Contxto – The likes of Amazon and Alibaba probably frowned at the Colombian government’s recent announcement of a tax proposal for foreign e-commerce websites.
Within this scheme, products bought on e-commerce sites that aren’t from Colombia would come with an additional four percent tax.
At a larger scale, a tax reform is being discussed in Colombia’s congress. It may all come down to the upcoming vote.
To Juan Londoño Martinez, the Vice-Minister of Finance, the proposal makes fiscal sense.
“Mr. Amazon isn’t paying this country its taxes,” stated Martinez. “These international platforms aren’t paying income taxes nor do they own establishments. As a result, they’re leaving no revenue for Colombia.”
He went on to add that besides generating the aforementioned revenue in the country, this proposal would even the playing field for Colombian businesses.
Furthermore, this tax scheme sounds like a reaction to the foreign e-commerce boom in Colombia and legislators are scrambling to pressure e-commerce giants. As just a few weeks ago, Amazon made free shipping possible in this Andean country.
Let’s not forget Mercado Libre is also present in Colombia, so this tax levy may also affect a Latin American darling.
All things considered, this proposal just sounds like passive-aggressive protectionism.
E-commerce in Colombia and Latin America
In any case, e-commerce has risen in Colombia and all of Latin America.
According to a study by research firm eMarketer, e-commerce sales in the region will grow 21.3 percent in 2020 so as to be worth US$71.34 billion.
Brazil is, of course, the country with the most frequent online consumers. In second place is Mexico, third is for Colombia, while Argentina and Costa Rica take fourth and fifth respectively.
Related article: The thriving Brazilian e-commerce market
A common concern across many Latin American countries when it comes to online shopping is security and identity theft. This should probably mean that e-commerce sites (Colombian or not) should deploy at least a few of their resources to better educate their users on how to make secure purchases.