New reforms that lower tax rates on foreign investors’ profits to 14% from 33% stir up mixed feelings regarding the benefits reaped by Colombia.
“Increased flow of foreign resources will allow an expansion of our country portfolio and modernization of our capital market, with positive externalities on the financial sector,” Olga Ximena Novoa Gonzalez, an advisor in the Finance Ministry, told Colombia Reports.
The most important benefit in the recently passed tax reform, explained Novoa, is the reduction in the cost of funding the nation’s debt issuances, which in turn will free up tax revenues for spending in projects with high social impact.
Despite the benefits that come with making investment attractive to outsiders, a member of Colombia’s strongest opposition party rejected the cuts, saying the reform will do little to solve Colombia’s troubles.
“I am not in agreement with the idea of lowering taxes on foreign investors’ profits, and furthermore, I don’t believe that less taxes on investor’s profits means solving Colombia’s problems,” said Senator Jorge Robledo.
Robledo, the leader of opposition party Polo Democratico, has often spoken out against Colombia’s neoliberal economic policies.
Letting foreign investors pocket more profits goes hand in hand with Colombia’s 2012 efforts to set up free trade agreements with the United States and the European Union.
Foreign investment grew from $13.5 billion in 2011 to $15.3 billion in 2012, a 12.5% increase.