Four months after President Iván Duque’s tax reform proposal led to massive street violence and the resignation of Colombia’s Economy Minister, a less burdensome and controversial version of the bill received its final approval in Congress this week.
The new law is expected to bring in around COP 15 trillion (USD 4 billion) per year, less than two-thirds of the original plan. The source of those funds will also be quite different from that of the first proposal, as the revamped bill focuses on raising taxes from corporations instead of consumers, households and individuals.
The heart of the tax reform is a hike in corporate tax rates from 31 to 35 percent, beginning next year, which is expected to account for COP 6.7 trillion per year, almost half of the estimated total.
The remainder of the increased tax take comes from several sources: COP 3.9 trillion from the elimination of tax breaks on industry and commerce; COP 2.7 trillion from cracking down on tax evasion and formalizing private sector activities; COP 300 billion from a special surcharge on banks and financial institutions; and COP 1.9 trillion cuts in public sector spending.
Despite the hit to their bottom line, representatives from both big and small corporate associations accepted the new...
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