How is Colombia doing in terms of tax collection compared to its Latin American neighbors? OECD's snapshot reveals details

After two years of increases, tax revenue as a proportion of gross domestic product (GDP) fell by 0.2 percentage points, on average, in Latin America and the Caribbean in 2023 to 21.3 percent, according to the report "Tax Statistics in Latin America and the Caribbean 2025."

This report presents detailed and internationally comparable data on tax revenues from 27 Latin American and Caribbean economies, four of which are members of the Organization for Economic Cooperation and Development (OECD): Colombia, Chile, Costa Rica, and Mexico.

However, the regional average represents the unweighted average of 26 countries in the region and does not include Venezuela due to data availability issues.

The report is part of a large body of analytical documents that the organization offers to both member countries and non-members of the group, with the aim of identifying best public policy practices that can be implemented by states.

This wealth of knowledge will enable a dialogue at the OECD Local Development Forum in Barranquilla, July 8-11, in which public, private, and social economy stakeholders will discuss how to work together to manage territorially-based change.

Regarding the tax report, it shows that with a decrease of 0.2 percentage points, tax collection is also slightly below the 21.4 percent recorded in 2019, prior to the COVID-19 pandemic.

The overall decline in tax revenues as a proportion of GDP in the region was due to a drop in income tax revenues, especially in some of the major hydrocarbon and mineral-producing countries.

Income tax revenues decreased by an average of 0.1 percent of GDP, down from a peak of 6.3 percent in 2022, a year in which a sharp increase in hydrocarbon revenues boosted corporate income tax revenues.

At the same time, personal income tax revenue increased by 0.1 percent in 2023, while VAT and other consumption taxes remained stable between 2022 and 2023.

Tax trends varied considerably across subregions, reflecting unique economic pressures and changes in commodity prices.

Tax revenue as a percentage of GDP fell sharply (0.5 percentage points) in the South American subregion, which was hardest hit by the decline in non-renewable natural resource prices and experienced the sharpest economic slowdown in 2023.

However, South America continued to record the highest level of tax collection as a proportion of GDP on average, at 22.9 percent.

In 2023, average tax revenue as a proportion of GDP in the Caribbean, Central America, and Mexico stood at 21.9 percent and 19.0 percent, respectively.

It fell 0.2 percentage points in Central America and Mexico in 2023, and in the Caribbean it increased 0.3 percentage points after being the only subregion where tax revenue as a proportion of GDP had fallen in 2022.

Social security contributions, meanwhile, increased by 0.1 percentage points in 2023, while revenue from taxes on goods and services remained unchanged as a proportion of GDP.

The fall in commodity prices in 2023 reduced revenues from non-renewable natural resources in the region. Hydrocarbon-related revenues fell to an average of 3.9 percent of GDP in 2023 (from 4.4 percent of GDP in 2022) among the region's top ten oil-producing countries.

Meanwhile, revenues from mining fell to 0.59 percent of GDP (from 0.74 percent of GDP in 2022). The report estimates that revenues from hydrocarbons and mining will decline further in 2024, to 3.2 percent of GDP and 0.5 percent of GDP, respectively.

The report also details that tax revenue as a percentage of GDP in Latin American and Caribbean countries ranged from 11.6 percent in Guyana to 32 percent in Brazil. By comparison, the average for this ratio in OECD countries was 33.9 percent.

Three-quarters of the countries in this region had tax ratios below 25 percent of GDP, while more than three-quarters of OECD countries had ratios above this level.

Furthermore, the report highlights that tax revenue as a proportion of GDP decreased in 14 of the 26 countries considered. The largest declines were observed in Chile (3.2 percentage points) and Peru (2.1 percentage points), driven by falls in income tax revenue.

In both countries, income tax revenue as a proportion of GDP fell in 2023 from the previous year's peak, due to lower corporate profits in 2022, leading to significant tax refunds and relief in the following year.

The decline in non-renewable natural resource prices also contributed to the drop in income tax receipts in both countries in 2023, which was 3.2 percentage points in Chile and 1.2 percentage points in Peru.

As for Colombia, tax revenue as a percentage of GDP was 22.2 percent in 2023. This was above the regional average (21.3 percent) but below the OECD average (33.9 percent).

Compared to the figure reported in 2022 (19.7 percent), revenue increased by 2.6 percentage points, while compared to the regional average it decreased by 0.2 percentage points.

The 2.6 percentage point increase was driven by a 2.4 percentage point increase in revenue from income taxes, particularly corporate tax (2.2 percentage points).

These increases are due to several factors, including the impact of the 2022 tax reform, which took effect in January 2023 and included changes to the corporate income tax and new surcharges for specific industries (including financial institutions and oil, coal, and hydroelectric companies).

The increase also highlighted the fact that large taxpayers were required to pay additional income tax points in advance for the 2024 tax year. This advance payment primarily affected financial intermediaries.

Over a longer period, the regional average increased by 4.3 percentage points, from 16.9 percent in 2000 to 21.3 percent in 2023. Meanwhile, Colombia's tax-to-GDP ratio increased by 6.6 percentage points, from 15.7 percent to 22.2 percent over this same time period.

In recent years, Colombia's highest tax revenue as a percentage of GDP was in 2023, and its lowest was in 2000, at 15.7 percent.

The largest share of Colombia's tax revenue in 2023 came from corporate income tax (32.3 percent). The second largest share of tax revenue came from VAT (27.3 percent).

These are followed by other taxes on goods and services (12 percent), property taxes (7 percent), social security contributions (7 percent), personal income tax (7 percent), and other taxes (6 percent).

For the first time, the 2025 edition of the "Tax Statistics in Latin America and the Caribbean" report presents harmonized data on non-tax revenues, such as property income and royalties, interest and dividends received by the government, and public sales of goods and services.

The report shows that non-tax revenue at the central government level for 22 countries averaged 3.1 percent of GDP in 2023, ranging from 0.4 percent in Peru to 11.6 percent of GDP in Cuba.

Between 2019 and 2023, non-tax revenues decreased by an average of 0.4 percentage points in the region, although strong annual variations were observed during that period, including a 0.7 percentage point drop between 2022 and 2023.

In 2023, sales of goods and services were the main source of non-tax revenue for central governments in more than half of the 22 countries in Latin America and the Caribbean, followed by property income, which includes rent, royalties, interest, and dividends.

Another fact highlighted in this report is that in 2023 , consumption taxes generated almost half of the region's total tax revenue, compared to less than a third in the OECD (31.5 percent in 2022, the latest year available).

VAT was the main source of such revenue in the region, representing an average of 28.5 percent of total tax revenue and 6.0 percent of GDP. Income and profit taxes accounted for 29.6 percent.

Additionally, revenue from corporate income tax and personal income tax accounted for 18.7 percent and 9.5 percent, respectively, compared to 12.0 percent and 23.6 percent in the OECD (2022 figures).