Colombia’s oil industry has railed against a proposed tax reform presented on Saturday to the country’s congress, Reuters reported. The proposed regime aims to raise $53 trillion Colombian pesos (just over US$26 billion) from 2015-2019.
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Image of the Congress of the Republic of Colombia, located in Bogota. |
El Lider reports that the new tax plan proposes five key changes. Two of them directly affect companies; representatives from Colombia's oil industry says changes to these areas could, in turn, affect industry investment.
One key issue deals with the so-called wealth tax. The proposed rate will spike 3% on earnings of more than 1 billion pesos, up to 12% from the current 9%. For those making more than 5 billion pesos, the tax range is from 0.2% to 1.5%. In addition, the income tax on equity will require a 34% interest rate, along with with a surcharge of 3% on profits higher than 1 billion.
The tax reform is expected to be approved by the end of 2014, Reuters reported.
According to El Lider, Colombian Minister of Finance Mauricio Cardenas said that the new tax plan was attempting to balance the load, trying to even out the disparity between what companies pay.
The Colombian Oil Association (ACP) issued a statement noting that such structural changes would negatively impact the sector’s economic contributions over the last five years. On the ACP’s website, the group placed a 5.22% increase in exploratory drilling from 2012 to 2013. It also said that the country’s crude oil production, which is more than 1MMbo/d, contributed more than $18 trillion pesos in tax revenue. Oil is the country’s chief export.
Reuters reported that the industry is critical to the country’s US$370 billion economy, which suffered setbacks in 2013 because of attacks by Marxist rebels on pipelines and infrastructure.
The country held an offshore licensing round in July that was met with lukewarm response, with bids from four companies for five of 19 offshore areas offered.
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