Petro Government wants Netflix, Spotify and others to pay rent in Colombia

Bogota — The Tax Reform to be presented by Gustavo Petro’s Finance Minister, José Antonio Ocampo, will focus on eliminating benefits, but also, in which taxpayers who do not contribute today begin to do so and some of those come from abroad with digital services.

Bloomberg Línea spoke with José Antonio Ocampo, finance minister appointed by the president-elect, to find out details of how the reform is being prepared, which is expected to reach the Congress of the Republic on August 8.

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“The idea is to present it on August 8, but we are reviewing some legal issues before that, ”says the economist commissioned by the leader of the Historical Pact.

One of the most interesting issues is the treatment that is going to be given to the so-called “digital economy”, a segment that tried to tax itself in the failed 2021 reform headed by Alberto Carrasquilla, today co-director of the Banco de la República.

Ocampo explains that he wants to evaluate the mechanism for companies such as Netflix, Uber, Spotify, among many others, to contribute taxes to the Colombian economy.

“We are analyzing when the size of sales of one of these companies in the country reaches a certain level, that company will be considered to have national residence. We are looking at what level of income,” says Ocampo.

He explains that “the company would be subject to income. They are supposed to have a branch when they reach a certain level of sales, this is an issue that has been the subject of much international debate in this digital era and we are going forward with it in this reform”.

What is yet to be defined is the level of income that said platform must generate from Colombia to be considered a tax resident, and Ocampo explains that all this discussion is part of the debates and agreements reached in the OECD.

“We are going to introduce some of the rules of what was discussed and agreed last year in the so-called inclusive framework of the OECD, we are going to take some of those measures”, he added.

Ocampo had already clarified that the occasional earnings tax is going to be increased, and that the Government’s proposal will be to raise it to 20%, however, regarding the exemptions that said tax would maintain, nothing has been decided yet. “We are analyzing. We are going to lower the total tax benefits of both individuals and companies, but we are looking at what to do on the specific issue of occasional income.”

There was the expectation Regarding the rent rate that will be raised for legal entities, because for years it has been said that this tax in Colombia is very high compared to other countries in the region, however, Ocampo clarifies that for now it is not contemplated to reduce the rate in the reform that is going to be presented soon.

“We hope in the future, if the tax reform is successful in terms of collection, to make a proposal to reduce the corporate income tax rate, but not now because the Uncertainty is very great”, said the minister who will assume his position in property this Sunday when it is the possession of Gustavo Petro.

Among the issues that interest companies, Ocampo explained that “we are going to eliminate some sectoral benefits, it is part of what we are going to do in terms of corporate income.”

Previous reforms have tried to ccreate incentives for foreign investment in Colombia from the elimination of taxes, but the new person in charge of finances in the The country does not have that among its plans, at least for now. “It has not been on the agenda to eliminate the tax on foreign portfolio investment and we are going to make a proposal for a maximum deductible of VAT on capital goods.”

It also says that since there will be a proposal to tax large estates, there will be no presumptive income figure. “There will be no presumptive income, because if there is a wealth tax, that we are going to propose, because it would not make sense”.

According to what Ocampo said, a wealth tax is proposed from $2,000 million liquid and the initial rate will be 0.25% and will increase to 1% for assets of $5,000 million and up.

Ocampo said in an interview that at the moment it is not contemplated increase the income surcharge for the financial system, but what is expected, for now, is to maintain the current conditions.

Those who will have to make a greater contribution to the treasury are the big polluters, that is, green taxes will be more relevant in the next reform.

“We are going to expand the green taxes to include coal, which paradoxically does not cover it today. The current rates will be maintained. but it is extended to emissions that were excluded,” explained Ocampo, who clarified that “we are discussing whether there will be benefits for carbon-neutral companies.”

Similarly, Ocampo did not rule out raising taxes on dividends, but assured that he will be very careful not to affect the market in Colombia.

“We are discussing taxes on dividends, but we are going to prevent double taxation from being greatly extended. We are going to be restricted in this matter”, said the new minister.

Finally, regarding the tax treatment of free zones, he said that the requirements of companies that access tax benefits from there will be toughened.

“The free zones we will put export requirements. They have to export a minimum proportion of their production, they will not be able to sell it on the market internal, as many companies do. If they do not comply, they have to give up their free zone characteristics, and we understand that this would not have a legal impediment,” concluded Ocampo.

Regarding the regulations with which Dian will be strengthened, he did not give further details, but explained that “there will be regulations, but especially how Dian can better control evasion and we are going to expand the norm of when evasion becomes a crime”, he concluded.

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