Valledupar, Colombia, Overhauls Tax Code: Businesses and Residents Face Changes
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The Valledupar City Council concluded its final session of 2024 wiht a notable decision: the approval of a revised Tax Statute, effective January 1, 2025. This update brings considerable changes too both business and property taxes, impacting a wide range of residents and businesses.
Among the most notable adjustments are increases to the Industry and Commerce Tax (ICA). Financial institutions will see their rates jump from 11 per thousand to 14 per thousand. Wholesale trade in various sectors, including pharmaceuticals and cosmetics, will also experience increases. Such as, the rate for wholesale medicine and cosmetics will rise from 10 to 11.04 per thousand—a change met with opposition from buyer’s associations. Similar increases affect beverages, tobacco, clothing, and wireless telecommunications.
The city administration justifies these changes, citing Article 14 of Law 2082 of 2021. This law mandates that capital city tax statutes align with Bogotá’s legislation, “as long as it does not go against the constitutional provisions on the matter.” The administration argues the changes are necessary to maintain fiscal balance.
Property Tax Adjustments
Significant changes are also in store for property taxes. Following discussions with the Colombian Chamber of Construction (Camacol) in the Cesar department, the Finance Secretary, Lily Mendoza, announced revised rates for residential properties in strata 4, 5, and 6. She stated: “From 0 to 70 current minimum legal assessment wages, the agreed rate is 5.5x 1,000; from 70 to 135 minimum wages,it is 6; from 135 to 200 wages,it is 7; from 200 to 500 wages,8; from 500 to 700,9; from 700 to 900 wages,10; from 900 to 1,000,it is 11; and from 1,000 onwards,the rate is 14.5.For their part, undeveloped lots range from 22 to 25.”
Mendoza explained that these increases are intended to offset tax incentives included in the updated statute. Commercial, service, and industrial buildings will also see adjustments, with those valued at up to 200 minimum wages facing increases. Higher-valued properties will see even steeper rate increases.
The changes implemented in Valledupar’s tax code represent a significant shift in the city’s fiscal policy.The long-term effects on businesses and residents remain to be seen, but the immediate impact is clear: higher taxes across various sectors.
Valledupar Businesses and Residents Face Rising taxes: A Conversation with Economist Dr.Maria Alvarez
Valledupar, Colombia recently made headlines with its updated Tax Statute, set to take effect in 2025.
The new code brings notable changes to both business and property taxes across the city. To better understand the implications of these changes, we sat down with Dr. Maria Alvarez, a renowned economist specializing in Colombian fiscal policy.
World-Today-News Senior Editor: Dr. Alvarez, thank you for joining us today. The revised Tax Statute in Valledupar has generated a lot of discussion. Can you shed some light on the key changes and thier potential impacts?
Dr. Alvarez: absolutely. The most notable change is the increase in the Industry and Commerce tax (ICA) for various sectors. This includes a rise for financial institutions and higher rates for businesses in industries like wholesale pharmaceuticals, cosmetics, beverages, and telecommunications.
World-Today-News Senior Editor: Have these increases been met with resistance, and what reasons are being given for them?
Dr. Alvarez: There has been some pushback, notably from businesses facing significant jumps in their ICA rates. Buyer’s associations, as an example, have voiced concerns about the impact on wholesale medicine and cosmetics.
The city management cites a 2021 law that mandates aligning capital city tax statutes with Bogotá’s legislation. They argue that these adjustments are necessary for fiscal balance, but many businesses are worried about the added burden.
World-Today-News Senior Editor: The article also mentions changes to property taxes. What can you tell us about those?
Dr. Alvarez: Yes, there are significant changes to property taxes, especially for higher-value residential properties in strata 4, 5, and 6. The rates are tiered based on the assessed value, with properties exceeding a certain threshold facing the highest rate increases. Undeveloped lots will also see increases.
World-Today-News Senior Editor: What impact do these property tax increases have on homeowners and potential buyers?
Dr. Alvarez: The most immediate impact is a higher property tax bill for those owning homes in the affected strata ranges. For potential buyers, it could lead to a decrease in affordability, particularly for higher-priced properties.
World-Today-News Senior Editor: Dr. Alvarez, thank you for this insightful analysis. What are your overarching thoughts on the long-term effects of these tax changes in Valledupar?
Dr. Alvarez: It’s still too early to definitively say.The ultimate outcome will depend on various factors, including the city’s economic performance, investment climate, and how businesses and residents adjust to the new rates. However, these changes undeniably represent a significant shift in Valledupar’s fiscal policy and will undoubtedly have far-reaching consequences for the city’s economic landscape.
World-Today-News Senior Editor: Thanks again for your expertise, Dr. Alvarez.
