COLOMBIA

On February 9, Colombian President, Iván Duque, announced that the Government would submit a new Tax Reform bill to Congress during its next legislative term, from March 16 to June 20, 2021. According to the President, this measure will aim to “inspire the markets with confidence, maintain investment levels and give the next administration greater certainty regarding the fiscal scenario”. The draft bill is expected to be published in the coming weeks.

Duque explained that the reform contains social and fiscal components, the idea being to have “the social components” of the measure drawn up in 2021, and income and revenue results in 2022. In the social arena, the aim is to strengthen the social programs implemented during 2020, such as the Solidarity Income, the VAT refund and the Formal Employment Support Program (PAEF). In the fiscal area, the Executive will seek to expand the collection of VAT and modify income tax thresholds.

The President also recalled that the Government is awaiting the results of the fiscal and tax analysis undertaken by the Commission of Experts on Tax Benefits in order to continue work on the consolidation of the draft bill. The commission was specially convened for this purpose and its findings are expected to serve as input for the preparation of the official proposal to be submitted to Congress during 2021.

Finally, on February 10, the Vice Minister of Finance and Public Credit, Juan Alberto Londoño, stated that the fiscal reform envisaged will not seek to increase VAT itself, but rather the number of products in the basic basket subject to VAT, as well as reducing the number of taxpayers exempted from paying the tax. He added that the Executive would be reviewing pensions under privileged conditions and subsidies for basic services for the lowest income population.