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Published on Thursday, January 2, 2020

Colombia | No taste of reform

They approved a new tax reform which they have named "Growth Law". I think that the reform does things that can indeed help us grow but also does others that perpetuate historical criticisms of our tax and social security contribution system.

Key points

  • Key points:
  • On the positive side, gradually lowering income tax rates for companies seek to level the playing field with the rest of the Pacific Alliance countries, for example.
  • The refund of IVA for investments in capital goods leaves us in tune with international legislation.
  • On the negative side, it creates targeted taxes by increasing the inflexibility of Colombian public spending which is already particularly inflexible.
  • Reducing the health contribution of the lowest pensions sounds good but the cost is so high in fiscal terms that it turns out to be a subsidy of the poorest to those who are a little less poor, the minority that receives a pension in Colombia.

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