Tuesday, 17 July 2018

Corruption At It's Best!

We are in the last weeks of the Presidency of Juan Manuel Santos, and from an Expat point of view... Good Riddance!, not that the next will probably be any better.

I think Santos reputation is better abroad than in this country, when I first came here, I believed he was trying to do a good job, but I am now far from convinced that is the case. Yes, he was the one that signed the Peace Deal, but where is the Peace? and it is speedily disappearing down the pan, why? because unknown people have been pocketing the funds that were given to pay for the Peace process, there has not been the will to see the process through, and as soon as Santos received his Nobel Peace Prize, he faded into the background, as if he could no longer be bothered, as his tenure was coming to an end.

Also until Santos came to power the Tax Regulations stayed more or less stable, but since he came to power they have changed every single year. Accountants over here, who we are legally obliged to use to submit our annual tax returns, are pulling their hair out, because they have to study year on year, to be able to know the current regulations.

Up until the year I arrived (2012) Expat Pensioners paid no tax in Colombia, then it changed, because DIAN (Colombian Tax Authority) had an informal arrangement with  HMRC (UK Tax Authority) and the same conditions applied as if there was a Double Tax Treaty, and it still does, so the tax paid on my pension in the UK, was deducted from any tax owed in Colombia. On top of that I could claim a variety of expenses, such as work on the house, work on the car, health payments etc. As a result, I have had a zero Tax return.

However Santos is leaving the Country heavily in debt, and as a result the pot has to be filled, unfortunately they see Foreigners as an easy target, and with the rule change this year, I could find myself being stung.

I went to see my Accountant this morning, with all the papers for my annual Return, she informed us (Marcela was with me), that I could be looking at a sizable payment this year, possibly as much as I paid on it originally back in the UK, the reason, they have changed how tax is accumulated, each section has it's own tax rate, and the number of things you can claim against tax have been drastically reduced. She said that she could not be more specific at the moment, because the Training course she went on, the Trainer hadn't a clue, so she is going for a one to one session, with a member of DIAN later this month, and then she will have more of an idea. I know she will do her best for me, but there are limits to the magic she can work. I have been putting money aside each month, but in the worst case scenario, this may not be enough, in which case it could well wipe out all my savings.

I have said to Marcela, that if we are hit by the worst case scenario, we may well have to consider leaving Colombia, where to? we have no idea, we will have to start doing some research, but when my pension only goes up 1-2% a year, and prices are going up 10%, it soon starts to hurt, and then to have to give up to 33% in tax on top of that, is not a joke. We will wait and see what the new President brings to the table, if it's a better option, then we will stay, but if they use us to plug the financial black hole, I will have to consider following the other Foreigners closing the door on their way out of Colombia.

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