President Santos Gives Tax Break to Colombian Creative Sector and Establishes New ‘Digital Economy’ Agency at Andicom 2017

Yesterday, Colombian President Juan Manuel Santos signed three new directives aimed to support technology development, promote innovation, and streamline administrative processes, including a tax break for certain software and training programs.

In Colombia, there no longer will be a value-added tax (VAT, or IVA in Colombia) on software licenses for various programs commonly used in so-called “Orange Economy” content development fields such as graphic design, animation, and 3D printing, among others. The benefit is even more significant now given that a nationwide tax system overhaul raised the VAT from 16% to 19% in December.

There will also no longer be a VAT included for online educational services that help train people to enter these and other fields, including the development of analytics, big data, the internet of things, and video games, said the president.

“This is a great opportunity for all producers of this type of content,” said Santos, adding that “we know that these incentives are what boost the sector.”

The tax break is part of a wider push to kickstart innovation that Santos detailed in an hour-long address on Friday in Cartagena at Andicom 2017, the largest IT and communications conference in the country.

Colombia Creates Vice Ministry of Digital Economy

In addition to the VAT exemption, Santos also formally launched the nation’s new Vice Ministry of Digital Economy in a ceremonial signing with David Luna, minister of information technology and communications.

The stated goals of the new agency are to support Colombian companies undergoing digital transformation, promote public/private partnerships, advance the adoption of tech tools, and generally track various indicators and figures of the “digital economy.”

Under current measurements, the digital economy accounts for at least 100,000 jobs in Colombia, according to the government, and it generated some $4.5 billion USD (13 trillion pesos) in sales last year. By 2022, MinTIC estimates that there will be 300,000 direct jobs within the digital economy.

The new office will be run by Vice Minister Daniel Quintero Calle and fall within the Ministry of Information and Communication Technology (MinTIC).

“The digital economy is gaining momentum and preparing our industry, labor market, and regulation to allow us to better position ourselves in the global landscape,” said Quintero Calle during a presentation during the conference.

“Having access to technology transforms people’s lives,” said President Santos speaks at Andicom 2017 in Cartagena. (Credit: Jared Wade)

Expanded “Digital “Citizen Services”

On Friday, Santos also signed the new “Digital Citizens Services Decree,” which aims to give Colombians better access to the important forms and documents in their life. Through the creation of a “citizen folder” for each Colombia, people will now be able to have access their own medical history, employment records, and other administrative documents involving the government. They will also have a digital signature that allows for faster digital processing of official forms.

Additionally, the decree aims to improve the inter-departmental communication between governmental agencies so that people do not have to continually provide information two or three times during the administration of routine processes, as has long been the case. “It is a necessary evolution,” said Santos.

The addition of the citizen folder aligns with the county’s “No Más Filas” (No More Lines) initiative to streamline processing times across governmental agencies that oversee everything from immigration and taxation to licensing and legal matters

“We seek to facilitate users’ relationship with the state,” Luna told Finance Colombia in an interview this week. “Therefore, we have made available the webpage No Más Filas, which was previously called Sí Virtual. This is a national government, multi-channel platform where the general public can find state services and perform transactions completely online. In total on this website, there are 714 online transactions and 3,485 partially digitalized transactions available to Colombians.”

President Santos was joined on stage by indigenous Colombians who have benefitted from improved connectivity in their rural Amazon community. (Credit: Jared Wade)

The Benefits of Connectivity in Colombia

Throughout Andicom 2017, the president, David Luna, and other public officials praised the recently released results of the country’s “First Great ICT Survey,” which through polling across the country found that almost two-thirds (64%) of Colombians now have an internet connection in their home and 75% of Colombians used the internet within the past year.

Of the 36% surveyed who do not have a connection in their home, only 8% said it was because their community has no access in logistical terms. Nearly half of those without a connection (48%) say it is because connectivity is too expensive, while roughly one-fourth (24%) say they don’t consider it necessary.

The governmental push to increase connectivity numbers in Colombia has focused on its Vive Digital (Live Digital) initiative that, among other investments, has brought digital kiosks to both poor urban areas and lowly populated jungle, coastal, and mountain communities. In the Amazon/Orinoco Basin region, 56% of people have used these kiosks, according to the MinTIC study. This is compared to an 11% usage rate nationwide.

The government says that the kiosks are also intended to help teach Colombians how to use the internet. Among the 25% who had not accessed the web in the past year, the top reason given was that they don’t know how to use the internet.

To put a face to how these and other tech-focused initiatives can improve the lives of Colombians, Santos invited several Colombians to join him on stage. A woman and young man from the Amazon, using both Spanish and their native language, explained how they have begun to sell clothing and products online thanks to Vive Digital bringing internet connectively to their small indigenous community. A young woman who is studying to be an electrical engineer, with the help of public financial aid, also spoke to the audience about her desire to work in technology .

“Digitizing the country means deepening the state/citizen relationship through the use of the internet,” said Santos. “Having access to technology transforms people’s lives.”

(Photo credit: Jared Wade)