COLOMBIA

On April 7, the Minister of Finance, Alberto Carrasquilla, offered more details on the tax reform bill that is being drafted by the Executive Branch. According to the minister, the initiative will include a wealth tax, which will be for two years and deductible from the Income Tax (IR, in Spanish), and a “solidarity” tax for monthly incomes exceeding 10 million pesos, which will apply between July and December of this year and will be deducted from the IR of the taxable periods 2021 and 2022. The tax reform is expected to be submitted to Congress in the short term.

Regarding the IR, Carrasquilla mentioned that the taxable base will be increased from 4% to 12% of individuals who currently pay such tax. Also, the government aims to gradually reduce the IR for legal entities by 2023. The 50% discount on the Industry and Commerce Tax (ICA, in Spanish) will also be maintained.

Through the reform, the Executive Branch expects to collect more than 26 trillion pesos, which will allow not only to stabilize public finances and promote the economic development of the country, but also to promote social assistance policies such as the current Solidarity Income program.