Colombia will publish a list of tax havens within two weeks, clearing the way for investors not based in such jurisdictions to obtain lower tax rates on locally sold government bonds.
Some investors may have been waiting to see if their jurisdictions would be included on the list, Public Credit Director Michel Janna said in an interview. Under a law that took effect Jan. 1, investors from tax havens must pay a 25 percent tax on profits from the local bonds, while those who aren’t covered are eligible for a 14 percent rate. The tax was previously 33 percent for all foreign investors.
President Juan Manuel Santos cut the tax rate as the Andean country sought to reduce borrowing costs by attracting more foreign investors to the local debt market. The Finance Ministry is working to clarify how the withholding tax is charged to make it “more clear and transparent,” Janna said. The clarification will be ready within two months, he said.
“All decrees that help to clarify and to set a framework for investors to be comfortable to invest in Colombia is always a positive step to take,” said Janna, 33, who assumed his post on April 1 after working as head of sovereign risk for the Americas for Goldman Sachs Group Inc. “We hope more investors will come in and to have a more diversified investor base.”
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