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2007 Assessment

Colombia: Integrity Indicators Scorecard

Colombia: Integrity Scorecard Report > Sub-Category: Taxes and Customs
Indicators		Score
58	In law, is there a national tax collection agency?	100
59	Is the tax collection agency effective?	75
60	In practice, are tax laws enforced uniformly and without discrimination?	25
61	In law, is there a national customs and excise agency?	100
62	Is the customs and excise agency effective?	75
63	In practice, are customs and excise laws enforced uniformly and without discrimination?	50

Indicator and sub-Indicator Details

In law, is there a national tax collection agency?

58: In law, is there a national tax collection agency?

Score:

YES

Comments: According to Decree 2117of 1992 the DIAN (National Tax and Customs Agency) is the responsible agency for tax collection. It is a technical agency ascribed to the Ministry of Finance but with financial and administrative autonomy.

References: DECRETO NUMERO 2117 DE 1992 (Diciembre 29) POR EL CUAL SE FUSIONA LA DIRECCION DE IMPUESTOS NACIONALES Y LA DIRECCION DE ADUANAS NACIONALES EN LA UNIDAD ADMINISTRATIVA ESPECIAL DIRECCION DE IMPUESTOS Y ADUANAS NACIONALES Y SE DICTAN DISPOSICIONES COMPLEMENTARIAS. [ LINK ]

Is the tax collection agency effective?

59a: In practice, the tax collection agency has a professional, full-time staff.

Score:

100

Comments: The DIAN (National Tax and Customs Agency) has sufficient staff to fulfill its mandate and is regulated by independent regulations on civil service. According to a recent survey of institutional performance made by DANE among civil servants, about 40 percent of employees of the DIAN consider that the profiles of employees are not adequate to fulfill the mandate of the agency. However, it is important to note that according to a recent study by the CEPAL, there has been an advance in the level of institutionalization of the tax system in Colombia, owed partially to the professionalization of tax agencies.

References: DANE. 2006. Encuesta Ambiente y Desempeño instituciona Dirección de Impuestos y Aduanas Nacionales.

Baer, Katherine. 2006 La administración tributaria en América Latina: algunas tendencias y desafíos In Tributación en América Latina. En busca de una nueva agenda de reformas Oscar Cetrángolo y Juan Carlos Gómez Sabatini (compiladores). 2006. CEPAL

Peer Review Comments: The comment by the reviewer points toward a 75 score. I would agree with a 75 because DIAN has indeed sufficient staff, although they are perhaps not always adequately trained.

59b: In practice, the tax agency receives regular funding.

Score:

100

Comments: The funding is fairly consistent from year to year and the majority of employees surveyed in a recent survey of institutional performance consider that the agency has sufficient budget to fulfill its responsibilities.

References: DANE. 2006. Encuesta Ambiente y Desempeño institucional Dirección de Impuestos y Aduanas Nacionales.

In practice, are tax laws enforced uniformly and without discrimination?

60: In practice, are tax laws enforced uniformly and without discrimination?

Score:

100

Comments: According to a recent study of the CEPAL, there has been an advance in the level of institutionalization of the tax system in Colombia, owed partially to the professionalization of tax agencies. However, in 2007 the Economist Intelligence Unit rated Colombia as having high tax policy risk derived from the existence of many differential rates and exemptions, which are created by the influence of vested interests.

Colombia has one of the highest nominal tax rates in the Americas, for both corporate and personal taxes, but deductions are widespread and this is where the base of unequal treatment lies. In 2005, the government implemented an online platform to facilitate payments and declarations and to verify taxes due by comparing reporting information with the financial sector and other government agencies in order to avoid evasion. The result of the last amendment, which was initially aimed at making the taxing statute shorter and simpler, was the opposite.

References: Baer, Katherine. 2006 La administración tributaria en América Latina: algunas tendencias y desafíos In Tributación en América Latina. En busca de una nueva agenda de reformas Oscar Cetrángolo y Juan Carlos Gómez Sabatini (compiladores). 2006. CEPAL

THE ECONOMIST INTELLIGENCE UNIT. Colombia risk: Tax policy risk. June 18, 2007. Revista Semana. "Otra colcha de retazos: Irresponsable resultó la nueva reforma tributaria que aprobó el Congreso. Dentro de dos años habrá que hacer otra". Edición 1286-1287 Diciembre 25 de 2006 a Enero 8 de 2007.

In law, is there a national customs and excise agency?

61: In law, is there a national customs and excise agency?

Score:

YES

Comments: According to Decree 2117 of 1992, the DIAN (National Tax and Customs Agency) is the responsible agency for excise collection and inspection of customs. It is a technical agency ascribed to the Ministry of Finance but with financial and administrative autonomy.

Is the customs and excise agency effective?

62a: In practice, the customs and excise agency has a professional, full-time staff.

Score:

100

Comments: The DIAN has sufficient staff to fulfill its mandate and it is regulated by independent regulations on civil service. According to a recent survey of institutional performance made by DANE among civil servants, about 40 percent of employees of the DIAN consider that the profiles of employees are not adequate to fulfill the mandate of the agency. However, it is important to note that according to a recent study by the CEPAL, there has been an advance in the level of institutionalization and professionalization within the tax and customs agency.

References: DANE. 2006. Encuesta Ambiente y Desempeño instituciona Dirección de Impuestos y Aduanas Nacionales.

62b: In practice, the customs and excise agency receives regular funding.

Score:

100

Comments: The funding is fairly consistent from year to year and the majority of employees surveyed in a recent survey of institutional performance feel that the agency has sufficient budget to fulfill its responsibilities.

References: DANE. 2006. Encuesta Ambiente y Desempeño institucional Dirección de Impuestos y Aduanas Nacionales.

In practice, are customs and excise laws enforced uniformly and without discrimination?

63: In practice, are customs and excise laws enforced uniformly and without discrimination?

Score:

100

Comments: In recent years there has been an improvement in reducing customs procedures in Colombia. However, both entrepreneurs and customs officers state that there still are many problems in enforcing customs regulations consistently. The first problem relates to the time that customs procedures take. According to a survey made among entrepreneurs by the World Bank, the average time for clearance of imports and exports is higher in Colombia than the average time in the rest of the countries surveyed. Delays increase costs and discourage businesses from participating in external trade, but most importantly, create incentives both for customs officers and for entrepreneurs to ask for and offer bribes in order to expedite processes. The second problem is the lack of technology that could help in make customs processes more efficient. For example, there are no comprehensive programs for risk management to prevent and monitor violations of customs regimes. And the third problem is the lack of appropriate training for customs officers and the fact that inspections depend on the will of improperly trained officers.

The DIAN (customs and excise agency) is among the institutions most widely perceived by the public as being corrupt, although it is important to note that in general perceptions about the existence of corruption have decreased in recent years in Colombia.

References: Banco Mundial. 2006. Encuesta de Empresas. Examine las economías, Colombia 2006.

Rosalba Cubillos F. Colombia, lejos de una aduana actualizada. 2005. La República. [ LINK ] VICEPRESIDENCIA DE LA REPÚBLICA, BANCO MUNDIAL. 2002. CORRUPCIÓN DESEMPEÑO INSTITUCIONAL Y GOBERNABILIDAD EN COLOMBIA: ELEMENTOS PARA LA CONSTRUCCIÓN DE UNA ESTRATEGIA ANTICORRUPCIÓN. RESULTADOS DE LAS ENCUESTAS A USUARIOS, EMPRESARIOS Y FUNCIONARIOS PÚBLICOS SOBRE CORRUPCIÓN, DESEMPEÑO DEL SECTOR PÚBLICO Y GOBERNABILIDAD

ALCA - COMITE DE NEGOCIACIONES COMERCIALES. REUNION DE EXPERTOS SOBRE MEDIDAS DE FACILITACION DE NEGOCIOS REFERENTES A ASUNTOS ADUANEROS DIFUSIÓN DE LAS MEDIDAS DE FACILITACIÓN DE NEGOCIOS REFERENTES ASUNTOS ADUANEROS. Estatus de Implementación y Necesidades de Asistencia Técnica: Medidas de Facilitación de Negocios Referentes a Asuntos Aduaneros. [ LINK ]