Eduardo Calero, Partner, PricewaterhouseCoopers, on tax reform

The tax reform approved in December of 2012 produced a series of important changes in the business environment, the most important of which were the reduction of corporate income tax from 33% to 25% and the creation of a new equality tax (CREE). This generated a bit of confusion in the first months of 2013, especially in regards to the issue of how the CREE would be viewed within local and international financial statements.

Despite this, the reform incorporates rules that benefit the system, such as the reduction of the impact of "cash taxes," particularly of VAT. Nonetheless, foreign investors are accustomed to working with different jurisdictions and therefore are used to the changes and challenges that arise from the VAT. On some occasions, particularly when a reform includes changes that may harm the interests of taxpayers, transition rules should be established. A transition period is contemplated in some specific cases within the 2012 reform, as in the amortization of goodwill, but measures of this kind are sorely missed on issues like capitalisation and corporate reorganisations, among others.

The reform placed particular emphasis on the role of taxation as an instrument to encourage individual saving for pensions. The new tax regime for individuals not only introduced a cap on saving for pensions with tax relief - which does seem like a contradiction for a standard that aims to stimulate savings – but also stipulated that, for some taxpayers, these voluntary contributions will not materially reduce their income tax when subject to national alternative minimum tax.

In regards to employment, the national government is attempting to create jobs through the reduction of labour costs - primarily in payroll taxes and contributions to the social security system. Although it effectively reduced the cost of these contributions, many have expressed their disagreement with the idea that a reduction in payroll taxes will have a direct impact on employment growth. Regardless of this contention, it is important to note that in the first quarter of 2013, the economy experienced a slight downturn, and under these circumstances, creating new jobs becomes more difficult.

At the international level, the country has enjoyed significant progress in relation to treaties and conventions on three fronts within the past few years.

We have improved in free trade, investment protection and in avoiding double taxation. The treaties and regulations in this last area are still scarce, but the country is headed in the right direction.

A model in regards to double taxation agreements is Spain, which has established an extensive network of agreements to avoid it. Despite its current crisis, Spain is known as the "Gateway to Latin America" and is undoubtedly a reference for the countries of the region, at least from that perspective.

Compliance and proper use of the rules will be a key element to ensure credibility of the efforts that Colombia is doing in this matter.

Conventions for the avoidance of double taxation give overriding priority to the harmonisation of the standard. This makes understanding, interpreting and complying with rules easier for foreign investors, which are naturally more confident if they know that Colombian standards follow the same parameters used in other jurisdictions.

Finally, the reform of the tax law comes after a record year. In 2012, government revenues from levying taxes reached a total of $99bn, which represented 15% of GDP and a significant breakthrough compared to previous years, all thanks to solid economic performance.

In 2013, despite positive growth, we are experiencing a slight slowdown that could represent a decrease in revenues from corporate income taxes. However, we are still in the process of measuring the impact of the tax reform on public finances, an impact that so far seems to be positive.