Colombia tax reform to target high-earners, says incoming agency head

BOGOTA, July 14 (Reuters) – A tax reform proposed by Colombia’s President-elect Gustavo Petro will raise $10.9 billion annually by using a progressive income tax, the elimination of enterprise exemptions, and tackling evasion, his incoming tax agency head said on Thursday.

Petro, a leftist who will take office subsequent thirty day period on guarantees of generous social systems, this 7 days named 38-12 months-aged economics professor Luis Carlos Reyes to head the DIAN tax and customs agency.

Reyes will be tasked with employing the 50-trillion-peso reform need to it go congress, wherever Petro has built a broad coalition of leftist functions and the centrist Liberals.

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Company leaders and investors are cautious of Petro, who took pains to reassure them in advance of the election and named a industry-welcoming previous central banker as his finance minister. read through more

“We are pretty optimistic in relation to the figure of 50 trillion, simply because there are a range of exemptions for people today, for organizations that we can get rid of. And evasion in Colombia is so significant that there is a lot of area to reduce it,” Reyes informed Reuters in an interview.

Tax exemptions for persons and organizations established to be removed by the reform are equivalent to just beneath 2{3e92bdb61ecc35f2999ee2a63f1e687c788772421b16b0136989bbb6b4e89b73} of the country’s $258 billion gross domestic merchandise, Reyes mentioned.

Evasion fees the place some $17.6 billion per year, he claimed. Beneath the reform evasion will be punished with prison sentences, Reyes added, which are hardly ever utilized now.

Everyone earning extra than 10 million pesos ($2,194) a month – just 1{3e92bdb61ecc35f2999ee2a63f1e687c788772421b16b0136989bbb6b4e89b73} of Colombians – will need to progressively shell out much more in profits tax.

“No just one earning considerably less than 10 million pesos should worry,” he stated.

Businesses – which at this time fork out a tax rate of 35{3e92bdb61ecc35f2999ee2a63f1e687c788772421b16b0136989bbb6b4e89b73} – are probable to see their obligations fall until they presently gain from exemptions or unique tax costs, Reyes explained.

“The great the vast majority of corporations who will not have any tax advantages will pay back considerably less than they are paying now.”

Oil and mining organizations will shed tax rewards, Reyes added, nevertheless specifics are nevertheless remaining confirmed, while taxes on capital and dividends will also rise.

Improved tax revenue could assist decrease the fiscal deficit, which hit 7.1{3e92bdb61ecc35f2999ee2a63f1e687c788772421b16b0136989bbb6b4e89b73} of GDP past year, he reported.

“With out a reform, there is certainly no federal government,” Reyes claimed. “Colombia demands a lot more money to be able to have out promises laid out in the constitution.”

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Reporting by Luis Jaime Acosta and Carlos Vargas, Producing by Julia Symmes Cobb Enhancing by Rosalba O’Brien

Our Standards: The Thomson Reuters Belief Ideas.

Maria Flores

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