An increase in the FUTIC contribution rate would seriously affect the finances of operators and the future of connectivity in Colombia

By Asiet

This is a machine translation of the original press release issued in Spanish.

After learning about the study 'Review of the Periodic Compensation for the ICT Sector for the period 2025-2028', which recommends an increase in the compensation rate that should be paid by providers of telecommunications networks and services and which would apply from next year, ASIET considers it relevant to state the following:

The telecommunications sector in Colombia bears a significantly higher tax and benefit burden than the Latin American average. According to IDB and cet.la, the average tax burden, contributions and rates, with respect to industry sales, in the region is 8.07%; however, in Colombia it is 12.82%, without considering the eventual increase in the rate as proposed by the project and which would surely leave Colombia with the most tax-burdened sector in Latin America. This puts Colombia at a disadvantage, is a disincentive to the entry of foreign investment, and surely a brake on efforts to reduce the digital divide.

In the last six years, according to the GSMA, the sector has invested more than USD 14 billion to develop mobile infrastructure, despite high inflation, high interest rates, ARPU stagnation, and sector revenues declining since 2020. Increasing the rate would slow down the investments needed to connect the unconnected and better connect those already connected. When the MinTIC in 2020 adjusted the compensation rate, direct investment for the sector grew by almost 23%, and has remained annually above 20% growth (CRC Investment Observatory, 2023).

The industry in Colombia is not only at a disadvantage compared to other countries in the region, but also faces a significantly higher tax burden than the average sector. In addition to general taxes such as income tax, VAT (19%), property tax, ICA and GMF, the sector is subject to specific taxes, such as the tax on mobile services consumption (4%), sectoral compensation of 1.9% of income, and contributions to finance the regulator (0.14%). It also includes unique taxes such as the tax on telegraph and public telephones (Law 97 of 1913) and local charges for the use of public space, applied exclusively to telecommunications.

On the other hand, the execution of FUTIC resources in 2023 was 85.87%, and in July 2024 it barely reached 16.71%. This indicates that there is room for improvement in management capacity, which cannot be solved by increasing the amount of available resources. In this sense, before proposing an increase in the rate, it is essential to review the structure of the fund, optimize its expenses and ensure that resources are used efficiently to meet the objective of closing the digital divide.

Increasing the rate goes against the sustainability of an industry that has enabled us to achieve current levels of connectivity and that will need to continue to play a central and fundamental role in building and operating networks to support emerging technologies, such as AI, IoT, Machine Learning, 5G, and others.

For this reason, ASIET considers a structural reform of the FUTIC necessary, which will allow it to adopt a more efficient resource management model without increasing the tax burden on operators, maximising the impact on closing the digital divide and, in addition, undertaking the regulatory reforms that are necessary to expand the taxpayer base to the entire digital ecosystem, which would even allow a reduction in the compensation rate, but it is repeated, without this effort entailing the increase in the single rate as proposed in the project.

It is crucial that the State demonstrates its maturity and institutional strength by undertaking processes that do not lead to increasing the burdens, where it is “easy” to do so, but rather making adjustments that lead to more efficient, effective solutions with a positive impact on the country's inhabitants. An increase of this nature affects the industry that supports digitalization and does not solve the underlying problem.

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About ASIET

The Inter-American Association of Telecommunications Companies is made up of public and private companies in the telecommunications sector that operate in the countries of the American continent. ASIET works for the development of telecommunications and the advancement of digital transformation in the region through public-private dialogue, promoting the growth of the industry and favoring the exchange of knowledge and international best practices.