Colombian companies and individuals will now have to pay a 33 percent fee when they transfer funds to countries listed by the government as a tax haven, announced Finance Minister Mauricio Cardenas on Tuesday, after tax authorities estimated that up to 20 trillion pesos ($10.6 billion) in potential tax revenue were being lost due to funds sent abroad.

Tax-HavenFor those who have been taking advantage of tax havens, the party is over,” said Cardenas, as cited by Reuters, calling on the so-called tax havens to sign information-sharing agreements with Bogota in order to be removed from the government’s list.

More than 40 countries have been named by the Colombian government as a tax haven, including Hong Kong, Bahrain and Antigua and Barbuda.

“It is absolutely necessary to put the brakes on this loss of resources,” Cardenas said, adding that many Colombians who were avoiding taxes were high-earners or business owners.

Last month, the Colombian government signed a tax agreement with the World Bank in an effort to improve tax administration and collection. Tax income for the country in the first nine months of the year was 82 trillion pesos (US$43.5 billion), below the target of 84.5 trillion pesos, the director of the country’s DANE statistics agency, Juan Ricardo Ortega, said separately on Tuesday.

Nevertheless, full-year revenues could now reach up to 105 trillion pesos ($55.7 billion), exceeding the government’s goal of 100.3 trillion pesos, Ortega added.

Colombian companies and individuals will now have to pay a 33 percent fee when they transfer funds to countries listed by the government as a tax haven, announced Finance Minister Mauricio Cardenas on Tuesday, after tax authorities estimated that up to 20 trillion pesos ($10.6 billion) in potential tax revenue were being lost due to funds sent abroad.

“For those who have been taking advantage of tax havens, the party is over,” said Cardenas, as cited by Reuters, calling on the so-called tax havens to sign information-sharing agreements with Bogota in order to be removed from the government’s list.

More than 40 countries have been named by the Colombian government as a tax haven, including Hong Kong, Bahrain and Antigua and Barbuda.

“It is absolutely necessary to put the brakes on this loss of resources,” Cardenas said, adding that many Colombians who were avoiding taxes were high-earners or business owners.

Last month, the Colombian government signed a tax agreement with the World Bank in an effort to improve tax administration and collection. Tax income for the country in the first nine months of the year was 82 trillion pesos ($43.5 billion), below the target of 84.5 trillion pesos, the director of the country’s DANE statistics agency, Juan Ricardo Ortega, said separately on Tuesday.

Nevertheless, full-year revenues could now reach up to 105 trillion pesos ($55.7 billion), exceeding the government’s goal of 100.3 trillion pesos, Ortega added.

Meanwhile, the World Bank agreement, which will be in effect until August 2015, will encourage tax simplification and reduce the tax burden on corporations. In addition, Colombia will receive technical assistance from international consultants to implement a strategy for reducing the tax burden’s compliance cost.

Reuters further reported that Colombia’s crackdown on tax havens were also targeted at stopping the illegal drug and arms trade in the country, as many crime syndicates were funding their activities through money stored overseas.

According to Reuters, the amount of money laundered from the trafficking of drugs, arms and human beings in Colombia could be as much as $17 billion a year, more than 5 percent of the economy’s total output, and more than total foreign direct investment last year.

Source: Economy Watch