The project of tax reform implies a greater impact on the capital market by way of an increase in taxes on stock dividends and in this sense, the Stock Market, which until April 20 was one of the most highly valued in the world, today shows a fall of 8.58% in its main index, the Colcap.
(‘Tax is not social, much less equitable’: Senator Luna).
And that blow began after the first presidential round, continued in the second and was accentuated after the presentation of the tax reform, on August 8.
Analysts say that as the initiative stands, it represents a disincentive to buy shares and also to have themwith the aggravating circumstance that this has the consequence that entrepreneurs lose interest in maintaining their investments, which in turn would cause the effect that no one wants to start a business and create jobs.
As Andrés Pardo, former Vice Minister of Finance and Chief LatAm Strategist, XP Investments puts it “in some cases, the combined rate on corporate income distributed as dividends could exceed 60%, which would be substantially higher than the average maximum combined rate in the OECD, which is close to 42%.”.
He adds that this last measure could also lead to lower investment levels and a lower capital stock in the economy, which would ultimately affect job creation and formality.
(Taxes that yes or yes would remain in tax, according to Minhacienda).
Business balance sheets for 2021, starting with ecopetrol, They marked good figures, but these have not been translated into the Colombian Stock Exchange, where 31 of the 40 most traded shares present accumulated falls between 0.2 and 46%.
For example, the most punished action of the year is that of Mineros, which registers a depreciation of 46%, while that of Nutresaon which the Gilinski Group advanced a takeover bid (takeover bid) is the one that has risen the most, with 34.43%.
Likewise, the state oil company registers an 8% drop in its price, despite having registered profits of $16 billion in 2021 and a result in the first half of this year of $17.1 billion.
This year the Colombian stock market, after that of Mexico, which falls 9%, is the one with the greatest devaluationwith 8.58% and similar to that of Lima. Those of Argentina, Brazil and Chile show increases of 70%, 7% and 28%.
For analyst Andrés Moreno Jaramillo, the fact that dividends on shares and occasional profits increase “disincentivizes any effort to start a business, because if there is no legal and financial stability, foreign investment will not come and in that sense he considers that a reform that is needed must be carried out and where no more burdens are added to the employers who generate employment”, said the expert.
(Last big Fed rate hike would be in September: JP Morgan).
Foreign investment
Sebastián Toro, founder of Arena Alfa, assures that as the reform is, Colombia would be left with one of the highest tax rates in the world, almost expropriatory, which affects companies, the entrepreneur and could affect employment and incentives to create a company. But she warned that when the fear passes we should align ourselves with the positive trends that have been seen in the region in recent months.
and warns that “Elections, politics and tax reform have to do with this fall in the Colombian market.”
Lawyer Rodrigo Galarza says that the tax reform means the “death certificate of the capital market, since the norm that the profit on the sale of shares is exempt is repealed, the tax on dividends is raised and the valuations measured as intrinsic value enter as an occasional profit. It is an invitation for no one to buy shares and for those who have to sell them”.
He points out that people buy shares to make a profit and since the market is small, incentives are needed to promote it. He warns that there are businessmen who abandoned the word uncertainty and say that “we moved into the world of certainty and making decisions based on it.”
Arnoldo Casas, Director of Investments at the Credicorp Capital Asset Management firm, for his part, assures that the reform discourages transactions in shares but can have a beneficial effect for the Collective Investment Funds because until the investors withdraw the resources, they will not They put the tax. However, he clarifies that the Minister of Finance, José Antonio Ocampo, says that he is willing to review the issue of occasional earnings.
Regarding this aspect, Juan David Ballén, from Casa de Bolsa, stated that among the great doubts that remain and that are vital for the capital market, is whether will the tax on occasional gains be increased or not. “In recent years we have seen a reduction in investors and issuers and an increase in occasional profits would work against it. In addition, the exchange is in the process of merging with the stock exchanges of Chile and Peru, and an increase in income taxes could uneven the playing field.”
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