Colombia will prevent tax evasion with national digital currency: Report

Colombia will prevent tax evasion with national digital currency: Report

Amid Colombia’s economic growth beating expectations in the second quarter, an official from the country’s tax and customs agency has hinted at some national digital currency plans.

Luis Carlos Reyes, head of the National Tax and Customs Authority of Colombia, stated that the government of recently inaugurated Colombian President Gustavo Petro will seek to create a digital currency to prevent illicit financial activities such as tax evasion.

Colombia’s digital currency plans are part of the country’s new monetary policy measures aimed at increasing the transparency of financial transactions, the official said in an interview with the local magazine. week. According to the report, it is estimated that tax evasion in Colombia represents 6% or 8% of the country’s gross domestic product so far.

Reyes also noted that a possible digital currency would be a great benefit to the user experience, stating, “The creation of a digital currency would make these transactions easier for the consumer.”

The official did not specify what type of digital currency exactly the Colombian government will seek to launch, a central bank digital currency (CBDC) or rather an asset-backed national currency similar to Venezuela’s Petro digital currency project.

Hernando Vargas, deputy technical governor of Colombia’s central bank, previously considered the implications of a retail CBDC in Colombia in early 2022. The official noted that cash is the preferred instrument of low-cost payments in Colombia, pointing to potential threats from cryptocurrencies and stablecoins under certain circumstances. He stated:

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

The news comes shortly after the new Colombian president, Petro, took office on August 7. As previously reported, Petro is known for expressing his support for cryptocurrencies like Bitcoin (BTC). In 2017, Petro suggested that BTC could take power away from the government and give it back to the people. “Virtual currency is pure information and therefore energy,” Petro said at the time.

Related: Official Explains Why China CBDC Shouldn’t Be As Anonymous As Cash

According to the latest reports, Colombia’s economy beat expectations in the second quarter in a boost to the Petro government, with GDP rising 12.6% vs. expected growth of 12.1%.