{"id":17263,"date":"2016-07-26T11:24:22","date_gmt":"2016-07-26T16:24:22","guid":{"rendered":"http:\/\/panamaadvisoryinternationalgroup.com\/blog\/?p=17263"},"modified":"2016-07-26T11:24:22","modified_gmt":"2016-07-26T16:24:22","slug":"foreign-companies-are-fleeing-colombia-to-escape-oppressive-taxation","status":"publish","type":"post","link":"https:\/\/panamaadvisoryinternationalgroup.com\/blog\/foreign-companies-are-fleeing-colombia-to-escape-oppressive-taxation\/","title":{"rendered":"Foreign Companies Are Fleeing Colombia to Escape Oppressive Taxation"},"content":{"rendered":"<p><a href=\"http:\/\/panamaadvisoryinternationalgroup.com\/blog\/wp-content\/uploads\/2016\/07\/map-of-colombia.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-17264\" src=\"http:\/\/panamaadvisoryinternationalgroup.com\/blog\/wp-content\/uploads\/2016\/07\/map-of-colombia.jpg\" alt=\"map of colombia\" width=\"659\" height=\"439\" srcset=\"https:\/\/panamaadvisoryinternationalgroup.com\/blog\/wp-content\/uploads\/2016\/07\/map-of-colombia.jpg 659w, https:\/\/panamaadvisoryinternationalgroup.com\/blog\/wp-content\/uploads\/2016\/07\/map-of-colombia-300x200.jpg 300w\" sizes=\"auto, (max-width: 659px) 100vw, 659px\" \/><\/a><\/p>\n<p>Vanesa Vallejo reports in Pan Am Post about how high tax rates are driving companies out of Colombia.<\/p>\n<p class=\"wp-caption-text\">Direct foreign direct investment in Colombia has fallen 37 percent as of February.\u00a0 Panama will be the recipient of some of this pullback.<\/p>\n<p class=\"wp-caption-text\">Between 2015 and 2016, seven multinational companies have left.\u00a0PayPal, Ripley and Mondelez are just a few of the bigger names.<\/p>\n<p class=\"wp-caption-text\">Though many factors influence a company\u2019s decision to withdraw investments from a country, it\u2019s almost certain that high taxes and excessive bureaucracy are\u00a0near the top of the list.<\/p>\n<p class=\"wp-caption-text\">According to\u00a0<a href=\"http:\/\/espanol.doingbusiness.org\/reports\/global-reports\/doing-business-2016\" target=\"_blank\">Doing Business 2016<\/a>, 69.7 percent of a company\u2019s profit go to the state of Colombia. That\u2019s $70 of every $100 earned.<\/p>\n<p class=\"wp-caption-text\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-98219 size-full\" src=\"https:\/\/es.panampost.com\/wp-content\/uploads\/gra%CC%81fica.jpg\" alt=\"\" width=\"710\" height=\"350\" \/><\/p>\n<p>When deciding if they\u2019re going to invest or not, companies look at\u00a0the profitability of a project, which often depends on profit margins that take a serious hit with high taxes. High taxes\u00a0discourage investment. Still, many insist on denying financial theory when they say taxes won\u2019t bankrupt a company, or that companies have too much money, or that a little redistribution wouldn\u2019t hurt.<\/p>\n<p>Besides low taxes, companies need tributary stability. It\u00a0eases financial forecasting and eliminates additional risk factors. This therefore raises the chance of investment project execution. Hence the president\u2019s announcement on Twitter in response to\u00a0different companies leaving Colombia.<\/p>\n<p>However, this year\u2019s studies for the reform have started despite Santos saying\u00a0that if the peace accord passes, there would\u00a0be no new taxes. Labor Minister Clara Lopez said if the accord is signed, taxes will have to go up to finance post-conflict activities. In Colombia, no low taxes, nor financial stability.<\/p>\n<p>Another important issue when deciding whether to invest or not in a country is the ease of doing business. This criteria includes aspects like the amount of\u00a0paperwork to create a company, or how easy it is to enforce a contract. Logically, companies will want to reduce expenses and time to establish a company. They also need an institutional framework that guarantees contract fulfillment and protection of property rights.<\/p>\n<p>In this aspect, Colombia doesn\u2019t offer the best conditions. According to\u00a0<a href=\"http:\/\/espanol.doingbusiness.org\/reports\/global-reports\/doing-business-2016\">Doing Business 2016<\/a>, on average, a Colombian company must make 11 payments to the government. It spends around 239 hours doing this, while the average time in OECD countries is 176. Regarding contract enforcement, Colombia\u00a0takes place 180 out of the 189 considered countries. A company in Colombia needs 1,288 days to enforce a contract. In Singapore, which ranked first, this takes between six\u00a0and nine\u00a0times less.<\/p>\n<p>It should be clear that the Colombian tributary structure brutally punishes the productive sector. Also, cumbersome paperwork and lack of guarantees for contract enforcement, as well as tributary instability make Colombia an unattractive country for investment. It\u2019s absurd that people keep demanding a raise in taxes with the excuse that they want to improve the country\u2019s situation.<\/p>\n<p>In Colombia, like any country in the world, private investment creates employment. Presenting a high tributary load to companies as a solution to poverty is asking for the path that has taken so many countries to misery. In Venezuela, for example, Hugo Chavez told\u00a0private companies to \u201cexpropriate.\u201d Back then, many Venezuelans and people all over the world applauded him and saw him as the poor\u2019s benefactor.<\/p>\n<p>We now see that expropriations and taking money away from companies is the worst thing a society can do. The only way to help the poorest ones is by creating jobs. We don\u2019t need more public spending, but a government that doesn\u2019t interfere with the actions of individuals and companies.<\/p>\n<div class=\"addtoany_share_save_container addtoany_content_bottom\"><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Vanesa Vallejo reports in Pan Am Post about how high tax rates are driving companies out of Colombia.<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[242,10,12,241,39,34,33,62,219,245,243,7,246,244,44],"class_list":["post-17263","post","type-post","status-publish","format-standard","hentry","category-news-articles-panama-perpsective","tag-boca-chica-real-estate","tag-bocas-del-toro","tag-boquete","tag-boquete-real-estate","tag-buenaventura","tag-casco-antiguo","tag-casco-viejo","tag-coffee-in-panama","tag-move-to-panama","tag-offshore-real-estate-panama","tag-panama-papers","tag-panama-real-estate","tag-relocate-to-panama","tag-rum-in-panama","tag-travel-to-panama"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.7 (Yoast SEO v27.7) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Foreign Companies Are Fleeing Colombia to Escape Oppressive Taxation - Blog and 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