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Among the recommendations of the report of the commission of international experts on the tax reform, which at this time becomes official, several fundamentals appear.
The main one has to do with the elimination of the 4 x 1,000 tax, which is applied in financial transactions, and which the commission considers antitechnical.
Experts also propose the replacement of the ICA tax, which in his concept, strongly hits the gjob creation in Colombia; and apply itaxes on pensions with fair rates, especially the highest ones; and decrease the amounts of exempt income for the income statement.It may interest you: The options to expand the VAT base without touching the basic foods
Regarding the taxation of pensions, the Commission said that the current treatment is very unfair because there are very generous deductions for pension savings with a very high ceiling, since although when they are in the pension fund it is not applied, when they receive the pension it is received to a large extent not taxed.The Commission’s approach in this regard was focused on high pensions, since there is extremely tax exemption because pensions of up to almost $ 10,000 per month are tax-exempt, without any effective rate, something that is rare and is a scenario in which can be made a reform.
Recommendations for VAT
Regarding the value added tax (VAT), the experts recommended that the country increase the taxable base, that is, making more products and services that today are exempt (zero rate), excluded from the tax or pay a reduced rate of 5 percent, pay a general fee.
In the opinion of Jeffrey Owens, professor at the University of Vienna and one of the international experts of the Commission, if this is achieved, the collection will increase and it is feasible to think about lowering the general rate of 19 percent, since 60 percent percent of the country’s consumption is outside the VAT base.
The foregoing, according to the expert, maintaining the compensation scheme for low-income people, an aspect in which the Commission document states that the country must ensure that the VAT compensation or refund mechanism reaches the entire poor population. and increase the value of compensation when the tax base is expanded.
But if the return or compensation mechanism does not reach the poor population in the short term, the experts recommended maintaining the 0 percent rate for the goods of the basic family basket, in the short term.
But additionally, another recommendation is to increase the rate of goods and services that today have a reduced rate of 5 percent VAT to a range between 10 and 12 percent, while having a VAT on investment in fixed assets credited within the VAT and not to deduct it with the income tax.
Vision for personal income tax
When analyzing taxes on natural persons, the Commission, the income system for natural persons is particularly narrow and there are a large number of exempt items, whose design is unusual compared to international standards, such as allowing the deduction of taxes. taxes become 25% of income.
“This is unfair because the more income, the more deduction ”, indicated Bert Bert Brys, head of the National Tax Policy team of the Organization for Economic Cooperation and Development (OECD), who was in charge of presenting the experts’ recommendations. .
In other words, said the expert, the value of deductions (amounts that are not paid) rises as people’s incomes rise, that is, those with the highest incomes.
Even one aspect to review has to do with the distribution of income or sources of resources, since when reviewing the presentation of income statements, people with lower incomes receive more capital income or income interest than what they receive as salary, something that is peculiar. “They would be expected to earn more in wages and less in capital income. You have to look at what is marking the result, “he said.
Review of dividend tax mechanisms
Another key point of the report has to do with the dividends received by the shareholders of various companies in the country, an aspect on which it was found that in Colombia businesses have not been established as public limited companies and pay very few dividends and this is because companies they do not distribute them.
I mean, basically the The country’s current tax regime means that through these schemes, dividends are received as income and salaries and not as dividends, understood as the distribution of the annual profit of each company.
Five tables did the analysis
The recommendations were known after seven months of work – in which the country’s tax statute was analyzed in depth – the commission of tax experts officially presents this Tuesday to the Treasury and to the country the recommendations for tax adjustments that it considers should be included in the tax reform that the Government will present to Congress.
As EL TIEMPO learned, this Thursday or Friday the meeting with the Board of Directors of the Bank of the Republic would be held, in which the document will be socialized as well as the central elements that the bill that will be presented to the Legislative will have.
The commission worked on five thematic tables, each of which was chaired by an international expert.
The first table dealt with reviewing the corporate income tax, the second dealt with matters related to personal income taxes and dividends, and the third analyzed the state of the art regarding incentives for the field and non-constituent income of rent.
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The fourth table focused on issues related to the VAT and the special treatments that are granted against this tax, and the fifth focused on international trade matters, in particular with regard to the preferential treatment given to free zones, with respect to other countries.
ECONOMY AND BUSINESS – WEATHER
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