October 15, 2010 / 7:32 PM / 9 years ago

Colombia presents tax reform law to Congress

* Lawmakers will hold four debates on law

* Colombia seen growing 4.5 pct to 5 pct this year

BOGOTA, Oct 15 (Reuters) - Colombia’s government presented on Friday a reform bill to Congress aiming to eliminate a tax deduction for investment by next year, reduce an energy surtax for industry and combat tax evasion.

President Juan Manuel Santos’ administration has proposed an ambitious set of reforms ranging from the management of oil and mining royalties and an agrarian land reform, to overhauling the health and justice systems.

“We’re looking to better competitiveness in the productive apparatus, better collections, lower the fiscal deficit by eliminating the deduction, which allows us to collect 0.8 percent of GDP,” Finance Minister Juan Carlos Echeverry said.

“We hope these changes raise the country’s collections.”

Investors see Santos’ reform agenda as the last step toward an upgrade by credit agencies such as Standard & Poor’s, Moody’s, and Fitch, all of which currently rate Colombia one notch below investment grade. [ID:nN16265600]

The three agencies have revised their outlooks on Colombia to positive from stable this year.

If passed by Congress, the bill would reduce the tax deduction on investment to zero percent in 2011 from 30 percent currently. It also would try to halt evasion of a tax on financial transactions and eliminate an energy surtax by 2012 from 20 percent this year.

Colombia, once dismissed as a failing state mired in drug violence and guerrilla war, is enjoying a flood of foreign direct investment in its petroleum and mining sectors as instability from the four-decade conflict eases. (Reporting by Javier Mozzo; Editing by Andrew Hay)

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