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The tax of the 1 percent that they had to pay, in an extraordinary way, the patrimonies equal to or greater than 5,000 million pesos in the country, during the years 2019, 2020 and 2021, it will not only be permanent but its rate will rise to 3 percent.
(You may be interested in: (What is at stake in Colombia with the tax reform).
A government source told EL TIEMPO that the modifications to this tax, created by the 2018 financing law and which covers some 7,000 taxpayers in the country, will be included in the draft bill. tax reform that will be based on the Congress.
It should be remembered that this tax, which seeks to collect 1 billion pesos annually, was imposed, among others, on natural persons, illiquid successions and foreign companies or entities that are not taxpayers of the income tax in the country.
The reform project was structured based on the recommendations of the Expert Commission on Tax Benefits and it is guided, among other central purposes, by the increase in tax collection in the country, the imposition of clear limits on tax deductions, the control and rationalization of exemptions and benefits, an increase in the income tax for the highest incomes and the fight against evasion, particularly of undeclared assets abroad.
(In context: The expert recipe for VAT, 4 x 1,000, income and other taxes).
Taking the above into account, the project will also strengthen the tax on dividends. Today those who receive income of 10 million pesos or more for this concept per year pay a rate of 10 percent. This percentage will rise to 15 percent for those who obtain each year 30 million pesos or more in this way.
It is important to point out that the Commission drew attention to the fact that the collection of income on these incomes is low in Colombia; Since companies are not incorporated as limited companies, they do not pay dividends as such, but as personal income or wages.
In that vein, he recommended creating a dividend recapture tax.
Revive the solidarity tax
The Government will also propose that the solidarity tax, that was created by decree 568 of 2020 to finance aid for the vulnerable middle class affected by the pandemic, covers all workers (public and private).
The norm, which was repealed by the Constitutional Court in August, imposed a tax of between 15 and 20 percent on government officials, contractors and pensioners with incomes equal to or greater than 10 million pesos. The decree ordered that these percentages be discounted from these people in May, June and July of last year.
According to the Court, the decree violated principles of generality of tribute and horizontal equity, as it was specifically applied to public employment. Taking these concerns into account, the Government will revive the tax, which will cover, after the reform, all workers who, after deducting health and pension contributions, earn these amounts on a monthly basis.
Although the rate has not yet been defined, this tax would be charged only for six months and would have a compensation: taxpayers will be able to deduct the resources they contribute from future payments they must make for income.
(As well: Commission suggested hard adjustments to benefits when declaring income).
Another key point of the reform is to increase the income tax for higher incomes. The Commission pointed out in its report that the tax system has at least 12 incentives used by those who declare income to reduce the value of the tax payable, obtain a zero balance and even in favor; For this reason, each year, according to Dian accounts, the country stops collecting about 17.1 billion pesos.
The Government took careful note of the recommendation to reform or eliminate these benefits to ensure that, at the end of the day, the effective rent rate payable in all cases is not less than 20 percent.
Today a person who in Colombia accumulates, for example, income of 480 million pesos a year would have to pay, according to the tax statute, a rate of 39 percent. However, after applying all exemptions and benefits, the effective rate drops to 16 percent. The reform will seek to correct distortions like this one.
Finally, and as the Commission had already suggested and stated by the Government, a tax on higher pensions. The initial idea is to start taxing them from 7 million pesos a month.
The project will also propose that companies can continue taking as a tax deduction from income tax, 50 percent of what is actually paid by industry and commerce (ICA). On the other hand, it will seek to freeze, for 3 years, the progressive reduction that had been taking place on corporate income, which today is 30 percent.
The VAT base is expanded
To the previous adjustments, which constitute an important component of the reform, the Government will add the increase in VAT taxable base, since on account of the exemptions and exclusions the country stops receiving 51.6 billion pesos annually. It is clear that, for now, basic goods and services will not be touched.
The Commission recommended that while taxed goods and services increase, the number of families receiving VAT offset and the value of the refund is raised, which today is 76,000 pesos, every two months.
(What’s more: IDB closes its assembly with an ambitious reactivation agenda).
In fact, the reform package includes a social transformation agenda that seeks to make some programs created to mitigate the impacts of the pandemic among the poorest, such as the VAT refund, become permanent and sustainable. The objective is to shelter with them 5 million households in vulnerability and extreme poverty, that is, about 20 million Colombians.
Agenda for the poorest and most vulnerable
Through the Social Transformation Agenda, that the National Government will also take to Congress shortly, it seeks to guarantee the flow of aid for five million families (about 20 million people), who are in a situation of vulnerability and extreme poverty.
The first item on the agenda proposes to increase the scope of the program Solidarity Income, that it was created to mitigate the economic impact of the pandemic among the poorest families in the country; each of the three million households that benefit today receive a monthly transfer of 160,000 pesos. Last year, the State allocated 4.3 billion pesos to finance the program.
The second point on the agenda proposes the extension of VAT compensation, which in 2020 reached one million families; each one of them receives 76,000 pesos every two months; According to Prosperidad Social, the goal for this year is to increase the number of households benefited to two million.
The third proposal on the agenda is the consolidation of the Educational Solidarity Fund, through which zero enrollment was guaranteed to about 70 percent of students in public universities, during the pandemic.
To face high youth unemployment, which stood at 22.5 percent between November and January, the agenda proposes creating an incentive for hiring young people between 18 and 28 years old, for a period of five years; it will be sought that the Congress approves that the nation assumes the contributions to social security.
The fifth point proposes extending the Paef this year, which is the subsidy to the payroll of companies whose income was affected by the pandemic by at least 20 percent. Until March, about 130,000 micro and small firms had received resources for 5 trillion pesos, which protected 3.9 million jobs. The sixth point of the agenda seeks to alleviate the tax burden of these companies, which concentrate the largest number of jobs.
Adjustments in the region are urgently needed: IDB
The Inter-American Development Bank (IDB), In its Annual Macroeconomic Report, released during the 61st Assembly of Governors that ended on Sunday in Barranquilla, it pointed out that the countries of Latin America and the Caribbean urgently need to implement fiscal reforms to prepare the ground for a sustainable post-covid recovery.
The baseline hypothesis of the report is that the region will grow 4.1 percent this year after falling 7.4 percent last year. To achieve a higher growth rate, Latin America needs to implement reforms that aim to improve productivity, help connect companies to global value chains and promote the digital economy and job creation in an inclusive, sustainable and resilient way.
(You can continue reading: BID: these are the five keys to your Vision 20-25)
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