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Colombia to cut VAT to 17% by 2021

  • Nov 9, 2018 | Richard Asquith

Colombia to cut VAT to 17% by 2021

Colombia is proposing that it cuts its VAT rate to help boost the struggling economy. There is a proposed two-stage decrease from today’s 19%: going to 18% on 1 January 2019; and then to 17% in 2021. VAT was originally raised from 16% to 19% in 2016.

Colombia will also extend the tax net by removing exemptions and nil rating from 2019 on a range of staples to help fund the decrease. This will be mostly basic foodstuffs. The less well-off will be compensated by direct payments from governments. Products that will remain outside of the net will include: medicine; health; education; public utilities and transport

The new Duque government needs to stabilise revenues as it seeks to retain a fragile credit rating, currently just above ‘junk’ rating with major agencies.

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He can be contacted at: He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.