Good tax collection is expected by 2022 thanks to the reforms brought by the Economic Development Law
The December tax collection and especially that of the annual value added tax (VAT), So such as collection actions and control processes of the Internal Revenue Service, These are the factors that have helped tax collection in 2021 to exceed pre-pandemic indicators.
In 2021 the collection amounted to $13,976 million, that is, 13% more than in 2020, in which $12,382 million were collected. Marisol Andrade, director of the Internal Revenue Service (SRI), reported that during the year 2021 $ 1,594 million more were collected than in 2020, as a result of the economic reactivation and largely as a result of the actions of the control entity.
Andrade commented that the figure for 2021 is 1% higher than that of the year 2019 ($ 13,875 million), without considering occasional values such as the obligatory income tax advance. “We exceeded pre-pandemic collection levels,” he emphasized.
For Napoleón Santamaría, an expert in tax matters, the December collection helped this good result, since it grew significantly. According to income dataIn the month of December alone, tax collection reached $1,249 million, which represents $181 million more, that is, a growth of 17% compared to December 2020 ($1,068 million).
He explained that the good news is that the collection of 2021 has been of quality. This because the growth of the value added tax (VAT) represents economic reactivation. He explained that not only the numerical result is important, but also the structure. For example, it would not be good news if the rise in collection was due to a tax such as the ISD that grows when foreign currency comes out. The growth of VAT occurred especially in internal operations, that is to say that there is a greater circulation of liquidity within the country.
As for the income tax, during 2021 $4,331 million were collected, this is a slightly lower figure than that of 2020, which reached $4,407 million. However, the collection for December 2021 alone reached $336 million, 12% more than the same month in 2020.
For Santamaría, there are good prospects for tax growth also in 2022. This is due to three factors that come from the Economic Development and Fiscal Sustainability Law, approved in November.
The reform generates higher revenue both from the increase in income tax and from contributions to equity. In the future, this reform would also help make IR collection more robust. Santamaría commented that it would be positive if the gap between income tax and VAT narrows.
He stated that due to the collection structures, in Latin America, VAT, which is an indirect tax, is always higher than income, which is direct. On the other hand, in more developed countries such as the US and many in Europe, the one with the greatest weight is the IR, since they have a large tax burden on profits.
The current gap between VAT ($6,726 million) and IR (4,331 million) is $2,395 million.
Additionally, the reform provides for the regularization of assets abroad and progress has been made in information exchange agreements with the US, which will be one more incentive for those who want to declare and avoid future tax problems.
As a third factor, the tax mediation it will also be able to generate greater collection and that the judicial problems that bogged down these processes are overcome.
The SRI indicated that the year 2022 established a tax collection goal of $ 14,773 million, without considering the values derived from the Economic Development Law, valid from November 29, 2021. (I)
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