Royalties...The Chronicle of an Announced Deficit

Environmental attorney Estefanny Pardo published a column in Diario Occidente commenting on the critical situation facing royalties and state finances in Colombia. Ms. Pardo explains that royalties are an economic consideration agreed upon for the exploitation of non-renewable natural resources. Under this system, the state allows the exploitation of certain resources in exchange for being paid a portion of the earnings, which allows it to benefit greatly from high prices in the market. However, the 2022 tax reform introduced uncertainty for the extraction sector with a provision that royalties paid by the mining energy sector were not deductible from income taxes. In this article, the author describes subsequent legislative and legal developments in this field, arguing that understanding the regulatory history of the country's finances, in particular its deficit, is essential to avoiding scenarios like the present.

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