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It is a measure that will mean an increase in taxes for digital businesses and, therefore, an increase in the costs of various products and services that are consumed through different platforms. The District argues that the new approved tax burden will be given because these companies made profits and were not affected by the effects of the pandemic this year.
However, it ignores that this digital industry was the one that contributed the most so that citizens did not stop supplying themselves with basic necessities and even created new jobs and businesses based on the support of technology.
What was approved in the Marshall Plan, which the government of Claudia López built with the argument of economic reactivation, obliges these companies to pay an increase in ICA rates (10% until 2024) for the telecommunications sector. Further, There will be a progressive increase in the ICA for digital platforms, starting in 2021 until reaching 11.04 X 1,000 in 2024.
Pulzo consulted several experts and owners of these digital companies, who agreed that the measure would make many of them decide to leave the city. In addition, it will not only lead businesses to seek domicile in other municipalities, but if they stay in Bogotá, this increase in taxes would translate into additional value for the end user because it would make products and services more expensive.
The López mayor’s proposal, which includes other measures such as economic incentives, has been the target of criticism. For example, in recent days, and before the Marshall Plan was approved, the hashtag was a trend #DigitalBrake because, for some experts, this point of the project will also end up delaying the ICT industry and the businesses that emerge through digital platforms.
Through Twitter, Santiago Pinzón Galán, Andi’s vice president of Digital Transformation, published several arguments about why this point of the Marshall Plan is not considered an economic reactivation for the city, but a “digital brake”.
“The users, all of them, those who have survived thanks to the existence of ICT, adapting and transforming their business models or have simply been able to continue working, studying, etc. they end up paying that increase in the ICA fee. That is the reality, ”Pinzón published.
According to him, despite the fact that the proposal has already been voted on by the Council, the District administration It should contribute more ideas, formulate policies and carry out actions that improve digital competitiveness in the capital.
“There is a lot of work going forward among all of us who want the #DigitalEcosystem of Bogotá to evolve positively. In the public policy cycle there is always the evaluation stage to see the results. That is the opportunity to monitor and adjust ”, declared the vice president of Digital Transformation of Andi, who was part of the technical analysis and illustration that was made before the government of Claudia López on the effects that this measure has for the city.
These are the trills that Pinzón published about the Marshall Plan:
Was voted on #DigitalBrake today in the @CouncilofBogota
I am referring to the draft agreement presented by the District Administration.
What is approved affects the #DigitalEcosystem of the city and #Digital Transformation
– SantiagoPinzonGalan 🍊🚀 (@santiagopinzong) October 25, 2020
On the subject, Felipe Ossa, executive director of Domicilios.com, exalts that the situation unleashed by the pandemic reiterated the value of home platforms in the Colombian economy and how they became a safe, fast option with growth potential .
“It is a sector that is just being consolidated in the country, so mechanisms must be sought to protect it and at the same time promote it so that it continues to be an option for thousands of businesses and people who see this activity as an option for the generation of income, ”Ossa told Pulzo.
This company considers that an increase in ICA fees for electronic commerce may be counterproductive for the sectors most affected during the pandemic, such as restaurants and other businesses, just as it would represent an adjustment in the operating costs of platforms that can have effects on the entire chain that has benefited from a new sales channel.
In the case of Domicilios.com, it is a company that operates as a channel of demand towards its allies and domiciliary who connect as independent. Orders made through its platform must be covered by costs associated with the total operation, so this measure could lead to a variation in them.
“If there is a variation in the fixed costs of the operation by an external agent (new taxes), we would have to be forced to reformulate the cost structure, affecting the entire chain (homes and restaurants) and the margin on which we can operate efficiently ”, explained the CEO of the company.
The foregoing shows that an increase in taxes will lead to companies having to reformulate their costs and not only will businesses that sell through the Internet be affected, but the consumer would end up paying more for their purchases.
More orders mean no profit
Another company affected by the District government measure is iFood, which explained to Pulzo that the most important thing should be to ensure that all platforms contribute to the economic reactivation of the capital. However, he emphasizes that the increase in orders, as happened this year during the pandemic, does not necessarily mean an increase in profits.
“Undoubtedly, home platforms are configured today as a massive and basic service, so that throughout social isolation we have registered growth in the number of orders and users, but not necessarily in profit or profitability”, pointed out Pulzo Tiago Luz, iFood’s country manager Colombia.
The company representative considers it important that the District take into account these market dynamics, as well as the nature of the collaborative economy. Furthermore, “that the role of contributing to the economic reactivation of Bogotá be assumed as an industry.”
Impact of the Marshall Plan on electronic commerce in Bogotá
A position similar to that of the aforementioned companies is held by María Fernanda Quiñones, executive president of the Chamber of Electronic Commerce (CCE), who criticized the increase in taxes for businesses that had profits during this year in the city.
For the executive, it worries that the companies that developed electronic commerce, and that naturally generated profits, are not recognized that they were the protagonists of the supply of Colombians in a very difficult situation. Further, that these benefits were achieved on account of a scenario such as the pandemic, which can be considered episodic, and which will not be maintained over time.
“What should be promoted is an incentive to digital, which has many gaps to overcome, and COVID-19 did not overcome those gaps, it did not digitize the entire population. (Those affected) are companies that are still in the investment phase, which are even showing losses, ”María Fernanda Quiñones explained to Pulzo.
For the CCE, The ICA in Bogotá is handled as a regressive tax that goes against how electronic commerce works, with a value chain.
“The costs that are going to be generated will radiate in the development of this dynamic. These costs are shared between customers and businesses. We do not agree (with the approval of the measure), we do not believe that it will bring benefits to the people of Bogotá, “added the president of the CCE.
Beyond the scenario of imposing new taxes, the affected companies recognize that policies are required for reactivation, but those who contributed cannot be punished so that the unleashed scenario was not worse.
Mauricio Jaramillo, technology consultant and director of the Impacto TIC portal, considers the same that emphasizes that this digital industry is not that it has won this year, what it did was contribute so that Bogotans survive.
“Therein lies the big mistake: it is punishing a sector that has been the support of society just because it has been growing. We are going to raise more, without thinking about the long-term impact it can have. While on the one hand we are betting that Bogotá is a digital ecosystem, on the other hand a bad message is being given with these measures, ”Jaramillo told Pulzo.
Several companies could leave Bogotá for these taxes
Another of the critics of what was approved last weekend in Bogotá is Councilor Rolando González, who makes a call because he considers that the measure of raising the ICA to some companies is affecting competitiveness and employment in the sector TIC.
“What is going to happen with this, which we warn, is that these companies are going to move to nearby municipalities that offer better rates and losing the employment of many young people,” said the councilor to Pulzo.
Further, criticizes the government of Claudia López because the main argument for this measure of the Marshall Plan is that the city will benefit, something that, he says, is not going to happen.
“The income is close to 12,000 million pesos. They are going to be spent on advertising for the Bogotá Mayor’s Office ”, he questions.
The District government defends the tax increase
Despite the criticism, the person in charge of formulating and structuring the Plan has been the Ministry of Finance, which, when consulted by Pulzo defended the ICA measure and assured that there is no risk that companies will leave just because of the tax burden in the city.
“It is not foreseen by the District administration that relocation decisions will be made by the companies that participate in the economic activities that from the year 2022 will have a permanent and gradual increase in the ICA rate, since the variations in Relative terms of the rate do not exceed 10% and it has been evidenced from the available information that they belong to sectors that have not seen their income affected due to the pandemic, ”Hacienda responded in a communication with Pulzo.
According to this District entity, ICA rates will gradually increase with respect to the nominal rate in force, starting in 2022; by 3.33% in the first year; by 6.66% in the second year; and 10% from the third year and for subsequent years.
For the Ministry of Finance, there will be no impact on companies that carry out their economic activity in Bogotá, among other things, because 4 aspects have been considered:
- “The lesser impact on activities with the closure of economic sectors as a result of the health and economic emergency, and the national preventive isolation decrees.
- The profits that these activities had been obtaining before the covid-19 pandemic.
- The income obtained in the year 2019 and its growth rate.
- Its potential for postcovid-19 growth ”.
Finally, the government of Claudia López does not consider that this measure threatens the ICT sector and innovation in the city because, it states, the rate increases approved for the ICA do not represent a tax burden for taxpayers who are part of the selected economic sectors, “So investment decisions on technological innovation will not be affected.”
“Therefore, the District Administration does not consider that the ICA tariff modifications constitute in themselves a disincentive for technological innovation in Bogotá,” said Hacienda.
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