentage of average earnings (71.2%), the highest compared to its peers in the region.
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In addition, It ranks 131st out of 137 countries with the worst effects of taxation on incentives to invest. Against this background, a Growth Diagnostics Report analyzes the effects of this tax burden, which would be slowing down a higher rate of economic growth in Colombia.
The report disaggregates various taxes such as “The ICA, which is charged on income and not on profits (disproportionately affecting companies with lower margins) and the so-called and inexhaustible 4×1000.”
To these “very high taxes”other problems are added such as the very low tax base, informality, evasion and low growth.
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According to the report, the low growth due to taxes is evidenced by four signs:
one. Companies cite tax levels and taxation itself as major restrictions on their operation, more than in the world and in the region. They also complain about the disadvantage faced by those who do not pay.
two. Almost 40% of the companies report less sales than what is true in order to pay less, and labor informality reaches 57%.
3. Although governments have tried to reduce this burden, for example in 2012 with the reduction of parafiscal, the failures result in a porous system full of dubious exemptions. In addition, Colombia is the country with the most free zones.
Four. The tax system discouraged the investments necessary to be able to compete.
Under this scenario, only companies with high profit margins survive. To counteract this, the report indicates that a tax reform is necessary that adjusts to the needs of the country and reduces the tax burdens that exist to allow greater economic growth in the country.
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