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The Colombian Senate approves the tax reform project without the presence of the opposition

December 19, 2019


The Colombian Senate approved on Wednesday night the tax reform project without the presence of the opposition in an intense debate that has lasted more than fourteen hours and that will have to continue from now on in the House of Representatives, where 36 more articles must be approved.

Among the points that appear in the new tax proposal is the refund of VAT to citizens with lower incomes – some 2.8 million families – who could receive about 20 euros every two months – which is a cost for the Government of about 320,000 euros–; and the reduction of taxes of the pensioners in the matter of health in up to 270 euros per year and that will go down gradually from 12 to 8 percent until reaching 4.

According to the Ministry of Finance, the objective of the new reform is to strengthen the growth of the economy, investment, job creation and, ultimately, improve the living conditions of Colombians, in order to reduce poverty and establish a better fiscal framework in line with the economic situation of the country.

Some of the other points that have been approved with the reform, as the Colombian radio station Caracol Radio has listed, are the three days without VAT per year, for January, July and October; tax benefits for those companies that hire labor under the age of 28; a gradual reduction of the tax on legal entities to reach 30 percent; and higher rates for those citizens that exceed 6,500 euros.

As for the estate tax, the proposal is to set a rate of 1 percent for each year in vigo over liquid capitals exceeding 1,350,000 euros, with 75 of the proceeds earmarked for agricultural policies.

In relation to taxes on cannabis derivatives, the money collected will go to infrastructure, as well as goods and services in those areas of the country where the state policies of substitution of illicit crops by others have been carried out in accordance with legislation .

On the other hand, the new measure of the Government of President Iván Duque intends, as pointed out by the Ministry of Finance, to encourage the presence of foreign investment in Colombia by offering more competitive conditions with respect to other countries in the region.