We agree that tax reform is necessary. But the cure cannot be bigger than the disease. Technology today is humanity’s most powerful tool for creating equality and wealth. generates income opportunities, especially for young people; It accelerates financial inclusion and formalization; makes everyday life easier; eliminating paperwork; among others.
For this reason, it is imperative that the Ministry of Finance, DIAN and the Senate and Chamber’s third committees correct some of the errors made in good faith in the initial version of the tax reform that caused tremendous damage to the Colombian digital ecosystem:
1. Let’s not kill the unicorns of the future
This tax reform makes the natural persons property tax permanent, levies it at 72,000 uvt (a little over $2,700 million in today’s money) and rates it with progress criteria.
what’s the problem? Basically, startups are usually financed with risk capital, for which they record a valuation based on their future projections, but not on their assets or their liquidity. And Tax Reform says that DIAN will take the intrinsic value of companies as a reference when calculating the annual value of property taxes. Then, entrepreneurs will have to go into debt to pay this tax or, failing to do so, spend a significant portion of the risk investment they receive on their tax obligations, rather than inject it into marketing or specialized human talent. , which helps them to grow..
In other words: with this reform, entrepreneurs will have to answer the wealth tax with money they don’t actually have. And many people will certainly move their talents, their ideas and their capital to other countries with better tax terms.
Tech giants (unicorns) like Rappi, Truora, Platzi and Habi were born in Colombia. Almost always, at the tip of the risk capital. If this bug is not fixed there will hardly be many more such success stories.
2. New taxes on digital platforms isolate us internationally and scare investments
Tax reform proposes a new tax for digital platforms, through significant economic presence figures. Basically, it obliges companies residing abroad and carrying out economic activities in Colombia, especially (but not exclusively) in technology, to pay income tax.
We agree that digital platforms should pay taxes. Indeed, they have been responsible for VAT for many years. But the devil is in the details. let’s watch:
– Does anyone understand that when the Ministry of Finance intends to impose new taxes for mobility platforms, traffic policemen fine their drivers for the simple fact of working? Let’s first regulate this service and then talk about the rest.
– The OECD has already given a line on the taxation of digital platforms through the BEPS program, so that their tax money does not remain in the countries of tax residence, but also reaches the countries where they generate income. In this way we can also get the collection. The OECD has insisted that member states (such as Colombia) should not take unilateral measures on the issue, which it does with tax reform.
Such measures alienate us from the OECD, put us under unnecessary diplomatic tension, scare away foreign investment and take away options from digital consumers.
– Article 11.5 of the FTA with the United States literally states that “any party shall permit a service provider of another party to establish or maintain a representative office or any other form of company, or to cross a may not be required to be resident in your area as a condition. – Limit supply of a service.” In other words, what does a significant economic presence figure do.
Technology should be given priority in times of political change, citizen empowerment and generational change. And it doesn’t start with suffocating him through tax reform. Fortunately, the government and Congress have had enough time to make the necessary adjustments.