A new tax for digital platforms?

Netflix, Amazon, Mercado Libre, Apple, Linio, Dafiti, among others, are platforms that in the midst of the pandemic have positioned themselves more thanks to the increase in their use. This has translated into large monetary income for each and every one of them.

Digital platforms in our country pay two taxes: VAT and reteica. The fact that Colombia belongs to the OECD restricts the extension to other types of taxes, so these companies have managed to enter strongly in this and other South American countries.

As for the collection of these two taxes, in 2019 it was $253,678 million pesos. This year, in 10 months of 2020, the value already amounts to $209,887 million pesos.

“Faced with this, the Dian proposes that, despite not having an infrastructure in the country, these platforms should transfer more revenue to the treasury”

Faced with this, the Dian proposes that, despite not having an infrastructure in the country, these platforms must transfer more income to the treasury, and not elude these resources in tax havens or in returns to their countries of origin.

A minimum tax rate must be generated

From the point of view of the Economic Commission for Latin America and the Caribbean -Cepal-, it is only fair that large technology multinationals start paying taxes in the countries where they operate.

“Some multinationals have been the winners during the pandemic, we are not only talking about the digital ones, but also about the large monopolies or oligopolies or those that operate as such. So, I think there we have a gap in the tax systems,” says Alicia Bárcena, executive secretary of ECLAC.

Taxes should be paid in the countries where they obtain productivity gains, where they are earning. The entity indicates that in countries such as Colombia, Mexico or Brazil, where there are large markets, these companies are earning a lot.

“We have to agree in Latin America to generate a minimum tax rate. The European Union, for example, is setting a minimum tax rate of 25% on the profits of multinationals. We would have to do something like that in Latin America and the Caribbean,” he stresses.

A strategy to increase tax revenues

José Antonio Ocampo, member of the Independent Commission for International Corporate Tax Reform (ICRICT), former Minister of Finance and professor at Columbia University, said that, when discussing the next tax reform, a strategy to raise tax revenues is to propose a tax on digital companies, the big winners in this crisis.

This is an issue that has already been analyzed so far this year. The newspaper La República, in its editorial of July 8, 2020, published that the Minister of Finance, Alberto Carrasquilla, and his advisors should work on the hypothesis that, if 3% of the global sales tax is applied to the four big technology companies, they would have to pay this year 25,000 million dollars, since they expect revenues of 840,000 million dollars, in light of the reports in the stock exchanges.

“Colombia is a key market for these multinationals and the global trend of making them pay more taxes in the countries from which they derive their sales cannot go unnoticed,” the editorial states.

The time has come to apply the Gafa tax in Colombia

Pedro Sarmiento, managing tax partner at Crowe Colombia, warns of the need for the next tax reform to contemplate a new tax for these platforms.

For him, Colombia should adopt the so-called Gafa rate (Google, Apple, Facebook and Amazon), with which technology giants that are not taxed in countries where they generate value, profits and benefits are taxed.

“In Europe they have not agreed on how much the ideal rate should be, but it is between 3% and 5%. For example, in Spain it is already 3% and in Australia it is 5%. The causation is on the services provided in each jurisdiction. After the pandemic, the adoption of technological services is very wide and, surely, this will be one of the new taxes, hopefully at a reduced rate below that of Europe, that is, an average of 3% to avoid tax competition”, he explains in La República.

What does the success of the collection of this tax depend on?

The analysis The GAFA tax in Latin America, prepared by the Centro Estratégico Latinoamericano de Geopolítica -Celag-, indicates that the success of the application of this tax will depend on the tax administrations being attentive to three elements:

–Thatbank secrecy is abolished, and that the tax administration has access to local banking information regarding payments abroad.

–Thatlocal banks be required to make a true taxonomy of the international activities and companies to which payments are made abroad.

–Thatthe banks be turned into tax withholding agents, i.e., that they be the ones to debit the tax to each taxpayer in each transaction and that this amount be transferred to the Government.

Source: Actualícese