Tax reform: these are the points that MSMEs are asking the government to address
The National Government plans to submit to Congress a new tax reform in an effort to boost the country’s economic reactivation.
In the midst of this discussion, the Minister of Finance, Ricardo Bonilla, has provided more details on this initiative, which is part of a package of measures aimed at granting tax incentives to companies.
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🇨🇴 El 20 de julio el Gobierno Nacional radicará ante el Congreso una nueva reforma tributaria.
— RTVC Noticias (@RTVCnoticias) May 14, 2024
💵➡️ El @MinHacienda por su parte defendió el compromiso de nuestro país para pagar su deuda al @FMInoticias.
Conéctate con nosotros 👉🏻 https://t.co/oeZQpX1NJ1 📲 pic.twitter.com/JsxVcBkE4B
According to statements made by Minister Bonilla, the tax reform will act as a complement to incentives that have been overlooked in previous reforms, such as the reduction of the nominal corporate income tax rate. However, the extent to which this reduction will be implemented has not yet been specified.
The response from various economic sectors has not been long in coming. In particular, the Colombian Association of Micro, Small and Medium Enterprises (ACOPI) has expressed its position on the proposals presented by the National Government.
Una nueva reforma tributaria no puede ser para aumentar los impuestos. Esta es la oportunidad perfecta para convocar a un diálogo nacional, franco e incluyente, que permita un acuerdo para salvar la economía. Estamos listos @RodolfoCorreaV pic.twitter.com/GAtWnEbFd9
— ACOPI Nacional (@acopi_nacional) May 14, 2024
ACOPI, for its part, has formulated specific proposals to reduce the income tax for MSMEs, seeking a national agreement that will allow economic recovery after the crisis derived from the pandemic.
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Context of high business inequality
In Colombia there is immense business inequality, both in terms of income and profits, and the tax reform is an opportunity to correct this situation.
In 2022, the 587 largest companies, which represented only 0.1% of the legal entities, concentrated 56% of the fiscal profit of the business network, according to calculations by the Center for Labor Studies (Centro de Estudios del Trabajo).
ACOPI has noted for several years that this business inequality is structural, not circumstantial.
In line with the concerns raised by ACOPI, the Government has raised the possibility of reducing the tax on legal entities in the tax reform while increasing taxes for individuals. This initiative is contemplated for the year 2025.
In the communiqué, ACOPI emphasizes that MSMEs represent 99.7% of the country’s business fabric, provide 79% of formal employment and nearly 40% of the Gross Domestic Product (GDP).
Consequently, it stresses the need for these entrepreneurs to be included in the decisions that affect them and have an impact on the country’s economy.
ACOPI emphasizes the importance of convening an inclusive national dialogue involving all relevant sectors. It is emphasized that no country has achieved economic and social development without strengthening its national industry and promoting the productivity and competitiveness of its sectors.
Proposals for a tax reform that seeks to reactivate the economy
In the midst of the context of high business inequality, ACOPI has presented a series of proposals to be considered by the national government. The proposals are:
1. To advance in a tax reform that contemplates a tax regime that considers the possibility of establishing a differential tax rate for this sector, adjusted to its sales levels, productive sector and seniority.
2. Formulate a National Plan to strengthen the MSME sector with a long-term vision, including strategies for integration into current production chains, with an emphasis on entrepreneurship and job creation.
3. Establish an alliance between the public and private sectors to define the route for the technological and digital transformation of the national economy, starting with MSMEs.
ACOPI expresses its willingness to contribute to the collective construction of government initiatives and legislative projects that have a positive impact on MSMEs.
It is expected that the dialogue between the Government, the Congress and the different economic sectors will lead to a tax reform that promotes sustainable development and the economic recovery of the country.
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