A proposed tax reform in Bogotá has sparked a discussion regarding how much the financial sector should pay in Industry and Commerce Tax (ICA) and who could ultimately bear the additional cost. The bill initially proposed increasing the tax rate from 14 to 21 per thousand.
Banking and fintech industry associations have called for the current rate of 14 per thousand to be maintained. Their main concern is that the increase could be passed on to the cost of financial products and, consequently, affect access to credit for households, businesses, and entrepreneurs. They have also warned that a higher tax burden could make Bogotá less attractive for new investments and lead some financial and technology operations and talent to relocate to other cities.
In response to these concerns, the Bogotá District Treasury has stated that the adjustment is based on taxpaying capacity and tax equity considerations and that, even under the proposed new rate, the financial sector’s effective tax burden would remain below the average for economic activities in Bogotá.
The bill has already been approved at first debate and continues to be considered by the Bogotá City Council. We will continue to monitor developments regarding this proposal.
