Colombia to prevent tax evasion with national digital currency: Report
A national digital currency would help curb tax evasion in Colombia, which is estimated at up to 8% of GDP, the head of Colombia’s tax and customs agency said.
Amid Colombia’s economic growth beat expectations in the second quarter, an official at the country’s tax and customs agency has hinted at some national digital currency plans.
Luis Carlos Reyes, the head of the Colombian Tax and Customs National Authority, claimed that the government of newly inaugurated Colombian President Gustavo Petro will seek to create a digital currency to prevent illicit financial activity like tax evasion.
Colombia’s digital currency plans are part of the country’s new monetary policy measures aiming to increase transparency of financial transactions, the official said in an interview with the local magazine Semana. According to the report, tax evasion in Colombia is estimated to account for 6% or 8% of the country’s gross domestic product so far.
Reyes also pointed out that a potential digital currency would be a major benefit for user experience, stating: “The creation of a digital currency would make these transactions easier for the consumer.”
The official did not specify what kind of digital currency exactly the Colombian government will be looking to launch, a central bank digital currency (CBDC) or rather an asset-backed national currency similar to Venezuela’s Petro digital currency project.
Hernando Vargas, technical deputy governor at the central bank of Colombia, previously considered implications of a retail CBDC in Colombia earlier in 2022. The official noted that cash is the preferred instrument of low-cost payments in Colombia, pointing to potential threats from cryptocurrencies and stablecoins in certain circumstances. He stated:
“A line of defense against a widespread use of cryptocurrencies and stablecoins is weaker in Colombia than in other jurisdictions and the discussion about the adoption of a retail CBDC becomes particularly interesting.”
The news comes shortly after new Colombian president Petro has sworn into office on Aug. 7. As previously reported, Petro is known for expressing support for cryptocurrencies like Bitcoin (BTC). Back in 2017, Petro suggested that BTC could remove power from the government and return it to the people. “Virtual currency is pure information and therefore energy,” Petro said at the time.
Related: Official explains why China CBDC should not be as anonymous as cash
According to the latest reports, Colombia’s economy beat expectations in the second quarter in a boost for Petro’s government, with GDP reportedly rising 12.6% versus the expected 12.1% growth.
The government of Colombia revealed it has plans to launch a digital currency. One of the purposes of this new currency would be to curb tax evasion and enhance the traceability of transactions made by citizens. The proposed measure would also be accompanied by restrictions on cash payments and transactions of over 10 million Colombian […]
The Ministry of Information Technologies and Communications of Colombia, Mintic, has issued a guide that describes the steps to implement blockchain in projects directed at the state level. The document defines blockchain and its basic elements, and also describes the guidelines that some projects should follow, depending on the needs of each project. Colombia Issues […]
The UIAF, which is the Colombian money laundering watchdog, has postponed the date on which exchanges and individuals must start reporting their transactions to the organization. The institution will now open a consulting period in which companies and individuals can present their thoughts regarding the proposed regulation, which might be modified before its application on […]
The Colombian tax authority, DIAN, has reminded taxpayers that they need to start registering cryptocurrencies in their statements starting this year. The director of the DIAN, Lisandro Junco, reminded cryptocurrency users that this kind of asset is taxed as any other asset held by citizens. Colombia has already collected $1 billion in digital economy-related taxes. […]