Some of the key issues championed by Colombian President Ivan Duque during his campaign were economic diversification, revitalizing the countryside, and reforming the tax code. During the next few weeks, President Duque and his cabinet are expected to present their taxation overhaul proposal to Congress, which will then be tasked with debating and voting on the project. President Duque’s vision for Colombia’s economic future is centered on the following key pillars. Firstly, the Duque tax plan seeks to strengthen the middle class by not raising its taxes while also combating socioeconomic inequality. Simultaneously, the government has announced that it will progressively lower the corporate tax rate across the board to a level of 30% by 2020 in order to foster job creation and economic dynamism. Meanwhile, the Duque tax proposal does envision a slight tax increase in the sales tax as well as an increase in the income tax for ultra-high net worth individuals.
One of the key elements contained within President Duque’s proposed tax reform is that companies will be able to deduct from their corporate taxation all of the sales taxes that they pay on the acquisition of capital goods.
President Duque’s Tax Overhaul is a Win for Agribusiness
Additionally, as the budget discussions are also underway, President Duque is looking to maintain an almost balanced budget and minimize deficits by making the national bureaucracy more efficient and cutting unnecessary red tape. As part of the government’s intention of decreasing inequality and increasing the economic activity throughout the country, President Duque is pushing for zero capital gains tax for companies investing in the Colombian countryside, particularly in agribusiness and manufacturing development. Simultaneously, in order to increase the attractiveness and competitiveness of Colombia’s countryside, President Duque is building on the ambitious infrastructure projects of his predecessor in order to expand and modernize the road and highway system that connects a country almost twice the size of Texas.
President Duque’s tax reform and job creation proposal should be ushered through Congress by early next year. Therefore, as early as next year, the pro-business policies of the Duque administration will have offer tangible, financial benefits to companies like Farmfolio that are focused on created jobs, developing Colombia’s countryside, and diversifying the national economy. The Duque Tax Bill is great news for Farmfolio’s operations in Colombia and for our investors.