New Colombian government presents tax reform including the reduction and capping of some tax expenditures

By Nelson Bocanegra and Carlos Vargas

The new Colombian government submitted to the Congress an ambitious tax bill aiming to tackle poverty and inequality. The reform is expected to increase revenue collection by 1.7% of GDP in 2023 and, among other measures, targets the tax expenditure system.

Some of the main tax expenditure-related proposed measures include:

  • limiting the PIT deductions and exclusions for individuals earning more than 2,300 USD a month (i.e. 2.4% of the richest individuals),
  • reducing the PIT exemption for pensions,
  • eliminating 18% of the sectoral and regional tax benefits for corporations,
  • limiting tax expenditures for businesses that will be capped at 3% of net taxable income,
  • eliminating of preferential tax treatment for fuels in border zones,
  • and eliminating the “VAT-free days”.

Read the full article New Colombian tax bill aims at oil exports to fund social spending