Foreword

This report on Colombia is part of the OECD Tax Policy Reviews series. OECD Tax Policy Reviews are intended to provide independent, comprehensive and comparative assessments of OECD member and non-member countries’ tax systems or zoom in on a specific country tax policy topic. By benchmarking the tax systems of countries and identifying tailored tax policy reform options, the main objective of the Reviews is to enhance the design of existing tax policies and to support the adoption and implementation of tax reforms.

In 2021, the Tax Incentives Commission (TIC) identified the need for Colombia to develop a stand-alone Tax Expenditure (TE) report and to strengthen the measurement of the tax revenue foregone of TEs. Following up from the TIC report, Colombia requested OECD assistance in defining its TE benchmark and to provide technical support to improve the measurement of tax revenue forgone from TEs.

This OECD Tax Policy Review proposes a benchmark for the taxation of Income and Valued Added Taxes and seeks to identify the full list of TEs within the Colombian tax system. It provides an in-depth assessment of Colombia’s TE reporting practices and makes specific recommendations as to how the measurement of TEs and the reporting of them can be improved. Finally, it provides item-by-item estimates on the revenue forgone from all the TEs within the corporate and personal income tax that can be estimated given the available data. The report was prepared in close collaboration with Colombia’s Dirección de Impuestos y Aduanas Nacionales (DIAN) and Ministerio de Hacienda y Crédito Público (MHCP).

The review was written by Gioia de Melo and Yannic Rehm, with written inputs from and under the supervision of Bert Brys, from the OECD Centre for Tax Policy and Administration. The work benefited from productive meetings with tax officials from DIAN and MHCP, which were held remotely between October 2021 and June 2022. In particular, the authors would like to acknowledge the contributions of Catherine Fenwarth Benito-Revollo, Pastor Hamlet Sierra Reyes, Diana Marcela Parra Garzón, Jair Paolo Bedoya, Luis Adelmo Plaza, Sebastian Arcila Gomez, Ivon Maritza Albarracin, Daniela Gantiva Parada, Gloria Yori Parra, Alba Clemencia Avendaño Cruz, Estefania Jaimes Davila, Tomas Jaramillo Quintero, Nicolas Bernal (all DIAN) and Sammy Libos Zúñiga (MHCP). Financial support from the State Secretariat for Economic Affairs (SECO) of Switzerland is gratefully acknowledged. The OECD wishes to thank in particular Juan Pedro Schmid, Luisa-Fernanda Cardozo-Romero and Christian Braendli from SECO for their support and encouragement.

The authors would also like to thank colleagues from the OECD’s Centre for Tax Policy and Administration, in particular David Bradbury, Stéphane Buydens, Mariona Mas Montserrat and Richard Clarke for their helpful input and feedback, as well as Natalie Lagorce, Carrie Tyler and Hazel Healy for their assistance with formatting and communications.