{"id":6333,"date":"2016-12-09T10:04:54","date_gmt":"2016-12-09T10:04:54","guid":{"rendered":"http:\/\/progresomicrofinanzas.org\/en\/?p=6333"},"modified":"2017-11-17T12:52:50","modified_gmt":"2017-11-17T12:52:50","slug":"changes-to-the-business-classification-system","status":"publish","type":"post","link":"https:\/\/www.fundacionmicrofinanzasbbva.org\/revistaprogreso\/en\/changes-to-the-business-classification-system\/","title":{"rendered":"Changes to the business classification system"},"content":{"rendered":"
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The Colombian Government\u2019s Ministry of Trade, Industry & Tourism has published a decree \u00a0changing the classification of micro, small and medium enterprises (MSMEs) in order to define charges, profits or consequences in line with current legislation, using as its sole criterion annual company income from trading activities.<\/span><\/p>\n

Whereas the current system is based on the number of company employees and total assets, without distinguishing between different economic segments, the modification aims to create a business classification system based on annual company revenues, dividing companies by three major categories: i) manufacturing sector, ii) services sector, and iii) trade sector (see tables below).<\/span><\/p>\n

As well as entirely changing Colombia\u2019s business classification system, this draft decree stipulates that this new classification will not apply to the source of fiscal or tax profits. Nor will it be applicable in the event of the law providing for a different category in specific cases.<\/span><\/p>\n

In addition to the above, in view of the fact that the new business classification will be based on corporate revenues from normal activities, the draft sets out that verification of MSME revenues should be effected by submitting the results of the year prior to the one during which the company is being reclassified under the new system. Companies\u2019 annual income must be reported on the Single Business & Social Register <\/span>[Registro \u00danico Empresarial y Social: RUES*<\/span><\/i>],<\/span><\/i> which may be counterproductive for microfinance activity, given the difficulty of getting formal accounting information from credit recipients. It is also unhelpful in working towards the Government\u2019s aims of encouraging people into the formal banking system, because of the high rate of informality among micro-enterprises in Colombia.<\/span><\/p>\n

Current system<\/b><\/p>\n