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Released November 22, 2022 | SUGAR LAND
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Written by Amir Richani for Industrial Info Resources (Sugar Land, Texas)--This month, the Colombian Parliament passed a new tax reform promoted by the government of President Gustavo Petro, which aims to increase revenues for the state. Petro expects to raise about US$4 billion per year from different sectors. According to Fitch Ratings (New York, New York), the tax reform is projected to raise Colombian government revenues by about 1.4% of gross domestic product (GDP) over the next two years and about 1.2% in 2025 and 2026.
The reform includes higher taxes on high-salary earners, sugary beverages, processed food, plastics and carbon emissions. But, more importantly, this tax reform introduces significant changes in the energy sector.
For the oil and coal industries, the law proposes a surtax depending on the international prices for the commodities. For oil exports, a surtax of 5% will be added when the per-barrel price is between US$67.30 and US$75. The surtax will increase to 10% when prices are between US$75 and US$82.2, and it will finally close with a 15% surtax when prices are above the US$82.2 per barrel of oil.
Meanwhile, for coal exports, surtaxes will increase between 5% and 10%, depending on international prices.
The tax increases in these industries have raised concerns within the private sector, given the impact that they could have on future investments and revenues.
Yet, according to Fitch, the tax reform has demonstrated Petro's successful negotiation with parties across political spectrum in the Colombian parliament. As a result, Petro has been able to find consensus in the legislative branch.
Colombia's oil production stands between 700,000 barrels of oil per day (BBL/d) and 800,000 BBL/d, according to the Colombian Hydrocarbons Agency. Industrial Info is tracking nearly 100 oil and gas production projects in Colombia, worth US$970 million. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production Project Database can click here for a list of detailed project reports.
Meanwhile, in 2021, according to the Colombian mining associations and reported by Reuters, coal production stood at 59.6 million tons, about 20.8% higher than the previous year: the global pandemic dampened coal output in 2020. Industrial Info is tracking five active coal-mining projects in Colombia, worth US$560 million. Subscribers to Industrial Info's GMI Metals & Minerals Project Database can click here for the project reports.
Coal and oil exports represent a significant share of Colombia's GDP. As a result, any changes in its exports would impact Colombia's national coffers and the flow of foreign currency to the country.
So far, Petro's government has been critical of the environmental impact of the fossil fuels industry, and he has pledged to protect Colombia's environment and meet the country's pledges. As a result, the government had proposed a halt in new oil exploration projects, although, in the last few weeks, news has emerged about the government's possible reconsideration of this decision.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 Trillion (USD).
The reform includes higher taxes on high-salary earners, sugary beverages, processed food, plastics and carbon emissions. But, more importantly, this tax reform introduces significant changes in the energy sector.
For the oil and coal industries, the law proposes a surtax depending on the international prices for the commodities. For oil exports, a surtax of 5% will be added when the per-barrel price is between US$67.30 and US$75. The surtax will increase to 10% when prices are between US$75 and US$82.2, and it will finally close with a 15% surtax when prices are above the US$82.2 per barrel of oil.
Meanwhile, for coal exports, surtaxes will increase between 5% and 10%, depending on international prices.
The tax increases in these industries have raised concerns within the private sector, given the impact that they could have on future investments and revenues.
Yet, according to Fitch, the tax reform has demonstrated Petro's successful negotiation with parties across political spectrum in the Colombian parliament. As a result, Petro has been able to find consensus in the legislative branch.
Colombia's oil production stands between 700,000 barrels of oil per day (BBL/d) and 800,000 BBL/d, according to the Colombian Hydrocarbons Agency. Industrial Info is tracking nearly 100 oil and gas production projects in Colombia, worth US$970 million. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production Project Database can click here for a list of detailed project reports.
Meanwhile, in 2021, according to the Colombian mining associations and reported by Reuters, coal production stood at 59.6 million tons, about 20.8% higher than the previous year: the global pandemic dampened coal output in 2020. Industrial Info is tracking five active coal-mining projects in Colombia, worth US$560 million. Subscribers to Industrial Info's GMI Metals & Minerals Project Database can click here for the project reports.
Coal and oil exports represent a significant share of Colombia's GDP. As a result, any changes in its exports would impact Colombia's national coffers and the flow of foreign currency to the country.
So far, Petro's government has been critical of the environmental impact of the fossil fuels industry, and he has pledged to protect Colombia's environment and meet the country's pledges. As a result, the government had proposed a halt in new oil exploration projects, although, in the last few weeks, news has emerged about the government's possible reconsideration of this decision.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 Trillion (USD).
