Features of Tax Structure and Tax Evasion in Colombia

Abstract

In order to comply with its obligations, the government determines the public budget, where it takes into account revenue such as taxes, levies and fees, therefore, it needs a tax system that determines the tributary burdens and the mechanisms for their collection. Among the problems that affect the economies of countries is tax evasion as this prevents the State from gathering the necessary economic resources to ensure the welfare of citizens. The main objective of this article is to determine the reason why people evade their tax duties, and this is undertaken by means of a descriptive study, using a qualitative methodology. Initially, we define and characterize tax systems worldwide as well as carrying out an analysis of their evolution and we identify those that are the most frequently used in European and Latin American countries; particularly with regards to Colombia, we analyze the evolution of tributary regulations related to taxable income and vat taxes (IVA). Subsequently we establish definitions regarding tax evasion and we review antecedents concerning the rate of the income tax evasion in Colombia; and, finally, we study the causes that motivate people to commit this crime. As part of the main investigative findings, we find that developed countries maintain a progressive system, while Latin American countries focus on a regressive system, prejudicial more to lower income people by means of indirect taxes. As a consequence of the social and economic inequality and the lack of effectiveness of the tributary system, people feel influenced to evade taxes, and thus this problem is attributed to social or cultural, political, economic, legal, technical and administrative aspects.

Keywords: tributary system; taxes; income; tax evasion