Withholding Tax Would Generate $13.9 Billion for the Petro Government

Tax attorney Juan Carlos Valencia was interviewed by Portafolio about a measure that Colombia's Interior Ministry is preparing to increase the government's cash flow by raising the withholding tax. Mr. Valencia explained that this tax is a mechanism to anticipate the payment of a tax, which means an increase in the withholding rate would lead to an increase in cash for the state's coffers. He recalled that last year the government had to revise the rate for the hydrocarbon and mining sectors, adding that now it attempts to implement the same adjustment without a favorable change in the circumstances affecting companies in those industries. He also shared his opinion that, through this plan, the government is financing itself with data that is not real.

"This decrease in the cash flow of companies in the sector could lead them to a state of insolvency, which would further aggravate the difficult economic situation they are facing because of the fall in international prices, difficulties in marketing their products and new burdens imposed on them through the internal unrest decrees," he said.

READ: Withholding Tax Would Generate $13.9 Billion for the Petro Government