Colombia Will Prevent Tax Evasion With National Digital Currency

Colombia will prevent tax evasion with national digital currency as hinted by an official from Colombia’s tax and customs department. The country’s economic development exceeded expectations in the second quarter.

According to Luis Carlos Reyes, the head of Colombia’s National Tax and Customs Authority, Gustavo Petro’s administration would work to develop a digital currency to stop illegal financial activities like tax evasion.

The source stated in an interview with the regional magazine Semana that Colombia’s ambitions for digital money are a component of the country’s new monetary policy measures intended to boost financial transaction transparency. The analysis estimates that up to this point, tax evasion has contributed between 6% and 8% of Colombia’s GDP.

Colombia Will Prevent Tax Evasion With National Digital Currency

The development of a digital currency, according to Reyes, would make these transactions easier for the consumer and would have a significant positive impact on the user experience.

The official did not explain which specific type of digital currency the Colombian government will be trying to introduce, whether it will be a central bank digital currency (CBDC) or a national currency backed by assets akin to Venezuela’s Petro initiative.

Earlier in 2022, Hernando Vargas, technical deputy governor at the Colombian central bank, thought about the effects of a retail CBDC in Colombia. The source pointed out that cash remains the favored low-cost payment method in Colombia despite possible challenges from cryptocurrencies and stablecoins in some situations. He declared:

“A line of defense against a widespread use of cryptocurrencies and stablecoins is weaker in Colombia than in other jurisdictions and the discussion about the adoption of a retail CBDC becomes particularly interesting.”

Presidential Support

The announcement comes soon after Petro, Colombia’s new president, took the oath of office on August 7. Petro is known for voicing support for cryptocurrencies like Bitcoin, as was previously reported (BTC). In 2017, Petro suggested that Bitcoin might allow people to regain control of the government. At the time, Petro stated that virtual currency is pure information and thus energy.

According to the most recent figures, Colombia’s economy outperformed forecasts in the second quarter, supporting Petro’s administration. GDP growth was allegedly 12.6% instead of the forecasted 12.1%.

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