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Colombia backtracks broadening of VAT net

  • May 22, 2021

The South American state of Colombia has withdrawn plans to extend its Value Added Tax net following a popular uprising.

The April Ministry of Finance VAT proposal looked to bring some basic foodstuffs into the VAT net. The country's potential VAT take is just 39% of the total supplies compared to the OECD’s average of 58% for other South American countries. The plans had included introducing VAT on electricity, water, and gas.

However, this triggered union-sponsored strikes which turned to violence, including over 10 deaths. This led to the VAT proposals being withdrawn along with plans to lower the income tax threshold.

Other measures included a wealth levy and increased dividend taxes. 

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