The Marshall Plan will affect companies in Bogota

It is a measure that will mean an increase in taxes for digital businesses and, therefore, an increase in the costs of various products and services that are consumed across different platforms. The District argues that the new approved tax burden will be given because these companies have made profits and have not been affected by the effects of the pandemic this year.

However, it ignores that this digital industry has been the one that has contributed the most so that citizens would not stop stocking up on basic necessities and even created new jobs and businesses based on the support of technology.

What was approved in the Marshall Plan, which Claudia López’s government built with the argument of economic reactivation, obliges these companies to pay an increase in ICA tariffs (10% until 2024) for the telecommunications sector. Further, There will be a progressive increase in the ICA for digital platforms, starting in 2021 until reaching 11.04 X 1,000 in 2024.

Pulzo consulted with several experts and owners of these digital companies, who agreed the measure would make many of them decide to leave the city. Furthermore, not only will it lead to businesses seeking domicile in other municipalities, but if they stay in Bogota, this tax increase would translate into additional value for the end user because it would make products and services more expensive.

The mayor of López’s proposal, which includes other measures such as economic incentives, has come under criticism. For example, in the last few days, and before the Marshall Plan was approved, the hashtag was a trend #FrenoDigital because, for some experts, this point of the project will also end up delaying the ICT industry and businesses emerging through digital platforms.

Through Twitter, Santiago Pinzón Galán, Andi’s vice president of Digital Transformation, posted several arguments about why this point of the Marshall Plan is not considered an economic reactivation for the city, but a “digital brake”.

“Users, all of them, those who survived thanks to the existence of ICT, adapting and transforming their business models or simply could continue to work, study, etc. they end up paying that ICA tax increase. This is reality, “Pinzón published.

According to him, despite the proposal has already been voted on by the council, the district administration it should contribute more ideas, formulate policies and implement actions that improve digital competitiveness in the capital.

“There is a lot of work to be done among all of us who want the #DigitalEcosystem in Bogotá to evolve positively. In the public policy cycle there is always the evaluation phase to see the results. This is an opportunity to monitor and adapt, ”said Andi’s Vice President of Digital Transformation, who participated in the technical and illustrative analysis that was done before the government of Claudia López on the effects this measure has for the city.

These are the trills that Pinzón published on the Marshall Plan:

It was voted on #FrenoDigital today in @CouncilofBogota

I refer to the draft agreement submitted by the district administration.

What is approved affects #DigitalEcosystem of the city e # Digital transformation

– SantiagoPinzonGalan 🍊🚀 (@santiagopinzong) 25 October 2020

By the way Felipe Ossa, executive director of Domicilios.com, underlines that the situation unleashed by the pandemic has reaffirmed the value of domestic platforms in the Colombian economy and how they have become a safe, fast option with growth potential.

“It is a sector that is only consolidating in the country, so it is necessary to look for mechanisms to protect it and at the same time promote it so that it continues to be an option for thousands of businesses and people who see this activity as an option for generating income. “Ossa told Pulzo.

This company believes that an increase in ICA rates for e-commerce may be counterproductive for sectors most affected by the pandemic, such as restaurants and other businesses. as well as representing an adjustment of the operating costs of the platforms that can have effects on the entire supply chain which benefited from a new sales channel.

In the case of Domicilios.com, it is a company that operates as a demand channel to its allies and domiciles that connect as independents. Orders placed through its platform must be covered by the costs associated with the entire operation, so this measure could lead to their variation.

“If there was a change in the fixed costs of the operation by an external agent (new taxes), we should be forced to reformulate the cost structure, affecting the entire chain (homes and restaurants) and the margin on which we can operate efficiently ”, explained the company’s CEO.

The foregoing shows that an increase in taxes will lead to companies having to reformulate their costs and not only will companies selling over the Internet be affected, but the consumer would end up paying more for their purchases.

More orders don’t mean profit

Another company affected by the district government measure is iFood, which explained to Pulzo that the most important thing should be to ensure that all platforms contribute to the economic reactivation of the capital. However, he points out that the increase in orders, as was the case this year during the pandemic, does not necessarily mean an increase in profits.

“Undoubtedly, the domestic platforms are configured today as an impressive service of basic necessity, so that during the social isolation we have registered an increase in the number of orders and users, but not necessarily in profit or profitability”, stressed Pulzo Tiago Luz , country manager of iFood Colombia.

The representative of the company believes it is important that the District takes into account these market dynamics, as well as the nature of the collaborative economy. Furthermore, “that the role of contributing to Bogotá’s economic revival be assumed as an industry”.

Impact of the Marshall Plan on e-commerce in Bogotá

A position similar to that of the aforementioned companies is held by María Fernanda Quiñones, executive president of the Electronic Chamber of Commerce (CCE), who criticized the tax hike for businesses that made profits this year in the city.

For the executive, he is worried that the companies that have developed electronic commerce, and which have naturally generated profits, do not realize that they are the protagonists of the Colombian offer in a very difficult situation. Further, that these benefits have been achieved thanks to a scenario such as a pandemic, which can be considered episodic and will not be maintained over time.

“What should be promoted is an incentive to go digital, which has many gaps to overcome, and COVID-19 has not overcome them, it has not digitized the entire population. (The people affected) are companies that are still in the investment phase, which are even recording losses, “María Fernanda Quiñones explained to Pulzo.

For the CCE, The ICA in Bogota is handled as a regressive tax that goes against the functioning of electronic commerce, with a value chain.

“The costs that will be generated will radiate in the development of this dynamic. These costs are shared between customers and companies. We do not agree (with the approval of the provision), we do not believe it will bring benefits to the people of Bogotá “, added the president of the CCE.

Beyond the new taxation scenario, affected companies recognize that reactivation policies are needed, but contributors cannot be punished so that the unleashed scenario was not worse.

Mauricio Jaramillo, technology consultant and director of the Impacto TIC portal, believes the same thing which points out that this digital industry did not win this year, what it did was contribute to the survival of the citizens of Bogota.

“Here lies the big mistake: punishing a sector that has been the support of society just because it has grown. We will reap more, without thinking about the long-term impact it can have. While we are betting on the fact that Bogota is an ecosystem digital, on the other hand a bad message is given with these measures ”, Jaramillo told Pulzo.

Several companies could leave Bogota for these taxes

Another critic of what was approved last weekend in Bogotá is councilor Rolando González, who appeals because he believes that the measure to raise the ICA to some companies is affecting competitiveness and employment in the ICT sector.

“What will happen with this, which we warn, is that these companies will move to neighboring municipalities that offer better rates and lose the jobs of many young people,” said the commissioner al Pulzo.

Further, criticizes the government of Claudia López because the main argument for this Marshall Plan measure is that the city will benefit from it, something that, he says, will not happen.

“They have an income close to 12,000 million pesos. They will be spent on advertising for the Bogotá mayor’s office, ”he asks.

The district government defends the tax increase

Despite the criticisms, the person responsible for formulating and structuring the Plan was the Ministry of Finance, which, consulted by Pulzo defended the ICA provision and assured that there is no risk of companies leaving just because of the tax burden in the city.

“It is not foreseen by the District Administration that the relocation decisions are taken by the companies participating in the economic activities that from the year 2022 will have a permanent and gradual increase in the ICA rate, since the variations in the relative terms of the rate do not exceed 10% and it was highlighted by the information available that they belong to sectors that have not seen their income affected by the pandemic, ”Hacienda replied in a communication with Pulzo.

According to this district entity, the ICA rates will gradually increase from the nominal rate in force, starting in 2022; 3.33% in the first year; 6.66% in the second year; and 10% from the third year and for subsequent years.

For the Ministry of Finance, there will be no impact on companies carrying out their economic activity in Bogotá, among other things, because 4 aspects were considered:

1. “The lower impact on activities with the closure of economic sectors following the health and economic emergency and national preventive isolation decrees.
2. The profits these businesses had made prior to the covid-19 pandemic.
3. The income obtained in the year 2019 and its growth rate.
4. Its postcovid growth potential-19 ”.

Finally, the government of Claudia López does not believe that this measure threatens the ICT sector and innovation in the city because, it says, the rate increases approved for the ICA do not represent a tax burden for the taxpayers who are part of the selected economic sectors. , “So investment decisions on technological innovation will not be affected.”

“Therefore, the district administration does not believe that the ICA tariff changes are in themselves a disincentive for technological innovation in Bogotá,” said Hacienda.