A Colombian government proposal to charge withholding tax on digital transactions risks strangling the central bank’s plan to cut the use of cash and revolutionize the payments system.
A draft decree by the finance ministry would impose a 1.5% withholding tax on purchases of products or services made via Bre-B, the bank’s new payment infrastructure. The new rules would also apply to electronic transfers, QR codes, and other digital payment methods.
Bre-B, officially launched this month, was intended to pull more people into the financial system in a country where more than half of the economy remains informal.
