October 29, 2018 / 8:17 PM / 2 months ago

Colombia seeks to raise tax on high earners, cut corporate taxes

BOGOTA, Oct 29 (Reuters) - Colombia will seek to raise income tax on high earners and lower duties on businesses, among other tax measures, to raise 14 trillion pesos ($4.4 billion) to finance next year’s budget, the head of the DIAN tax agency said on Monday.

Finance Minister Alberto Carrasquilla, who has yet to reveal complete details or present the bill to Congress, plans to raise income tax on upper earners to between 35 percent and 37 percent from 33 percent now, depending on salaries, the agency’s Jose Andres Romero told reporters.

Corporate income tax would be reduced to 30 percent from the current 33 percent, he said, without providing more details.

The bill faces a difficult path through Congress as the government does not have a solid majority and there is little time for debate before year-end.

Latin America’s fourth-largest economy faces the challenge of reducing its fiscal deficit to 2.4 percent of GDP in 2019 from 3.1 percent forecast for this year and to 1.5 percent in 2022.

The deficit reductions, part of a so-called fiscal rule, are key to preventing the loss of its investment grade credit rating.

The tax bill will also seek an extension of the value-added tax to include more products, while cutting the rate to 17 percent from 19 percent by the time President Ivan Duque leaves office in 2022.

The bill will also include a plan to modernize the DIAN tax agency to improve collection and combat evasion, which is projected to provide the economy with about 30 billion pesos in additional annual revenue. (Reporting by Nelson Bocanegra and Carlos Vargas Writing by Helen Murphy; Editing by Dan Grebler)

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