Re-elected with a slim majority, Colombia's president Juan Manuel Santos vows to keep up the reforms - and that's good news for business, says our Colombian office.
Colombia's latest presidential race saw the return of Juan Manuel Santos last month, re-elected with a 50.80% majority in the second round and ensuring a continuation in economic reform.
Throughout his presidency, Santos has overseen a period of economic reform that has been well received throughout the international community and has positioned the country as an attractive destination for foreign investment. According to the National Administrative Department for Statistics (DANE), GDP grew 4.3% in 2013, and during the first quarter of 2014 Colombia had the highest GDP in the region and the world's second-highest following China. It registered $16.288m in foreign direct investment (FDI), a record figure for Colombia.
Protections for investors, integration with international markets and the reforms have all been key reasons for the investment increase. Tax reform has to date included the cutback of the corporate income tax to 25% from 33%, positioning Colombia as the second-best tax environment in the region according to the latest Latinvex rankings. In addition, there are tax incentives for specific sectors such as tourism, hospitality, agriculture and some of the river transport sector.
Reforms bring business benefits to Colombia
In 2010, the Santos government enacted a law to encourage job generation, giving tax and commercial benefits to companies created since 29 December 2010. Among the law's benefits is the escalation of income tax payments, where companies could skip this payment for the first two years of operation and for the next three the payments would be: 25% in the third year, 50% in the fourth year and 75% in the fifth year. Likewise, they would have discounts in parafiscal charges up to 100% during the first two years of operation, then 75% in the third year, 50% in the fourth year and 25% in the fifth year.