Colombia every year loses out on nearly US$2 billion in taxes, because
its systems to collect VAT and income taxes are outdated and often
evaded, the country’s tax office said Wednesday.
Tax office DIAN estimates that the country currently has a VAT-evasion rate of 22 percent, which for income tax that rate even is set at 35 percent. The DIAN does indicate the rates have dropped slightly compared to last year.
Fedesarollo, an non-government economic research institute, blames the high rate of tax evasion on the complicated collecting of tax money for employers, who then decide not to pay taxes.
“The Colombian tax system is very complex, which is illustrated by the fact that the tax charter has more than 1,100 articles and 2,000 additional norms,” Fedesarollo says.
The NGO advises the government to tackle tax evasion through a simplification of the tax system and the active prosecution of tax evaders. It also says companies can avoid tax, because of the country’s complex system of special treatments for certain companies and industries.